AN apartment building boom in Siem Reap is an indication that the local property market will continue to perform strongly in 2011, according to industry observers.
Dyna Merch, general manager of the newly constructed Yamathya Apartment complex on Airport Road, told The Phnom Penh Post she has already rented seven of its 38 units since building work was completed less than one month ago.
She said one-bedroom apartments were renting for US$450 a month and two-bedrooms for US$650.
“The majority of our leases have been to foreign customers looking for quality apartments in the vicinity of the city and airport,” she said.
Richard Besley, a local real estate broker and proprietor of Home Hunters, said expansion in the apartment rental sector was driven by the increasing amount of expatriate workers based in Siem Reap.
“Right now we’re witnessing a rapid increase in overseas nationals, visiting, living and working in Siem Reap,” he said.
Brothers Vong Thinonn and Ros Hay who run Cambodia Angkor Real Estate echoed Besley’s prediction about the future of the rental market in Siem Reap.
“The local property market has rebounded well since the global financial crisis. We have around 500 apartments and other residential and business properties listed with us, and we have seen an increase in the number of overseas investors starting construction on apartments and condominiums during the last two years,” he said.
However, Siem Reap Properties executive manager Bruno L’Hoste sounded a note of caution over this rapid increase.
“It’s essential developers are conscious of the market demand for the types of apartments they build. The majority of my customers are European expatriates who are used to apartment standards and designs from their home countries,” he said.
“If developers are prepared to spend money installing quality fixtures it greatly increases the occupancy rate of the building by members of this group.”
L’Hoste said the real estate sector in Siem Reap is segmented along ethnic lines with most western expatriates contacting agents who speak the language of their own country.
“Asian nationals looking to rent property usually have their own brokers, while many local Khmers will deal directly with the landlord.” L’Hoste explained this segmentation sometimes creates problems, as the overall demand for apartments may be high, but many lay empty due to the different housing expectations of each group.
“Many of my clients have a preference for Western-style apartments with windows on all sides for increased natural light, which means it’s difficult to place them in the more narrow Korean-styled apartments which have windows only at the front of the building.”
Vong and Hay from Cambodia Angkor Real Estate say the difference between apartments that fill quickly and those which do not often comes down to the quality of the furnishings and the amount of money spent on maintenance by landlords in older buildings.
“Interior decoration is key to attracting clients – keep it modern and clean,” said Vong. He told the Post the increase in apartment construction had led to a rapid rise in land prices in Siem Reap.
“Many of the expensive areas such as along the river and in the vicinity of Pub Street and National Road Six are already fully developed, so land prices are rising in districts where construction space is still available.”
Vong added that the mid-range price for land inside Siem Reap increased from US$39 per square metre in 2001 to more than US$198 per square metre in 2010, and said his company is performing new land valuations to confirm the price in 2011.
Besley said the growth of his property business was an example of the increasing demand for apartment-style accommodation. “My business has greatly exceeded the sales targets I set when we began in August 2010,” he said.
Besley said the majority of his customers were Western professionals and aid workers intending to stay in Cambodia for six to 12 month periods, and 75 percent of these people were placed in apartments.
“The rental market is currently better than the sales market, as many foreign clients are volunteering or working in Cambodia for six to 12 month periods.”
L’Hoste told the Post that while demand for accommodation by expatriates is strong, it does fluctuate depending on the season and political factors such as the Preah Vihear border dispute with Thailand.
He added: “Siem Reap is the fastest growing city in Asia and many new apartment and condominium projects have been started in recent years to take advantage of this.”
L’Hoste said a key element of marketing to expatriates is a strong web presence as many customers will research accommodation in Siem Reap before arriving.
Butterfly Residences general manager Luon Thea said the 12 units in his apartment complex which he manages on behalf of Frangipani Properties have proven to be a good investment for the company.
He said that construction of the apartment complex was completed in 2008 and since then occupancy rates for the complex have been high.
He added that a lot of referrals come by word of mouth due to the quality of the apartments interiors.
Rental prices in the complex ranged from US$950 per month for a one-bedroom apartment, two-bedroom apartments went for US$1,500 and three-bedroom apartments were US$3,200.
Beasley said he operates Home Hunters based on a simple philosophy of never showing apartments to clients where he himself would not want to live.
“The key thing for landlords is not to be greedy. A few hundred extra dollars spent on a nice fridge or television will pay for itself by increasing the occupancy rate of the building.”