Potential real estate investors in Siem Reap are being advised to look towards retail strips rather than hotels, according to Cambodian real estate professionals.
Knight Frank’s Cambodia chief, Sunny Soo, said that while the hotel industry is well supplied, the town lacks an organised retail strip.
“I think it can have a retail street. A more developed retail strip like you might find in Bali or Phuket would do well. It just doesn’t have a very organised retail street right now,” Soo said.
He said there are more than enough hotels in the area, leaving it less attractive to hotel investors.
“Siem Reap has developed to the stage whereby the supply is more than sufficient to cater for the existing and future demand,” Soo said, adding that with hotels, the occupancy rate isn’t that strong, apart from a few which are doing fairly well.
“But new hotels usually do not perform that well. I do not know if the area can fit in another five-star hotel.”
His thoughts are echoed by CBRE’s Simon Griffiths. “Today there is an oversupply of hotels in Siem Reap. Tourism figures are increasing and demand is in line with supply,” Griffiths.
“Developers have been looking at possible residential developments for expats and the growing middle-class market.
So that’s a shift away from tourism and retail is certainly a viable option, catering for people with disposable income. But that’s still a few years away.”
Griffiths said there has been increasing developer interest in the town.
“We are seeing an increase in activity. Just in the last couple of months CBRE has had to go up there a few times.
There are more and more people approaching us,” Griffiths said.
Soo said the area could also cater to a few more apartments, but investors looking at building for the expat retiree and holiday-home market are more interested in areas like Sihanoukville and Phnom Penh.
“You could have a few apartments in Siem Reap, but not many,” Soo said. “I can’t say whether the market is now justified for serviced apartments.”
Overall though, he said overseas investors, particularly Koreans, are interested in the area. His office receives regular interest in investing in Siem Reap.
Foreign ownership is tricky though, with foreign investors allowed to own just 49 per cent of a project.
Even finding land to buy in Siem Reap can be difficult, with a dearth of official real estate agents based in the town.
Buyers of smaller plots of land tend to enlist the help of a tuk-tuk driver with knowledge of for-sale signs. For larger purchases, buyers are advised by agents to approach international real estate firms who can negotiate with large landholders in the area.
“There are a number of large landholders who own a lot of land. We can negotiate with them for buyers. For larger assets, approaching a large company is the best way,” Griffiths said.