Warehouses enjoy surging demand

Rising demand means rising profit for those renting out warehouse space in Phnom Penh.
Rising demand means rising profit for those renting out warehouse space in Phnom Penh. PHOTO SUPPLIED

Warehouses enjoy surging demand

Things are looking up for the capital city’s warehouse rental market, with demand increasing significantly and prices rising about 10 per cent so far this year.

Economic growth is driving the demand for goods storage facilities, especially in Phnom Penh and on the outskirts of the city in areas such as Stung Meanchey near Northbridge International School, Veng Sreng Street, Po Chen Tong and Chom Chao, CL Realty Co, Ltd CEO Chailin Sear said.

“Nowadays those who have warehouses for rent are not worried about finding customers,” he said, adding that those with floor space between 500 and 3,000 square metres are doing the best.

The average warehouse rental price is between $2 and $3 per square metre a month and rental prices have risen about 10 per cent since the third quarter last year, Chailin said.

Most people renting warehouses are Cambodian, Chinese, Korean, Malaysian or Thai.

Van Chanthorn, managing director of Town Real Estate, talked up the potential of warehouses as a long-term investment, especially those of at least 1,000 square metres. The rental price in Phnom Penh is currently between $1.5 and $2 per square metre a month.

The highest demand is being experienced in areas with access to land, air and water services in western Phnom Penh, such as Chamka Doung, Lou 5, Veng Sreng Street and National Road numbers 3 and 4, he added.

Chanthorn said building new warehouses is a smart investment because “economic growth and population growth raise demand for consumer goods, so warehouses to store the materials and goods will also see great demand”.

There are, however, many factors that prospective warehouse owners must take into consideration, Chanthorn said, pointing to requirements such as high roofs, good lighting, a steady flow of fresh air, stable electricity and clean water supplies, drainage and sufficiently sized loading docks.

Dith Channa, general manager of VMC Real Estate Cambodia, said the biggest surge in demand came in the first half of this year, with growth slowing down in recent months.

The average price of small-scale warehouses (less than 2,000 square metres) in Phnom Penh is between $3 and $4 per square metre a month, with space on the outskirts costing from $2 to $3, Channa said.

Larger warehouses (2,000 to 5,000 square metres) in the capital range from $2 to $2.2 a square metre, while those on the outskirts cost $1.5 to $1.8.

Even amid the boom, the political environment has made itself felt in the sector, Channa said.

“In the first half of the year, a lot of customers were asking my company to help find them a warehouse. After the election demand decreased as firms waited to see the formation of a new government before making new investments.”

Warehouse investment is now picking up again, especially in Chamka Doung, Chom Chao, Tuol Sangke, Chbar Ampov and Chroy chang var, he added.

He also said he expects demand to increase significantly when Cambodia fully integrates into the regional economy at the end of 2015, bringing new waves of investors to the country.

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