PHNOM PENH: During yesterday’s webinar, Mr. Lawrence Lennon, Managing Director of CBRE Cambodia, highlighted that the real estate market in the capital city of Phnom Penh is experiencing its toughest competition yet. Lennon emphasized the need for industry players to update their strategies to suit the 2023 market, which will differ significantly from the past decade due to increased supply and lackluster demand.
CBRE’s Q1 2023 market insights webinar focused on Phnom Penh’s commercial and residential sectors, revealing that the office, retail, and industrial sectors have experienced an increase in supply. The hotel industry has seen a surge in supply as well, with four new notable completions in the 4-star and international brand categories such as Fairfield, Fraser, and Accor’s Ibis.
The office market has experienced a rise of 203,000 sqm, which will push the total supply by 21% to over 1,115,000 sqm by the end of the year. The retail market is also expected to rise, with the completion of the Prince International Plaza in Q1 resulting in a supply boost of 18% or over 119,000 sqm, which is expected to be completed by year-end.
Additionally, two new condominium launches were observed in Q1, adding 1,300 units to the stock, and another five projects are set to add an additional 3,900 units, resulting in a total of 58,000 units. This represents a 20% increase year on year in the condo supply.
However, during the period, the property market experienced a decrease in the supply of landed properties. According to reports by CBRE, it was the slowest quarter for project launches in the past 5 years. The data showed that there were only 4 new launches and 7 completions, whereas historically there were usually between 20 to 30 new launches per quarter.
Mrs. Kinkesa Kim said the slowdown in the landed property market is a result of rising interest rates and tighter financial options from banks and financial institutions. Developers have to provide longer payment terms to make their products more affordable. Therefore, handover times also got extended from the usual period of 24 months to 36 months as a reflection of slower cash inflow from buyers.