Rents for serviced apartments in Phnom Penh had tumbled nearly 20 per cent year-on-year by the end of last year as the number of foreigners working and investing in the Kingdom dwindles amid Covid-19 concerns, a new real estate study found.
CBRE Cambodia, the local affiliate of US commercial real estate services and investment firm CBRE Group Inc, said in the study that average monthly rent for top-quality “Grade A” one-bedroom apartments was $900-1,500 and $800-$2,300 for two-bedroom units as of the end of last year, cumulatively down 18.74 per cent year-on-year.
In the “Grade B” category, studios and one-bedroom apartments went for $500-1,000 per month at the time, while two-bedroom units were $1,200-1,600, down 18.21 per cent year-on-year.
The study said the capital’s rental apartment supply of both grades stood at 2,093 units at the end of last year.
CBRE Cambodia senior manager Kim Kinkesa told The Post that rents for serviced apartments in the capital have continued their decline since the end of the first quarter of this year.
She pinned the drop on foreign residents of Cambodia who had travelled to their countries of origin and had not returned due to global travel restrictions, adding that vacancies have driven rents even lower, a trend she said may persist throughout the year.
“According to research, apartment rental prices in 2021 may decline even further seeing that the number of foreigners travelling to Cambodia will not be as large as before.
“Competition in rental prices will only intensify as the number of apartments and condominiums entering the market increase in 2021,” Kinkesa said, adding that falling hotel room rates could also prove a snag in the market.
But with prices now at a low, she voiced optimism that the rate of decline in rents would ease this year.
Two planned apartment projects will bring 388 new units to the capital’s supply this year, according to Kinkesa.
Global Real Estate Association president Sam Soknoeun said the Cambodian apartment rental market is virtually entirely dependent on foreign consumers. The pandemic and subsequent travel restrictions have significantly strained the market and sunk it into its current rut.
The market is plagued by waning vacancy rates, and rents have slid more than 20 per cent since the beginning of last year, he said.
“Rents and occupancy rates for apartments in Cambodia have been falling since February last year, as scores of foreign consumers have returned to their home countries and the number entering Cambodia during the period is nigh on nil,” Soknoeun said.
He said the fate of the market is entirely at the mercy of the Covid-19 situation. Successful control of the outbreak and a return to pre-2020 levels of travel will prompt occupancy rates and rents to bump back up again.
“I don’t expect the market to be as strong in 2021 as it was before the crisis, it’ll take more time to attract more foreign visitors to Cambodia,” he said.
While official Ministry of Tourism statistics have yet to be published, minister Thong Khon estimates that Cambodia welcomed just 1.31 million international visitors last year, or down almost 80 per cent compared to the 6,610,592 who travelled to the Kingdom in 2019.