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Rents plunge as demand dries up

Rents plunge as demand dries up

APARTMENT rental prices fell up to 25 percent in the second quarter of 2010, compared to the first quarter, after the number of home seekers declined and new vacancies increased.

Keuk Narin, general manager of Bonna Realty Group and Secretary of the National Valuers Association of Cambodia, said yesterday prices in Phnom Penh have fallen between 15 and 25 percent in the second quarter.

“Demand is slipping because of the ongoing impact of the global financial crisis,” he said.

“In my view, I think the price might continue to drop because there will be increasing supply in third and fourth quarter this year.”

The cost of renting an apartment increased 25 percent to 35 percent from 2005 to mid-2008, according to NVAC statistics. But it has since dropped about 5 to 15 percent from mid-2008, the onset of the financial crisis, until the first quarter of 2010.

Figures released by NVAC yesterday show rentals are continuing to fall in the second quarter.

Average rent on a three-bedroom A-grade apartment in central Phnom Penh was US$2,500 to $2,800 per month on average in the first quarter. This dropped to $2,200 to $2,300 per month in the second quarter.

Compared to the second quarter last year, two-bedroom apartments are now $1,200 to $1,500, down from $1,700 to $1,800 last year.

Meanwhile, one-bedroom class-A units are $400 to $1,000, down from $500 to $1,300.

Mang Sovandara, property manager of Cambodia Property Ltd Co, with some 70 apartments and 500 villas for rent in the capital, said he expects the falling price trend to continue.

“Our company research shows the price for residential rent continuing to fall in the second quarter, and I think that it will continue to drop next year,” he said.

He said that the asking price across all grades of apartment – A, B and C – had dropped by $200 to $300 per unit, compared to the second quarter last year.

Ouk Vanna, the owner of a three-bedroom furnished apartment in Boeung Keng Kang II, said the world economic crisis had hit every business and likewise drove him to decrease his rental price.

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