Oxley to launch first strata retail units in Cambodia for sale
By Michael Lim
/ The Edge Property |
Singapore-listed property group Oxley Holdings will be launching its maiden freehold strata-titled retail units at The Bridge in Cambodia for sale at the end of this month. Singapore will be the first stop in a series of road shows that will include Hong Kong and Brunei ahead of its official launch in Cambodia later this year. This is the first time a developer has launched strata-titled retail units for sale in Cambodia, says Eric Low, deputy CEO of Oxley.
The Bridge is Oxley’s maiden joint venture project with Cambodian developer Worldbridge Land, and is located in the city centre of Phnom Penh. The mixed-use development comprises a 762-unit residential tower, which is almost fully sold, and 963 SOHO units, 70% of which have been taken up. The two towers sit on top of a five-storey retail podium with a total of 630 strata retail and F&B units and total net saleable area of 234,703 sq ft. The mall will have a supermarket and a food court.
The strata retail units are sized from 107 sq ft to 1,436 sq ft, while the strata F&B units are larger, ranging from 410 sq ft to 1,617 sq ft. All the strata-titled commercial units will be sold with a freehold tenure. The average price of the retail units is US$750 psf, with absolute prices starting from US$91,000, while the strata F&B units will start from US$239,000.
Oxley will be releasing 183 retail and F&B units for sale in Singapore. According to Oxley, buyers will have to pay a reservation fee of US$1,400 at the launch. A 20% down payment is payable upon signing the sale & purchase agreement, with another 10% payable six months later. The rest is payable upon completion of the project in 2018.
As Cambodian foreign ownership laws do not permit foreigners to buy land and even residential or commercial units on the ground floor, the strata commercial units on the ground floor of The Bridge will be available only to Cambodians, while the upper floors will be open to foreigners.
The Bridge is Oxley’s maiden joint venture project with Worldbridge Land and is located in Phnom Penh
Source: Oxley Holdings
Sell, lease and manage scheme
Another novelty is that instead of an outright sale of the commercial units at The Bridge, the developer will lease out the units and manage them on behalf of the investors. “No one has done such a sell, lease and manage approach in Phnom Penh before,” says Low. “We believe that, by managing the units on behalf of the investors, they will be able to enjoy a higher rental yield, as we will control the tenant mix.”
Oxley is providing a guaranteed rental yield of 6% for the first five years. At the end of the fifth year, it has the option of extending the guaranteed rental yield of at least 6% for five years.
Ching Chiat Kwong, executive chairman and CEO of Oxley, hopes that the extended period of the rental yield guarantee will assure investors that the developer is committed to the project for the long term. “With this strategy, we hope to erase people’s fears that strata retail malls are not well managed and have a poor trade mix, which will result in the deterioration of the mall’s image and value of the units,” he explains. “We can’t afford to let this happen because it will also affect the value of the residential and SOHO units above.”
Management of The Bridge will be handled by Metro Global Solutions, a joint venture company setup in April between Oxley and Metro Global, a Singapore-based international hotel, asset, facilities and property management company. Besides The Bridge, Metro Global Solutions will also manage properties owned and/or developed by Oxley in Singapore and worldwide. Oxley has also appointed CBRE Cambodia as the retail consultant for The Bridge.
Investors who choose to exit the strata commercial units after a number of years can engage either their own property broker to sell it on their behalf or Oxley to assist them. Those who buy the strata commercial units in the secondary market will also have to sign a management agreement with the developer.
According to CBRE Cambodia’s 1Q2016 report, retail rents in Phnom Penh remained broadly stable from January to March. The exception was rents across purpose-built retail malls, which fell 1.6% q-o-q. This trend is expected to continue as retailers review their requirements in the context of upcoming developments coming on stream over the next 12 months. Rental rates for 1Q2016 was US$30.80 psm per month for prime shopping malls and US$48.30 psm per month for the prime retail podium.
Currently, the first and only modern mall in the city centre is Aeon Mall, which is a five-minute drive from The Bridge. The 732,000 sq ft Aeon Mall opened in July 2014 and is fully leased.
Ching (right, with Low): We hope to erase people’s fears that strata retail malls are
not well managed and have a poor trade mix
Potential oversupply?
While there was no new supply in 1Q2016, Sorya Shopping Center, one of Phnom Penh’s first purpose-built shopping malls, announced renovation works, with the mall due to be relaunched as Sorya Center Point. The supply of new retail space in Phnom Penh is projected to increase by 5.4 million sq ft by end-2017, and another 7.5 million sq ft by end 2018, says CBRE. Upcoming mixed-use developments with shopping centres include Parkson’s Phnom Penh City Centre, with a net lettable area of 613,548 sq ft, and Lion City, with 656,604 sq ft of retail space. Both malls are being developed by Malaysia’s Lion Group and will be anchored by Parkson Grand department store. Hongkong Land is also developing Exchange Square in the financial district, which is expected to add 86,000 sq ft of retail space on the market by 1Q2017.
While there are concerns about an oversupply in retail space over the next two years, CEO of Cambodian- based property consultancy Ratanaka Realty, Nguon Chhayleang, believes that there is enough demand from both local and international retailers to absorb it. Besides Aeon Mall, there are no other full-fledged shopping malls in Phnom Penh. Most of the retail space is occupied by high-street shops, he says, and the trades likely to thrive in these new shopping malls are international food chains, department stores, supermarkets, cineplexes and gaming arcades.
With a population of two million, Phnom Penh is considered a small city by Southeast Asian standards, adds Ratanaka’s Nguon. “Its limited retail infrastructure has room for growth,” he says. “Phnom Penh’s long-term economic indicators favour retail since disposable incomes are growing yearly.”
Although traditional markets remain a popular shopping destination in Phnom Penh, increasing disposable income among the capital’s top 20% wealthiest could shift local preference towards more premium retail malls, says Sofia Perez, Knight Frank Cambodia’s research and consultancy manager.
It is no surprise that Cambodia is one of Oxley’s strategic markets after London and Singapore, according to Oxley’s Ching. The company’s second joint venture project with Worldbridge Land is The Peak, which comprises twin 55-storey residential towers containing 1,014 units and a third 55-storey commercial tower with 15 levels of office space and a 300-room Shangri-La hotel. The three towers will sit on a five-storey retail podium. The freehold mixed-use project, which overlooks the Mekong River, is located within the heart of Phnom Penh and a five-minute walk from The Bridge.
On May 3, Oxley and Worldbridge launched the remaining 507 residential units at The Peak Tower 2 for sale. Tower 1 is already half sold. The joint venture partners have not decided whether to sell the strata commercial units in the retail podium. “A lot will depend on the response to the launch of the strata retail units at The Bridge,” says Oxley’s Low. The group is also open to a bulk purchase of all the strata units in the retail podium and office space at The Peak.
Oxley plans to launch its third site in Phnom Penh by year-end. Developed in a joint venture with Worldbridge Land, the third site is also a mixed-use development with a residential tower and a hotel tower sitting on top of a retail podium. Meanwhile, the fourth site in Phnom Penh will be purely residential, says Ching. The project, which has yet to be launched, will contain one block of condominium units and strata landed houses.
This article appeared in the City & Country, Issue 728 (May 16. 2016) of The Edge Singapore
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