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Apartment demand falters in Q3

More apartments are rising in Phnom Penh.
More apartments are rising in Phnom Penh. Hong Menea

Apartment demand falters in Q3

The apartment rental market was flat in the third quarter after strong growth earlier in the year, with oversupply and political tensions among the causes blamed by realty experts.

Chrek Soknim, deputy director of VTrust Property Co, Ltd, said that growth has stagnated after the January-March period saw a quarterly rise of up to 15 per cent.

“The decrease in demand in the third quarter had only one reason: the uncertainty of the political situation,” Soknim said.

Soknim added that a Class-A apartment in Phnom Penh with one room currently has an average monthly rental price of between $1,500 and $1,700, with two rooms costing $1,500-$2,000 and three rooms $2,000-US$5,000. A Class-B apartment with one room is priced at $500-US$1,300 per month, with two rooms $650-$1,500 and three rooms $700-$2,500. A Class-C apartment with one room costs less than $500 per month while with two rooms is $400-$700.

However, Po Eavkong, managing director of Asia Real Estate Cambodia Co, Ltd, rejected Soknim’s appraisal of the situation. The political crisis did not significantly affect the apartment rental market because a stream of foreign investors all requiring living quarters continued to enter the country, Eavkong said.

Asia Real Estate Cambodia saw apartment demand jump about 10 per cent in the first quarter, he said, and conceded that there was a slight decline in the third quarter.

Finding clients for apartments in districts such as Chamkarmon and Daun Penh has not been a problem, Eavkong said, but added that some areas on the outskirts of Phnom Penh like Tuol Kok and Boeung Tum Pun districts are proving more difficult, with vacant apartments accounting for up to 30 per cent of some residential buildings.

Part of the cause of the high vacancy rates in Chroy Changvar and Tuol Kok has been attributed to a recent influx of newly constructed apartment complexes.

KEY Real Estate Co, Ltd general manager Sorn Seap said his agency has not experienced a fall in demand, but also not a surge.

Noun Rithy, general manager at Bunna Reality Group Co, Ltd, sounded a more optimistic tone, saying that although the scene is rather quiet at the moment, his firm has seen a rise of some five to 10 per cent in the third quarter. Average rental prices have also risen, he added.

“The apartment market still has high potential despite supply exceeding demand to some extent,” Rithy said.

Many global investors are looking to put their money in countries that will be a part of the Association of Southeast Asian Nations economic community, which hopes to fully integrate participating countries – including Cambodia – by 2015, according to Rithy.

“Furthermore, I believe that the large apartment supply we are seeing now is not a problem, as the government has policies in place offering incentives to foreign investors and those who want to come to live in Cambodia.”

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