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Excess office space keeps prices down in capital

Excess office space keeps prices down in capital

Rental prices for prime Phnom Penh office space remained stable in the third quarter of 2014, according to the Knight Frank Asia Pacific Prime Office Rental Index.

Knight Frank country manager Ross Wheble said this was thanks to a 7.9 per cent increase in the vacancy rate that was largely attributable to the Cambodian Stock Exchange vacating two floors of accommodation in the Canadia Tower. The CSX has relocated to a standalone building near Wat Phnom.

“The office rents remained unchanged because there is currently sufficient supply to meet demand, thus landlords are not able to increase rents,” Wheble said.

“As more office space is leased [meaning less supply], landlords can then start increasing rents again,” he said

The report said that monthly prime office rent prices in the capital increased by 1.2 per cent to $28.2 per square metre (after services, taxes and charges) in the third quarter.

He said Phnom Penh might see a moderate decline in the rental rate because there was more supply than demand thanks to the completion of the Vattanac tower.

“This is typical in most markets – you need the supply of office space to encourage new tenants to enter the market,” he said.

“I think it still remains positive, as new supply is not scheduled for completion until 2017 with Hongkong Land’s under-construction project, so it should allow time for the current supply to be absorbed into the market.”

He said rents consolidated in the third quarter due to a “general lack of activity” but there had been a “substantial pick up” in the fourth quarter.

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