Condominium demand in Phnom Penh remains low, despite an excess in supply and many construction projects continuing to rise.
In a forecast report on real estate, CBRE Cambodia said the number of condominium rooms in the capital this year will see a 120 per cent increase compared to last year.
The Post’s Hin Pisei met with CBRE Cambodia director Ann Sothida last weekend to discuss the progress of the condominium sector in the capital and get tips on how to be successful in the sector.
How do you see the current progress of the condo market in Cambodia?
Since early 2008, condominium development projects began a significant spike in the capital. It was at this time that we saw the arrival of Korean investors, with the development of their De Castle projects.
However, it was only in short-term then, due to the global financial crisis in mid-2008 caused the property market to collapse nearly to zero.
At this point, I’d like to say that in 2009 and 2010, the condominium sector in Cambodia did not have any new investments, and construction activities were also quiet.
At the time, they [investors] had to wait until the end of 2011, when two or three new condominium projects began to appear. Some of the projects that had been suspended during the crisis also began construction.
When did the sector begin to recover? And what brought about the renewed interest?
The condo market began to recover in 2013. It especially began to show during the The Bridge project, a cooperation between local investors and companies from Singapore. The 763-unit project was more successful than anticipated.
Through the success of the project, many new investors were gradually attracted to invest in condominiums in the capital. At the time, many condo developments projects sprouted up, especially in Boeung Keng Kang and Tonle Bassac communes.
Step by step, Chinese and local investors have become the leaders of this sector, especially since 2015, bringing the number of condominiums in the capital to the hundreds now.
Why will this year be the year of condo oversupply according to your report?
There are two main factors that will boost the number of condo units in 2019. First, some big projects such as Star City Time Center Sky Tree and The Star Polaris 23 will be completed this year. Second, 17 projects suspended in 2018 will be completed in 2019.
According to 2019 research, there will be 43 condominium projects to be completed, equivalent to around 16,939 units, while in 2018 there were 20 projects completed, equal to over 5,000 units.
According to the forecast for the end of 2019, luxury condominiums will have a 23 per cent market share, medium priced condos will have 43 per cent and affordable units 34 per cent.
Do you think the sector will change in the next five years?
Due to the limited number of affordable condos and Cambodians’ lifestyles in terms of living in condos has begun to change, I think that the low-end condo market should be further developed. Investment in low-end condos will be easier to sell than in medium and luxury condos.
More and more Cambodians will be interested in buying condominiums in the capital because it is more comfortable, safe and particularly because it will not cause traffic congestion.
How does one become successful in the sector?
Condominium developers should focus on locals. Because Cambodians will focus on car parks, location, and price as main factors, projects with enough parking are more likely to see success in the market.
Nowadays, vehicle parking lots are becoming a problem, so in my opinion, each project should have at least 70 to 80 per cent parking space. On the other hand, this is also an opportunity for those who want to invest in car parks.
This interview has been edited for length and clarity.