Phnom Penh investors and property owners are getting creative in the wake of subdued demand and oversupply in the residential market, with some deciding to renovate existing apartments and remodel them into hotels.
It looks like the apartment market has finally filled over the brim, as is evident from the many apartment owners seeking to remodel their apartment properties into hotels instead. Experts, however, have advised the opposite, warning the hotel industry is not in great shape either.
Din Somethearith, president of the Cambodian Hotel Association (CHA), told Post Property there is a fair number of apartments located in the Tonle Bassac and Boeung Keng Kang areas that are being renovated into hotels due to the current apartment oversupply and downcast demand.
However, Somethearith suggested the apartment cum hotel remodelling move would not prove beneficial.
“Copying each other’s business is a dangerous move, therefore, changing apartments into hotels will kill them. It won’t be successful, even if the amount of tourists coming to Cambodia will gain from 4 percent to 5 percent in a year; many more hotels will also spring up and be opened for business,” he said.
Somethearith added, “My friend has rented a villa to open up his own boutique hotel, and as a result, he is currently waiting for the boutique hotel to close down, because he hadn’t asked for my advice before continuing with his business endeavour.”
“He tried to follow others’ example, while not taking into account that many small hotels in Phnom Penh and Siem Reap are closing down one by one.”
According to Somethearith, Phnom Penh currently has about 400 hotels, while Siem Reap has 500 hotels. Despite the large number of established hotels, investors are changing tact and turning from the residential apartment sector to the hotel industry for improved financial returns.
According to a recent study completed by CBRE Cambodia, 17 apartment projects, equating to 8,000 individual units, will be released into the apartment and condo market at the end of this year – a market that already consists of 6,500 units, out of which 2,900 are condo units.
Dith Channa, chairman of Lucky Realty, said he had received news of the sudden renovating craze, adding that the apartments being flipped into hotels were also located in Sangkat Toul Svay Prey and Sangkat Boeung Proleut.
Apart from renovating apartments into hotels, Channa said there were some investors looking to renovate condos into ‘condotels’.
“Renovating condos into luxury condotels is a new sight for development in Cambodia, but that doesn’t apply to developed countries,” he said.
Channa was more confident in the renovation craze being a success.
“Remodelling apartments or condos into hotels in order to make the building a multi-functional complex will make the project a success,” he said.
Channa advised that if apartment owners are organised and equip their apartments with modern appliances to keep up with modern advances, there is no imperative need to renovate.
On the other hand, if the apartments are outdated and old, Channa admitted it would be difficult to attract customers.
Nevertheless, Chrek Soknim, CEO of Century 21 Mekong, said he was not aware of the new fad, but saw the value in the concept.
“It’s also a good idea for owners of old apartments with a swimming pool to turn their apartment into a boutique hotel. If they can make it organised, it will also attract many customers,” he said.