CBRE Residential Global Living Report, released this year by CBRE International, has seen two Asian real estate markets ranking in the top five highest value residential property markets worldwide, as decided by average property prices. This regional boom appears promising for the Cambodian residential property market as a parallel trend occurs, albeit, on a smaller scale in the Kingdom’s residential real estate market.
The Global Living Report examined property markets in 31 affluent cities around the world, including hubs such as Shanghai, Paris, New York, Tokyo, London and Madrid.
Hong Kong ranked number one in the Global Living Report this year, having the highest average price per square foot in the world. Singapore had the highest property price by capital value in the world, according to the report. However, when viewed on a per square foot basis it came in fifth internationally.
In Hong Kong, property prices leaped by 13.5 per cent last year alone, meaning the market saw 20 per cent average annual price growth, ranking it the second fastest residential growth market worldwide.
The report cites increased Chinese investment as a key stimulant behind this boom: “As Hong Kong attracts a substantial amount of Chinese (as well as other international buyers), the market is likely to be buoyed by the recent Chinese stock market crash, which may lead to investors finding alternative homes, such as property, for their capital.”
In Hong Kong only 65 per cent of all residential properties are owned for occupation, the report read.
Cambodia, while being pegged to the US dollar, could also benefit from this type of investor seeking to diversify their assets.
Anthony Galliano, Group CEO of Cambodian Investment Management, believes that “Cambodia’s real estate market had been historically ignored as the country wasn’t viewed as a ‘quality of life’ or ‘property investment’ destination by foreign investors.”
With Hong Kong and Singapore being Asia’s two most expensive markets, as well as world’s priciest markets, he said that developers are seeking for countries like Cambodia that are more economically viable.
Knight Frank’s Cambodian country manager Ross Wheble explained to Post Property last September, that Cambodia “has benefited [from] an influx of both foreign developers and investors seeking to take advantage of the comparatively low property prices and the relative ease at which foreign buyers can acquire freehold property (above ground floor level).”
Galliano suggests that the surge in investment in Cambodia’s property market has been driven by economic fundamentals, namely, “a more positive image of the country from frontier to developing market, and to an extent, herd instinct.”
However, as far as the cyclical nature of how property markets operate, he warned that positive indicators may not always last.
“While property prices currently remain attractive, and the country, more specifically Phnom Penh, has welcomed developers with open arms, inevitably once you do the math it is blatantly obviously there will be oversupply given the expected developments coming online in the next two years,” he said.
“Therefore while it is all rosy today, I expect turbulence in property prices in the medium-term,” he said. James Whitehead is content director at realestate.com.kh