James Hodge | Surveyor | Research, Consulting & Valuation Services
CBRE Cambodia estimates that condominium supply in Phnom Penh alone currently stands at 4,253 units and will reach 38,920 units by the end of 2019, representing a 9 fold increase.
Supply is coming from a low base but a combination of market dynamics and access to ample foreign capital have combined to create a dramatic shift in Phnom Penh’s residential market, as evidenced by the speed at which the city’s skyline is changing. With buyers spoilt for choice, CBRE Cambodia explores some strategies developers employ to make their project stand out from the crowd.
CBRE Cambodia’s word of 2017 is ‘differentiation’, as we see this as being a key factor in the future success of many types of projects. Differentiation can be delivered in a variety of forms with some of the most common being innovative design, the inclusion of green technologies and delivery of lifestyle enhancing services such as leisure facilities and integrated retail offerings.
Successful developers recognise that not all buyers are the same. Indeed, there are a plethora of nationalities willing to snap up investments in the Kingdom, a process made easier if the developer has thought about their audience’s preferences.
Even within a single development differentiation can be successful, for instance selecting a target audience for a portion of a development and tailoring the services, price point, design, layout and marketing strategy to suit them. Remaining flexible by adapting marketing strategies and tailoring finishes in response to buyers’ requirements will be important in ensuring as many potential purchasers can be captured as possible; it will also provide a benefit to buyers as their needs will be more closely aligned with the finished property.
Differentiation strategies can include the introduction of innovative disposal options. One route that has bought success to some developers is through partnering with branded or specialised serviced apartment providers who can offer a wide breadth of
services and an assurance of quality that appeals to long term business travellers and expatriates.
In other markets, branded residences developed by lifestyle brands and hotels including Armani, Marriott, Raffles, Six Senses and even Trump have proved successful, bringing greater returns for investors and enhanced sales for developers. Branded residences by lifestyle brands aim to fil a niche for apartment occupiers seeking luxury design, top-end facilities and association with designer brands, whereas hotel style branded residences and serviced apartment operators offer a full range of service levels to suit a variety of price brackets.
Other important considerations for both developers and buyers include the delivery of high quality, professional property management; a good property management regime will prolong the life of the building and improve the living environment, making it easier to attract and retain tenants.
Developers and investors alike have a great opportunity to begin widening their geographic reach; as the condominium market in Sihanoukville takes off a whole new investment profile, becoming available in Cambodia. Sihanoukville’s diversified economy including tourism and industry offers strong foundations for the delivery of a dynamic property sector, as has been witnessed in the likes of Da Nang, Vietnam. Diversifying into a number of markets offers developers the potential to spread market risk and allows them to access a wider target audience.
As the market expands and competition grows, developers have to be sure their project stands out from the crowd. In a competitive market, good developers continuously listen to their audience and learn from previously successful projects, both within Cambodia and other regional markets, to ensure that their buildings are designed to be more attractive and liveable than ever before.