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Condo market picks up pace

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Condo buildings in the capital’s Chroy Changvar district seen in October. Hong Menea

Condo market picks up pace

Transactions in the Cambodian condominium market are gradually gaining pace, as local buyers look to snap up bargains while Covid-19 continues to keep international investors away, forcing sellers to scale back their dependency on foreign money, local property and real estate players are pointing out.

Phnom Penh is undoubtedly one of the hottest localities for condo development, with studies by real estate companies putting the current unit supply at over 30,000 units – represented by around 100 buildings – and projecting that figure to increase to about 80,000 by 2025.

One such company, CBRE Cambodia, early last month reported that the Phnom Penh condo supply remained at 36,000 units for the quarter ended September 30, underlining that global headwinds continue to hamper the capital’s condo market, in terms of construction processes, transactions and rentals.

However, the company – the local affiliate of US commercial real estate services and investment firm CBRE Group Inc – suggested that, given significant improvements in the economic and political environments in the Kingdom and abroad, the capital’s condo supply could top 45,000 units by end-2022 and 65,000 units by end-2023.

At present, the per-sqm selling prices of Phnom Penh condo units typically range from $1,500-3,000 while the average monthly rent falls between $8 and $15 per sqm.

CBRE Cambodia, on the one hand, categorises condo projects as “high-range”, “mid-range” and “affordable”. It reported that, in the July-September period, the average per-sqm selling prices of condo units were $2,639 for “high-end”, $2,078 for “mid-range” and $1,408 for “affordable”, edging down by 1.2 per cent, 0.8 per cent and 0.2 per cent quarter-on-quarter, respectively.

Khon Kongkea, CEO of ERA Cambodia, the local affiliate of US-based multi-national company ERA Real Estate, told The Post that the local real estate market can yield relatively high profits, and that it is not uncommon to see annual capital gains of at least 15 per cent on assets.

While demand for local condo units has historically been dominated by foreign buyers, locals are increasingly purchasing properties, steadily driving up transaction volumes in the segment, he said.

However, the nationwide condo supply is still fairly low, Kongkea opined, although he noted that a number of projects are slated to be launched early in 2023.

Regardless, he said, now “is a great opportunity for people to buy condos, as prices remain relatively low and developers offer mouth-watering deals”.

William Lee, sales manager for the 45-storey, 1,184-unit Wealth Mansion condo that broke ground in June 2019 near the riverside in the capital’s Chroy Changar district and is expected to be finished in the April-June quarter next year, said that economic recovery, along with the steady flows of foreign direct investment (FDI) pouring in, has greatly lifted hopes for the condo market.

“To date, we’ve sold more than 50 per cent of the condo units – and about 40 per cent of those were bought by locals,” he said.

According to the Council for the Development of Cambodia, the government’s highest decision-making body for large-scale investments, new FDI commitments were nearly $3 billion in the first half of 2022.

The Greater China region – comprising mainland China, Hong Kong, Macau and Taiwan – remained the Kingdom’s top source market, accounting for 43 per cent, and other top jurisdictions included South Korea, Singapore, Australia, Thailand, Malaysia and Japan.

CBRE Cambodia associate director of research and consulting services Kim Kinkesa told The Post on October 12 that although Phnom Penh condo sales rates and rents in the third quarter reversed the slight recovery witnessed over the previous three-month period, the changes are small and do not substantially jeopardise the overall stabilisation in prices that has been seen since the beginning of 2022 and is expected to continue until the end of the year.

The anticipated return of foreigners to the Kingdom over the next year is also expected to trigger significant demand and occupancy growth.

To this end, Kinkesa commented: “In 2023, [we] expect transactions and rentals to improve against 2022, with just a few new projects set to be put on the market, while prices remain stable.”

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