Cambodian real estate insiders say rents for serviced apartments are in decline due to increased competition from the condo market, with supply for serviced apartments set to decline in the long run.
Kim Heang, president of Khmer Real Estate, said supply and demand for the luxury apartments long popular with high-rolling expats was stable in early 2015.
However, he said the number of serviced apartments did not increase at the end of 2014 and the market might be in full decline by 2017, the year before the number of condo units reaches 10,000.
“The number of [serviced] apartments did not increase at the end of 2014 and prices lessened due to the competitive market,” he said.
“The increasing number of condos has led to significant competition and price downturns.”
Chrek Soknim, CEO of Century21 VTrust, said the serviced apartment market was still robust, especially for smaller units, but would be in a problematic situation next year due to the increasing number of condos.
“The serviced apartment market has remained strong since their units are usually larger than condos,” he said.
“However, serviced apartment prices will not escalate anymore and the supply will begin shrinking due to the increasing number of condos in the market.”
Research from Century21 VTrust said prices for top-quality, “Grade A” serviced apartments with one bedroom start at $1,300 a month, while prices for Grade B range from $750 to $1,300 and for Grade C are priced between $400 and $500.
Independent property analyst Keuk Narin said the decline in serviced apartment prices was leading to increasing competition to install better amenities.
“The number of serviced apartment tenants has seen little increase. In contrast, the number of serviced apartments is swelling. Consequently, prices cannot be rising,” he said.
Narin said Grade A, one-bedroom apartments in Boeung Keng Kang 1 were priced from $1,300 to $1,500 per month, while Grade B apartments start from $700 to $1,000 and Grade C ranges from $350 to $400.
In the cheaper area of Russian market, Grade A apartments are priced from $800 to $1,000 per month and Grade B goes for $500 and $800, he said.