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Capital’s office space rents on rise

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Vattanac Tower is one of only two Grade A office buildings in Phnom Penh. Hong Menea

Capital’s office space rents on rise

Rental of office space in the capital saw a slight increase in the third quarter of this year compared to the second quarter, with a total of more than 86 per cent of spaces occupied, according to a CBRE Cambodia report.

It said the newly-constructed Keystone Office Building provided more than 15,000sqm of office space in the third quarter, bringing the total area of office spaces in Phnom Penh to 360,000sqm – up 4.7 per cent from the quarter before.

Grade A office spaces have an occupancy rate of about 68 per cent, Grade B (88 per cent) and Grade C (92 per cent).

Third quarter leasing prices were unchanged compared to the second quarter, with Grade A ranging between $28 to $38 per square metre, Grade B from $18 to $28, and Grade C from $10 to $18.

CBRE Cambodia analyst Kimsea Chea said economic growth and inflows of foreign companies have pushed the demand for office spaces in the capital, especially grade B offices.

“At present, Grade A offices in Cambodia do not seem to be very occupied, but this number will increase in the future."

“Over the next three to five years, the number of [occupied] Grade A offices will increase as many international companies invest in Cambodia,” he said.

Currently, there are only two Grade A office buildings in Phnom Penh – Vattanac Tower and Exchange Square – while many office space buildings under development are Grade B, the report said.

James Hodge, surveyor and head of Professional Services at CBRE Cambodia, Keystone’s marketing agency, said that the grade B office market is the best. He said the Keystone Office Building launched 50 per cent of its grade B office space in July.

He said most of the building’s customers are companies from abroad. “Investment in Grade B offices is high in Phnom Penh now. The market will be better in the future,” he said.

CBRE Cambodia estimated that in the fourth quarter, there will be four other Grade B offices to be put up for rent, including the East Commercial Centre, Diamond Twin, E.SUN Tower and Elysee. The new supply will bring the office space in Phnom Penh to a total of about 400,000sqm.

The Ministry of Land Management, Urban Planning and Construction said building investment capital in the first nine months of this year was worth over $4.8 billion. It was $5.6 billion in the same period last year or a 14.47 per cent decrease.

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