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Market for capital office space could be saturated, says report

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Vattanak Capital, one of the capital’s largest office buildings is shown. A report from real estate firm CBRE Cambodia shows that the market for office space in Phnom Penh could be close to saturation. Hong Menea

Market for capital office space could be saturated, says report

Office space occupancy in the capital in the second quarter of this year rose slower than the first. A report from real estate firm CBRE Cambodia hinted that the market could be reaching saturation.

The report, received by The Post on Wednesday, showed that office rentals as of the second quarter have topped 293,000 square metres – up five per cent from 277,000 in the first quarter.

At the financial year’s midpoint, total office space in Phnom Penh stood at just over 335,000 square metres.

Sixteen per cent of that figure was classified as grade A space, 20 per cent grade B and 64 per cent grade C, said CBRE director Ann Sothida.

However, in the second quarter there was no new office space for lease, while in the first, a new 14,350 square metre space was added to the market.

Sothida said on Wednesday that the modest growth was because the market was reaching saturation.

“This increase is due to the growth of domestic companies, increasing foreign direct investment and changing behaviour from renting houses or villas to office buildings instead,” she said.

More offices added
Rental fees for grade A office buildings usually range from $28 to $38 per square metres, grade B from $18 to $28 while grade C ranges from $10 to $18.

Nop Yoeus, the property manager for City Tower, which has grade B offices, said its 5,000 square metres of space is currently half occupied. He added that he did not expect occupancy to grow much this year.

CBRE says it expects five new office buildings to be added to the market by year-end, which will bring the total amount of office space to nearly 400,000 square metres.

A Ministry of Land Management report released on Wednesday showed that in the first six months of this year, authorities approved 1,643 construction projects with a total estimated value of $2.15 billion.

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