Workers near Aeon Mall 3, a large retail space, in Phnom Penh’s Meanchey district last December. Heng Chivoan
Phnom Penh’s retail space has stagnated throughout most of 2023 due to a “sluggish” global economic climate.
During Q3 2023, roughly two-thirds of the available 650,000sqm of retail space in Phnom Penh was occupied, according to research by CBRE Cambodia, marking an almost 3% decline from the previous quarter.
CBRE Cambodia’s Q3 Market Insights for Phnom Penh Real Estate report reveals that there were no new launches or completions of retail spaces in Q3. At the start of the year, CBRE had initially forecasted the introduction of 119,000sqm of new retail space. Construction delays for several projects shifted the expected additional supply down to 51,000sqm, however.
The completion of two projects is anticipated by the close of 2023, which would increase the total net leasable area by 2%, raising it to approximately 660,000sqm, as per the same report.
Contrary to trends between 2017 and 2019, recent data indicates a shift of interest from internal retail projects to standalone high street locations. Except for these prime locations, which saw rates soar by over 13%, the average quoting rent for all types of retail spaces fell by 1 to 7%.
“About 50% of the retail projects we anticipated completing this year have been postponed to 2024. The consistent delay in opening projects stems from market challenges rather than construction setbacks,” said Chin Chandaluch, CBRE Cambodia’s senior manager of Valuation and Advisory Services.
Throughout Q3, there were numerous movements of both international and local brands, encompassing both expansions and closures. This led to the decline of the occupancy rate from 70% in Q2 to 68% in Q3, signalling the continued challenges faced by retailers.
Prime shopping mall units averaged rental quotes of $25.8 per sqm/month in Q3, a 6.6%decline from Q3 2022. Prime retail podium units stood at $19.2, down by 1.4%, while community mall units were at $19.1, down 4.5%. Conversely, the average rent for prime high street units rose by 13.3% to $25.5.
The Q2 economic bulletin from the Ministry of Economy and Finance revealed that from April to June, the Ministry of Land Management, Urban Planning and Construction sanctioned 826 construction projects nationwide, a decrease of 173 projects from the previous quarter.
Investment capital surged to $1.475 billion, marking a substantial 130.2% increase from Q2 2022.
The breakdown showed residential construction investments at $607.5 million, industrial at $568.5 million, commercial at $249 million, public works at $87.1 million and tourism-related construction at $79.6 million.
