Changing trends in Sihanoukville’s economy

Changing trends in  Sihanoukville’s economy

Tourism has always been the key contributor to the Sihanoukville’s economy and while it remains the heartbeat for this coastal city, attention has shifted to demand for real estate with developers and investors looking to the area.

“Sihanoukville is a nice city but business activities have not evolved much. People usually want to buy properties near the beach for the nice view and coziness,’’ explained Chhayleang Ngoun from Ratanaka Realty. Chan Mlop Sokha from Sokha Law Firm also shares this view saying, “The real estate market in Sihanoukville is good. I think people want to buy properties near the beach.”

Tourist arrivals in Sihanoukville have grown consistently with a notable increase in the prominence of Chinese tourists. This is expected to continue in 2017 with an increasing number of international flight connections. Two local airlines in Cambodia – Angkor Air and Bayon Air - currently have daily flights between Sihanoukville to Phnom Penh and Siem Reap. Other international flight operators landing in Sihanoukville include Lucky Air from China, Cathay Dragon from Hong Kong and Singapore’s Silk Air. Another significant trend is the expansion and growing number of affordable accommodation opening up the market to a larger group of visitors. In the future, the Sihanoukville airport expansion will also facilitate further growth across all tourist segments.
The real estate sector in Sihanoukville has also gone through evolving trends. There is a clear shift towards investment properties in Sihanoukville where guaranteed yield offerings have become the market norm. The majority of buyers and investors tend to be interested in buying properties with a guaranteed yield which they can profit from, as well as enjoy the lifestyle aspects of owning a home close to the sea. They are also looking to purchase a property where ownership hassle is limited and a rental management program ensures owners’ incomes are maximised. New residential properties catering to this group are being built in Sihanoukville, such as Blue Bay Condominium, D’Seaview, Royal Bayview Condominium, Sunshine Bay and The Scarlett.

A downside is the current lack of experienced professional property management companies which limits the potential for growth.

The key difference for high-end villas located on the islands close to the mainland of Sihanoukville, compared to the entry level condominiums is the flexibility in usage. Condominiums unit buyers and investors are likely to be more accepting of restricted property usage terms and conditions whereas high-end buyers typically require more flexibility on when they can use their property. A very niche portion of the market is looking for ultra-luxury resort villas and buyers are attracted by what the islands close to Sihanoukville have on offer, especially the blend of quality beaches.

It is a new segment of the market which in the future will likely become the key driver of the resort home market, just like Phuket and Samui Island in Thailand where all the top-end properties have sea-views, and are fully serviced with five-star hotel management. However, these luxury villas are the very niche market accessible only by high-net worth individuals. Affordable investment products make more financial sense and are more in line with the majority of the current demand.

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