The emerging middle class is fuelling demand for isolated communities of villas and shophouses. About 37,000 of them – both under way and completed – are on the market and prices can range from $35,000 to $820,000
Driven by growing middle class wealth, the number of gated communities – known as boreys – in Phnom Penh has nearly doubled over the past three years, according to research from Bunna Realty Group.
The real estate company found the number of boreys with 50 or more buildings rose from 77 in 2011 to 128 in the third quarter of this year.
A borey is a community of homes including villas and/or shophouses with its own infrastructure such as electricity, security and roads.
Bunna Realty’s research showed that about 77 per cent of completed and in-progress constructions were sold and that most residents were Cambodian middle-income families.
About 37,000 borey dwellings, both under way and completed, are on the market, and prices vary dramatically.
In Sen Sok district, 4m x 16m flats are on sale for between $35,000 and $230,000, while 6m x 13m twin villas go for $100,000 to $270,000. Larger 12m x 15m villas are on sale for between $150,000 and $820,000.
“The demand for borey dwellings is outstripping supply, because Cambodians’ income is increasing,” Bonna Real Estate director Hin Socheat said.
“People need more affordable houses.”
Most borey developers and buyers are Cambodians, because foreigners need Cambodian nationality to buy property, said CPL Real Estate director Cheng Kheng, who is also the president of the Cambodian Valuers and Estate Agents Association.
“Due to rising living standards and desirability of boreys, I think that the residential supply of boreys over the next five years will see growth,” he said.
Borey Vimean Phnom Penh sales and marketing manager Chhay Sina said her company had based its strategy on market research.
“Not only Borey Vimean Phnom Penh, but also other Borey project developers analyse the market demand before they commence their construction,” she said.
Following the success of Borey River Town, general manager Teng Rith recently announced plans to inject $100 million into developing a new project nearby.
The new 25-hectare property development would be both residential and commercial, Rith said.
It would consist of twin villas, single villas, shophouses, flats and more than 10 floors of office space, and have a starting date for construction at the end of the year.
A major driver of increased borey development is the growing use of installment payments wherein buyers put down an initial downpayment, often about 40 per cent, and then pay the rest off over several years plus interest.
“Currently, home demand has seen a strong increase, with 50 or 60 per cent of buyers newlyweds who have the ability to pay an initial instalment,” she added.
Keuk Narin, vice president of Asia Real Estate Cambodia said, in general, customers could buy their house with an instalment plan, with the building housing investment and microfinance companies charging between 18 to 20 per cent interest per year, while banks have interest rates at 10 per cent.
Ouch Pysal, assistant president of Ly Hour Group, said installments help his customers buy more houses, if they have the 40 per cent deposit.
“Both those who have enough money and those who lack money can buy houses. Now my company has around 80 per cent of our customers buying their houses by instalment,” he said.