Nearly 40,000 condominium units are expected to spring up in Phnom Penh by the end of the decade, but lacklustre demand has the potential to thwart the timetable of some construction projects.
Research released yesterday by Century 21, in conjunction with VTrust, shows that from the first half of this year, off-plan condo sales have risen to 13,730 units, a 52 per cent increase compared with the same time last year.
Remarkably, the report predicts condo supply will grow to a total of 37,570 units in 2020.
The study documented the number of recently completed and ongoing condo projects, estimating 148 buildings under construction in Phnom Penh.
The report showed positive potential market growth in the city over the next five years, stating that condo sell-outs usually take 29 months to accomplish in Cambodia, compared to 40 months in Thailand and Vietnam.
Despite this, condo sell-outs in Phnom Penh are expected to now take longer because sales have dropped compared to the previous year.
Kuy Vat, CEO of Century 21 Cambodia, stated, “What is important now is gaining trust from foreign investors when it comes to property agencies so they can trust our market.”
“Market credibility and the condo expansion capability in Cambodia and its partner countries will make investors in the property sector trust and want to invest in Cambodia.”
Vat said that in order to develop the sector effectively, those in the industry, including developers, architects, and property agencies should contribute and collaborate to attract bigger investment funds, not only from ASEAN countries but from every country on the globe.
Vat acknowledged that with many condo projects currently in development stage, postponed construction timetables were inevitable.
Century 21 Mekong CEO, Chrek Soknim, said that slow condo sales in Phnom Penh have already resulted in the postponement of two projects, both of which he would not specify.
Soknim said that foreigners purchase 70 per cent of condos while the remaining 30 per cent are bought by Cambodians.
According to Soknim, most Cambodians purchase them for investment; with the current trend in the condo market based on locals because there has been a noteworthy increase in purchases from local Cambodians.
He went on to add that there was a 15 to 20 per cent growth in purchase activity last year, but it is a bit slower this year.
Overseas Cambodia Investment Corporation president Touch Samnang, whose company is investing in Olympia City, said condo sales are plummeting this year compared to last year because of the high number of developments.
He added, “I noticed most investors focused on the foreign and upper class market but they have turned around towards the average crowd.”
“I don’t care if the condo supplies will rise to 30,000 or 40,000 units; what I worry about is who the consumers will be.” He continued: “Some developers do not have the market abroad, the experience, or the skill in this department, on top of inadequate funds for construction.”
With supply likely to outstrip demand, Samnang suggested the government should attract as many investors possible through encouragement and various incentives.
When asked if more condo projects will be postponed in the future, Kim Heang, president of the Cambodian Valuers and Estates Association, merely said that there are two cases to result in delay or inactivity: One is when the developers have insufficient funds, experience and partners overseas, and second is when developers do not have any resources, leading to incomplete construction activity.
