Prices soar for luxury villas in coastal cities and towns

The limited number of new luxury villas in Sihanoukville and Koh Rong has led to the increase in price for the villas as demand is relatively strong in this niche market. Market preference has shifted towards hotel-branded products that offer the ability to generate rental income, quality management, five-star services and facilities.

2016 proved to be a good year for Sihanoukville, as the number of mainland Chinese and other Western tourists increased. Tourism in Sihanoukville and the islands has been favourable since the Sihanoukville International Airport resumed operations in 2012 and receiving 33,088 visitors in 2016. 
Infrastructure will be further improved with the upgrade of National Road 4 to a 190km long, 25m wide expressway which is expected to be completed in 2020.

However, Chhayleang Ngoun from Ratanaka Realty believes the price of properties will not go up. “I don’t think the price of residential properties will go up. There has not been any major job creation in the city which in turn does not have any effect on demand for residences.” 

 Mature tourists come to Sihanoukville for the warm, clear waters and stretches of powdery sand. In the past, major real estate players used to be small and inexperienced developers with limited financial backing, but the future trend is that they will be replaced by large operators, which is positive for the market in terms of improvement in the quality of villas and designs.

As tourist traffic has more than doubled over the last 10 years since 2006, this has made coastline properties extremely valuable. Many developers intend to build entertainment centres as well as hotel rooms, condominium buildings, retail shops and casinos, particularly with the Chinese influence becoming noticeable with a large number of new Chinese-backed casinos and hotels.

Increasing development and rising tourist numbers in Sihanoukville brought tourism to the islands. “Most villa sales are in the entry-level segment with prices starting from USD500,000” according to Chan Mlop Sokha from Sokha Law Firm. For example, top-end villas on islands such as Koh Russey, an island in the Koh Rong archipelago 3km from Sihanoukville’s Otres Beach with easy access from Sihanoukville. Despite the on-going demand in the luxury villa segment, buyers face a limited supply. However, the proportion of luxury villas priced above USD500,000 remains limited and accounts for only a small percentage of the villa market. For example, the 48-key Alila resort hotel by City Star includes one, two and four-bedroom villas for sale. Facilities include two five-star restaurants, a beachfront spa, a kids’ club, chef and butler services and a host of water sports such as snorkelling and diving.

Koh Russey is set to have a number luxury resort complex by 2020. The island is a 15-minute speedboat ride away from the Sihanoukville pier. Currently Siem Reap receives over 3 million tourists each year and many of them prefer to go to the beach. In the past, very few would choose to go the beach in Cambodia due to limited hotels and resorts available. However, this is quickly being replaced by many new developments. Major improvements are being made and this is certainly a positive thing for the real estate market in the coastal cities and towns.

In the end, price will definitely shift for villa developments in the upcoming years. I also expect that with the further growth in tourist arrivals this will have a positive effect on resort property sales.

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