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Land Prices rise in prime areas

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Land Prices rise in prime areas

Property prices in Phnom Penh’s prime residential locations increased by 10.7 per cent in the second half of 2014, while prime office development land prices increased by 11.1 per cent, according to Knight Frank Prime Asia Development Land Indices.

The research showed that Bengaluru, Phnom Penh and Bangkok all saw big increases in residential and office property prices. Bengaluru had the largest increase in the price of residential sites with 11.0 per cent, followed by Phnom Penh with 10.7 per cent and Jakarta with 8.0 per cent.

Ross Wheble, the independent global property consultancy’s country manager, said that as better quality developments are launched in Phnom Penh, both residential and commercial, projects can achieve higher selling prices and rental rates which enable developers to increase profit margins. This results in demand growth for land that drives up prices.

For offices, the research focused on the area around Canadia Tower, he said.

Wheble told Post Property that the land value was calculated using the “residual method” of valuation, which is based on the gross development value of a project minus construction, finance, legal and marketing costs and an allowance for developer’s profit.

“The performance of landed housing developments remains strong and we expect this trend will continue for the foreseeable future with Cambodian buyers preferring to own landed housing. Furthermore, the restriction on foreign buyers owning land limits speculation thus mitigates the risk of a pricing bubble,” he said.

Phnom Penh was the star performer with residential and office land prices registering 10.7 per cent and 11.1 per cent increases respectively over the last six month of 2014, stated the report.

Residential properties continued to enjoy robust sales to overseas investors, particularly Taiwanese, Japanese and Singapore at benchmark prices, while commercial buildings witnessed sustained healthy leasing demand from foreign firms seeking to tap into the strong economic growth in the city, the report added.

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