Logo of Phnom Penh Post newspaper Phnom Penh Post - Letter to the editor: ‘Real estate is a cyclical market‘



Letter to the editor: ‘Real estate is a cyclical market‘

Letter to the editor: ‘Real estate is a cyclical market‘

Marc Townsend, managing director of CBRE Vietnam and Cambodia, is optimistic Phnom Penh’s supply and demand fundamentals will eventually re-balance, as he tells Post Property:

It is true that there are now growing concerns that there is an oversupply in the residential market here in Cambodia. The market has grown quickly, albeit from a very low base, with 14,000 units being launched off-plan within the past one-and-a-half years.

In this regard, it is important to remember that real estate is a cyclical market affected by the dynamics of demand and supply as well as political and economic factors. One of the bellwethers to look out for is the percentage of FDI allocated into real estate.

At present this is around 20 per cent. In context, in Vietnam in 2008 it was around 50 per cent. In this sense the rate is not too high.

However, there are some challenges; local demand is still quite low with most investment currently coming from overseas and this leads to a small secondary market for residential units.

The price range is between $1,500 and $3,500 per square metre and a lot of the units are geared towards the top end of the market, whereas local demand is greatest for smaller, affordable units. These factors have inevitably led to a period of saturation, however the market does have ways to correct itself. Projects may slow down or postpone construction, developers may change use to hotel or serviced apartment, for example.

As in any market, if prices start to come down then, naturally, more buyers will enter the market. As seen in Vietnam, the next wave of growth will come as local demand, particularly from the owner/occupier segment growth.

Politics is an area always in focus in Cambodia. However, politics is keenly analysed by investors in all countries. There has historically been a “wait-and-see” approach by investors in the lead up to Cambodia elections, nevertheless, demand does not disappear during political events; people and organisations still need buildings for homes and commerce.

A real opportunity not only for real estate, but also Cambodia in general, is in infrastructure investment. If the government can invest in the road network and bridges, this can really increase efficiency, reduce traffic congestion and travel times, while also opening up new areas for development.

With now close to 20 per cent of the population living within greater Phnom Penh, the capital will significantly benefit from this kind of investment.

Yours sincerely,
Marc Townsend

MOST VIEWED

  • Municipal hall releases map detailing colour coded Covid risks by commune

    Phnom Penh municipal governor Khuong Sreng released an official map detailing the red, yellow and dark yellow zones within the city under the new lockdown orders for Phnom Penh announced on April 26. The designation of red, dark yellow and yellow corresponds to areas with high,

  • Phnom Penh unveils rules for post-lockdown transition

    The Phnom Penh Municipal Administration issued a set of detailed guidelines for the seven days to May 12 after the capital emerges from lockdown at the onset of May 6. In the 14-page document signed by municipal governor Khuong Sreng released on the evening of May 5, the

  • SBI LY HOUR Bank Launches Cross Border Money Transfer Service between Cambodia and Vietnam on RippleNet, utilizing DLT

    SBI LY HOUR Bank Plc and Hanoi-based Tien Phong Commercial Joint Stock Bank (TPBank) on Friday launched the first Cambodia-Vietnam money transfer service in real currency via RippleNet, provided by SBI Ripple Asia Co Ltd to provide safe, fast and convenient services. SBI LY HOUR

  • Phnom Penh, Takmao lockdown extended for another week

    The government late on April 26 announced an extension of lockdown in Phnom Penh and adjacent Takmao town in Kandal province for another seven days – or longer if residents do not comply with Covid-19 preventive measures and the community outbreak does not subside – until May 5. According

  • Gov't mulls extension of Phnom Penh, Takmao lockdown

    The Inter-ministerial National Commission for the Control and Enforcement of Lockdown held a video conference meeting on April 25 to review a draft document on the extension of lockdown in Phnom Penh and adjacent Kandal province’s Takmao town. The meeting was chaired by Minister of

  • Gov’t issues guidelines as lockdown nears end

    The government has issued a five-page set of instructions to be enforced when the three-week lockdown of Phnom Penh and adjacent Takmao town in Kandal province ends on May 6. According to an announcement signed by Prime Minister Hun Sen on May 4, the instructions cover a