Property investments in condominium or office spaces in Cambodia

Cambodia continues to be an attractive real estate investment destination and the country has emerged as one of the key real estate investment hubs in the Southeast Asian region thanks to its geographic advantages. It’s attractiveness in the eyes of foreign corporate investors to date has been the lack of any significant risk to hold them back. Taiwan and Singapore remain the main source of key foreign corporate investors while in the real estate market, both Japanese and Chinese developers have started to become dominant.

Several new condominium projects have been recently launched by joint ventures between Cambodian partners and major oversea developers including Sina Plaza, a 37-floor mixed-use office and hotel development. Chinese developers have also partnered with Cambodian developers for large-sized projects. Investment from foreign institutional and corporate investors this year risen significantly with large Japanese and Chinese developers entering new joint ventures with local partners at the project level. 

On the development side, the condominium sector is still attracting investment from overseas. This is largely because it offers the highest rates of return in Southeast Asia, and also with a shorter payback period compared to the other property types. 
Condominiums remain a major attraction for both foreign and local investors and buyers. The market anticipates having a large number of new condominium projects soon reaching completion stage. For the past few years, the number of foreign buyers of condominiums in the prime areas of Phnom Penh has grown significantly. In the past, when the concept of condominiums was first introduced in Cambodia, the ratio of Cambodian buyers to foreign buyers stood at over 50 percent. However, recently foreigners' share has increased to over 60 percent. 

For office investments, this is typically a long-term investment with little opportunity for speculation. Despite this, foreign players have been dominant in the Phnom Penh's office sector. However, there are a few challenges discouraging foreign investment. First, very few office buildings have been put up for sale in Phnom Penh. Second, competition for existing and upcoming office space in Phnom Penh is extremely high as many well-capitalised local and foreign investors are looking to grab investment opportunities in Phnom Penh's rising office market.

“I believe commercial properties will be of great value in the future. I believe that demand for commercial rentals will also grow significantly in the future as more and more companies start to move their offices from a traditional detached house to a more professional building with better security and amenities,” said Chhayleang Nguon, CEO of Ratanaka Realty.

In Phnom Penh, annual office supply has always been thin while demand is also finite. “As of today, the demand for office spaces is still very limited. I would not suggest any buyers to invest in office spaces,” warned Chan Mlop Sokha.

In the long term, many developers and realtors are confident that Cambodia's continued improvement in infrastructure, geographical advantages, skilled labour and relatively low cost of doing business will draw further foreign investment into the country's real estate market. 

Cambodia is considered as a less than mature real estate market, but this is a market that typically offers attractive yields.  Other major cities like Bangkok, Jakarta, Kuala Lumpur and Singapore will continue to be the most active investment markets in ASEAN owing to their high level of transparency and large quantity of investment-grade assets. On the other hand, there are still limitations such as undeveloped infrastructure, a lack of business and property laws, and other restrictions that draw away investors. 

In the end, the local real estate market can appeal to foreign investors only when a nation’s government economic policies are sound and the consumer and business sentiment improves. 

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