Now that the eventful year that was 2013 is behind us, it’s time focus on what 2014 holds in store for Phnom Penh’s property sector. The coming year promises to be an interesting one, with many big projects coming online and other developments that will continue to change the face of Cambodia’s capital.
It’s impossible to see into the future, but there’s nothing wrong with making some educated guesses regarding what we feel will define the next 12 months. Here are the themes that we think will shape the city in 2014.
Two major road infrastructure projects are scheduled to go into operation in 2014, both aimed at reducing traffic congestion and integrating outlying suburbs into the main urban footprint.
Upstream from the riverside dining and entertainment area, the expanded bridge to Chroy Changvar will improve traffic flow between the city center and the opposite side of the Tonle Sap River. This should push prices upward as the idea of a “new riverside” between two rivers continues to take hold among current and potential property investors.
The city’s third flyover, or ‘skybridge’, this one in Stung Meanchey sangkat, will improve traffic flow out of the capital toward the south while also bringing Stung Meanchey closer to the city. Despite its current low appeal, the convenient traffic infrastructure nearby should push prices in this sangkat higher.
Retail to go large
In retail, the gargantuan (by Phnom Penh standards) Aeon Mall and luxury retail area at Vattanac Capital Tower are poised to have major impacts on consumption in the capital. With more than $200 million in investment behind it, Aeon Mall will offer diverse shopping, eating and entertainment options. It will also be the largest air-conditioned space in town.
For those looking to drop major coin on luxury brands, Vattanac Capital Tower’s retail zonein its lower levels will be the only place to find several global luxury brands which will make their debut in the kingdom.
Grade A offices to arrive
Vattanac Capital Tower will also be home to the first international Grade A office space in Cambodia, beginning in spring 2014. Rather than competing with other office buildings on Monivong, primarily Canadia Bank Tower and Phnom Penh Tower, Vattanac will complement the central business district that is emerging on this important north-south artery.
The office zone of Vattanac Capital Tower will bring new levels of security, lift efficiency, headroom and even five-star washrooms to Phnom Penh. For multinationals and domestic heavyhitters, this will be a prestige business destination for years to come.
Interest by foreigners in Cambodian property investment has grown steadily since the passing of the law allowing non-Cambodians to own condominiums in their own name with strata title. When it is completed in the first half of this year, De Castle Royal will be the first luxury condominium project to open in the capital’s posh BKK1 district.
Other residential developments that will present new options for Cambodian investors, joint foreign/local investment or renting in the coming year include the faux-occidental gated community at La Seine on Koh Pich/Diamond Island, one of the island’s largest developments. A portion of Camko City will also come online in 2014, as will the 10-storey Galaxy condominium building across the Tonle Sap River in Chroy Changvar.
Traffic to become prioritised
As an up-and-coming business destination in Southeast Asia, Phnom Penh has a lot to offer. But it does have some obvious shortcomings in the infrastructure department. With more vehicles on the city’s streets each day and little possibility of widening roads in the city centre, the municipal government will need to focus on managing growing traffic pressure now and in the future.
One of the most obvious ways to do this is through public transportation, which is currently nonexistent on the city’s streets. A 7.5-kilometre trial bus route linking Monivong Boulevard and Chbar Ampov Market will launch operations in February. City officials have said that if the trial is successful, it will become permanent – and presumably grow in the future. This time around – a similar trial was scuttled more than a decade ago due to inability to compete with motorcycles – the trial needs to be made permanent. Hopefully it will.
Chinese, Japanese investment to grow
Several external factors are playing into Phnom Penh ability to attract growing investment from China and Japan, which should continue this year. Phnom Penh’s economic value as a growing market and political value as a capital of a country in a region where both Asian powers are vying for influence should guarantee more inflows of cash into the property sector.
China’s current overseas investment spree (some of which should be classified as capital flight) has already pushed property values toward the sky in major markets such as Hong Kong, London, New York and Vancouver. For non-millionaire Chinese, Southeast Asian cities such as Phnom Penh offer more affordable options in a fast-growing market. Chinese businesses that are looking to reduce costs are also increasingly looking at Phnom Penh and elsewhere in Cambodia as a place to relocate light manufacturing.
The current unrest in Thailand, where large amounts of Japan’s Southeast Asian industrial operations are located, is certainly making Cambodia a more appealing investment destination. If the political climate in Thailand continues to worsen, don’t be surprised if major Japanese investments previously earmarked for Thailand are announced in Phnom Penh instead.
Regardless of what happens this year, rest assured that this section of the Post will continue to cover major developments and important issues. We wish our readers a happy and healthy 2014.