PHNOM PENH: Recently, CBRE Cambodia showed updates on Phnom Penh’s commercial (office, retail & industrial) and residential real estate within the first half of 2023.
New office supply in the market is expected to continue to climb up this year with an addition of 215,00 sqm of office space to be complete within 2023, pushing the total supply by 24% to over 1 million sqm. In the first half of 2023, approximately 39% of the expected new supply this year was added to the existing supply.
The average occupancy rate across the market (centrally owned and strata title spaces) further decreased from 60% in the previous quarter to 58%.
Although, quoting office rents across all grades in the central business district and no-central business district increased between 2% to 4% H-o-H, achieved rents remained the same. Since office asking rents have experienced a huge drop of up to 20% since the peak in 2019, quoting rents have plateaued in the last 18 months.
This is because rather than reducing quoting rents, landlords opt for other incentives such as free parking space, longer rent-free periods, or tenant improvements. This means that effective rents are still being compressed.
“With the upcoming supply over the rest of 2023 and the fewer business expansions, thus low new demand of office spaces, we expect further pressure of office rents and occupancy level during the remaining period of 2023,” said Daluch Chin, Senior Manager, Valuation&Advisory of CBRE Cambodia.
“Cambodia being more globalized than ever faces a range of headwinds. The challenges observed over the first six months of 2023 are expected to persist as we observe a slowdown in the global macro context. ” Said Lawrence Lennon, Managing Director of CBRE Cambodia.
