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Prominent property developers downplay sliding real estate outlook

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Real estate experts, agents and developers on the podium during CAMPEX 2016. The exhibition was held at Sofitel from 5 to 7 August. Hong Menea

Prominent property developers downplay sliding real estate outlook

As the property market maintains its spotlighted position as one of the most debated industries in the Kingdom, with several differing opinions from real estate professionals alike, it seems more developers are upping the ante by offering novel investment schemes and opportunities.

Held last weekend, CAMPEX 2016 – Cambodia’s Exclusive Property Exhibition – was a three-day affair centred around many of the capital city’s outstanding property developments with an exclusive focus on condo projects. There were seminars, speeches, and booths by industry professionals representing companies like Century 21, Key Real Estate, and Camhomes, among various others.

Alger Keh, country manager for Aplus Asia network, which organised the event, admitted that while he is not a professional real estate expert, his many years of living in Cambodia have helped shape his point of view of how the market’s performance is as of now: “The trend is here; if you have money today, would you want to invest in property, condominiums, or real estate in general?”

“Let’s put it this way, if you want to invest today, what is the interest rate? For savings accounts, it is a 1.5 to 2.5 per cent rate a year. If you buy a property today, some of the property developers are offering you from 6 to 10 per cent guaranteed returns a year,” he said.

Keh is positive that the property market in Cambodia is still robust, with bountiful investors coming in every day proffering good opportunities for investments, not only in their personal interests, but on a wider scale that involves members of the public keen on investing.

He elaborated, “The Chinese, the Japanese, and other foreign developers are pumping in billions of dollars into the Kingdom every year. I have been here for many years, and Cambodia has always remained strong. Today, you can see a new group of young [local] buyers who are looking for nice places with good amenities, basically condos, for a very affordable price.”

Keh’s optimism is reflected in his perspective that there is still a demand for condos. This is especially the case with the increasing number of Cambodians that are buying condos, with Keh citing that 70 per cent of buyers for the Casa by Meridian condo are locals.

“With the ASEAN Economic Community coming up right now, I believe there will be a lot more investors coming in to Cambodia.”

One of the more noteworthy points shared by Murray Ko Sek Yan, CEO of Meridian International – the developer behind condo projects Casa by Meridian and Skylar by Meridian – was its co-ownership investment scheme that he claims is a debut concept in Cambodia.

“Our company has long-term planning in Cambodia. We think this is the right moment to offer something to the young people, for our branding, to help the new generation – the young elites,” he said.

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Visitors listen to a sales pitch for a condominium development. Hong Menea

Explaining further, Meridian’s co-ownership scheme for its Casa condo entails seven co-ownership titles priced at $30,000 each, with each co-owner receiving rental returns of 40 per cent over a period of five years, while property management is wholly under the responsibility of Meridian Holdings.

Guaranteed buybacks from the developer start from the third year onwards. The rental income and the capital appreciation will amount to $17,000 at the end of the fifth year, excluding upfront capital. According to Meridian, an investor could average an 11 per cent return on investment per annum.

“For the first five years, it is only for investment. Somebody else lives inside, but the co-owners can enjoy the rental guarantee. After five years, they have the opportunity to take over the condo unit, while all the way enjoying a good rental return income on top of their own personal incomes. This is a good opportunity for future planning and investment,” Yan explained.

Such a proposal is apparently in line with the message of Knight Frank’s country manager Ross Wheble, who has said that in light of the current real estate development peak in Cambodia, it does not suffice for developers to merely build a project while expecting prosperous sales returns.

As such, because the demand from foreign investors has been decreasing in the past half year, developers are now required to brainstorm for innovative means of offering their products as a result of the market now being increasingly delicate in terms of pricing.

While Knight Frank has suggested in their latest report that there will be a definite impending surplus in Phnom Penh’s residential sector (story page 2), assistant director of The Penthouse Residences, Korn Sokkea, thinks otherwise.

“I think there is not too much of a problem with the condo bubble,” he told Post Property when pressed on the matter.

“In Phnom Penh, it is still healthy to invest compared to countries like Singapore, Thailand and Vietnam, where there are already too many high-rise buildings.”

Perhaps, in a bubbled optimism of their own, property developers are upbeat that “there is no oversupply of condominiums now, because in Cambodia right now there are still very few high buildings, so in the next two to four years there will be more high-rise residential buildings”, according to Sokkea.

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