As local developers kickstart a variety of mid-priced housing projects, Post Property finds that local buyers earning around $8,000 a year could be spoiled for choice.
Responding to what it believes is rising demand from middle-income Cambodians, local developer Naki Group has decided to invest $10 million in a median-income housing project in south Phnom Penh.
The Cambodian company’s chief executive officer, Nget Veasna Meas, said that after having seen the economic growth in Cambodia and the rising incomes of the people, particularly average- and low-income individuals, he decided to get going on the company’s Ravana Borey project to respond to this market.
The housing estate will sit on three hectares (7.4 acres) of land just off National Road 2 in Prek Kampeus Commune, Dangkor District, Phnom Penh. The properties the Naki Group aims to construct will be priced in the $35,000 to $60,000 range, which the company deems ‘middle income’. In Cambodia, you could call yourself ‘middle income’ if you’re earning between $500 and $1,000 a month.
Meas said he thinks dual-income couples will be interested in properties constructed as part of the project. Referring to the anticipated pricing structure, he said: “I think this project will be a success based on the reason above, and I think new couples’ joint salaries will be from around $500 to $600 per month, which means they can save and buy it.
“We will help them get a loan from a bank to buy their dream house.”
Meas continued that his investment at the lower end of the unit price scale is based on the economic growth Cambodia has been enjoying in recent years. He said that a stable peace following the upheavals of the civil war has helped the Kingdom’s economy to a growth spurt, and as a result the numbers of median-income couples and families is increasing.
Last year the World Bank reported that Cambodia was no longer in its ‘low-income’ bracket (which refers to nations having a gross national income (GNI) per capita of $1,025 per year). The Kingdom now sits at the foot of the ‘lower-middle income’ bracket, which covers the GNI range $1,026 to $4,035. Cambodia’s GNI per capita stood at $1,070 in 2015.
The late Vann Molyvann, who dominated Cambodia’s architectural scene for many decades, believed that Phnom Penh’s southern area was the best location for the city’s future development because it is an area of high ground that isn’t affected by many floods.
Local construction company Piphub Thmey has also invested in the city’s southern area, with a 50-hectare (123-acre) estate of reasonably priced housing in the pipeline, also close to National Road 2. Part of this project has already been built.
Soknim Chrek, CEO of Century21 Mekong, said that the housing market is still strong this year, thanks to the increase in the population and people’s higher salaries. He also thinks that easier credit from local banks is keeping the sector buoyant. He believes that while there are a rising number of investors looking for second properties, developers are targeting median-income buyers because their numbers are also growing.
However, James Hodge of property development and management company CBRE keeps a close eye on the market and thinks the overall picture is patchy when it comes to ‘middle-income’ buyers. “The trend this year has been increasing involvement from foreign buyers. The proportion of local buyers varies by project; condominium developments with a trusted local brand behind them can often attract significant proportions of local buyers, perhaps as much as 80 percent.
“Alternatively, some foreign-built condominium developments are targeted at the overseas market and as such the representation of Cambodian purchasers can be low, at between 20 and 30 percent. The figures vary from project to project.”
Oknha Ly Hour, Head of the Housing Development Association of Cambodia, said that the market for affordable houses for lower- and average-income classes is doing well, with more houses having been sold. He said he had built 20 middle-income houses along National Road 6A, and all were sold within one month. He added that expensive houses are turning over slowly,and the market is now focusing on lower-income people.
“However, whether a house is cheap or expensive depends on its location. If the location is good, we cannot build affordable houses there,” he said. “If we look at the upper end of the housing market, it’s still doing well if the investment focuses on a location at the heart of the city and has good local commercial activity.”