Cambodia projects to benefit from improved infrastructure

/ EdgeProp Singapore
April 26, 2019 3:00 PM SGT
In recent years, Cambodia’s economy has been recording consistent growth of around 7% per annum, according to data from the World Bank. This is expected to continue based on recent estimates from the National Bank of Cambodia that placed 2019 growth at approximately 7%.
On the back of economic growth, the nation is seeing a trend of increased urbanisation due to higher adult literacy rate and an increase in minimum wage. The adult literacy rate in the country was at 82.5% in 2017, based on the Cambodia Socio-Economic Survey 2017 released in November 2018. Meanwhile, wages increased 7% in 2018, according to the World Bank.
Against this backdrop, CBRE Cambodia anticipates a diversification of property development in the country, with branded hotels, hospitals and education leading this charge. Across all realty sectors, supply is growing.
Focus on Phnom Penh
In the residential sector, the pipeline of new supply this year is estimated to be 31,112 units compared with 14,173 units in 2018. According to CBRE Cambodia, the increase is due to project delays. Despite the increase, CBRE Cambodia adds that prices have remained stable.
Developers have also been turning their attention to the affordable end of the market. Richard Leech, executive director of CBRE Cambodia, highlights that previously, the mid-range and high-end segments were in the spotlight due to foreign investment. As local buyers grow increasingly active in the market, demand for affordable projects has increased.
CBRE Cambodia anticipates a diversification of property developments in the country, with branded hotels, hospitals and education leading this charge
Despite this shift, Leech sees investment potential in Phnom Penh’s luxury real estate sector. Most luxury projects in Phnom Penh are relatively small in scale, typically containing fewer than 300 units, he states.
In most circumstances, he sees developers achieving more than 80% in pre-sales while others are able to sell out a project in its early phases if the project is positioned to appeal to both local and foreign buyers.
Luxury real estate in Phnom Penh generally fares well, with developments such as Oxley Holdings’ The Peak selling well and at good prices,” says Leech.
While Cambodia is a small market compared with its neighbouring countries, he notes that prices are...