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Competition on rentals tightens as supply swells

New condos being built in Phnom Penh.
New condos being built in Phnom Penh. Hong Menea

Competition on rentals tightens as supply swells

The marketing of condominiums and apartments in Cambodia is becoming increasingly challenging as supply swells and rental prices come under pressure.

A new report by Bonna Realty Group found that the total supply of apartment and office units in Phnom Penh increased by 20 percent last year while average rental prices fell by about 8 percent.

Noun Rithy, CEO of Khmer Foundation Appraisals, said this week that while rental supply increased significantly last year the decrease in rental prices was relatively small and not something to worry about.

“I still see positivity in this sector as more foreigners are coming to Cambodia, especially investors,” he said.

According to a recent report by CBRE Cambodia, some 1,200 apartment and condo units were added to the market in 2017, increasing the total supply to nearly 8,000 units. With more units due to come online in 2018, CBRE country director Ann Sothida expects competition to intensify in the market, though rental prices appear to be holding their ground.

“This year, the service fees on apartments for quality, services and management will be extremely competitive,” she said.

Sothida insisted that rental rates on apartments were not falling, but noted that many renters were choosing condo units over apartments due to lower service fees. Whereas the monthly rent on a condo unit might be $15 per square metre, it could range from $18 to $25 per square metre on a comparable apartment unit.

Grace Rachny Fong, executive president of Century21 Cambodia, said that while the rental prices of apartment and condo units in the capital remain high, those located far from the centre or without high-quality amenities and infrastructure are struggling to find new tenants.

She said units in the capital’s upscale Boueng Keng Kang 1 neighbourhood, mostly top-tier Grade A and A-plus quality – are consistently fully occupied with embassy officials, company executives and staff of international organisations.

“It has been a bit hard for Grade A apartments to find tenants as they are pricy, however the A-plus and B grade units are still doing well in the market,” she said, adding that these units tend to attract expats who come to Cambodia with their families for work and stay for a long period of time. ​

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