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Condo situation draws contrasting assessments

The D.I Riviera condo development on Koh Pich (Diamond Island) was flying low on the radar for some time, but is now picking up pace. Post Staff
The D.I Riviera condo development on Koh Pich (Diamond Island) was flying low on the radar for some time, but is now picking up pace. Post Staff

Condo situation draws contrasting assessments

Opinions on the state of Phnom Penh’s once-booming condominium market remain mixed, with some real estate figures conceding that conditions remain challenging while others seem more than happy to turn a blind eye to oversupply concerns.

Overseas Cambodia Investment Corporation (OCIC) project manager Touch Samnang admitted to Post Property there had been some market concerns regarding the overflow of condominium supply slated for 2017 and 2018.

However, he believes that the condo market is seeing a positive end to a somewhat tumultuous 2016. According to Samnang, there had been a rise in the flow of condo purchases recently in addition to additional Chinese companies committing to investment in Cambodia.

“The condominium supply in the market is no longer an obstacle because in the current market arise many Chinese investors coming to purchase condominiums, with other investors hailing [from] Shanghai, Hong Kong, and Taiwan,” he said.

Samnang added, “Currently, many projects have been successfully sold, as evident with the D.I Riviera project [on Koh Pich Island]. The construction has picked up the pace again [this year] very rapidly.”

Meanwhile, Thida Ann, deputy director of CBRE Cambodia, said condo sales are dependent on a variety of factors.

“Condominium sales will continue to be successful if the location is good,” she said.

“There are still plenty of opportunities if the investors have enough money to invest, in accordance with the market.”

She further stated that the condo situation becomes problematic when market conditions turn unfavourable and investors halt projects, as demonstrated by The Bay – managed by TEHO International – earlier in August.

Unfavourable market conditions were blamed for TEHO International’s decision to halt development of the upscale condo project, a $500 million mixed-use real estate project on the capital’s Chroy Changvar peninsula. The company cited Phnom Penh’s imminent glut of supply in condominium units as the reason behind the suspension of the project’s residential towers.

On a less downbeat note, Phnom Penh’s condo industry has its success stories.

Sear Rithy, CEO of WorldBridge Group, which is investing in The Bridge and The Peak condo developments with joint venture (JV) partner Oxley Holdings, said sales of the JV’s residential developments remained strong.

“Even though some projects are facing some challenges, my projects are still receiving successful sales rates and are going according to plan,” he said.

Alexander Evengroen, CEO of Key Real Estate, said condo sales were slowing down but believed a lot of the market jitters were its own doing.

“Don’t get me wrong, there are a lot of condos being built at the moment and some of them are slowing down regarding the building itself and the sales are going slow as well,” he said.

“I’ve said this before, if you are negative to the market, people will respond to that,” he emphasised.

“Of course people are getting scared; the market itself is reacting to it by sitting on their money.”

Despite some short-term micro and macroeconomic challenges relating to condo oversupply and the upcoming elections, Evengroen remains bullish for the long-term potential of the condo market due to the fact Cambodia has a large number of young people whom he believes will increasingly turn to condos as a viable housing option.

“More than 70 percent of all Cambodians are under 34 years old and that means in the near future a lot of people will start a family,” he added.

“And what do people need? A house.”

Century 21 Mekong CEO Chrek Soknim stated that the current situation for the condo market was still not very favourable, with some developments progressing slowly.

“A number of condominium investors are facing difficulties because they spent a lot of money to buy the land and to construct the building, but they haven’t received money in return,” he said.

Soknim believed that other issues, such as reluctance from the banks in supporting condos and the lack of knowledge regarding the benefits of condo living, were preventing the industry from truly flourishing without stop-start and suspension issues.

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