Prime Locations Keep Allure for Investors

Land in prime locations is becoming scarce in Phnom Penh. As a result, developers are turning to other new locations. Boeung Keng Kang 1 and Diamond Island continue to remain the most desirable locations for luxury condominiums, with riverside areas of Chroy Changva emerging as a new high-end site.

Location is not the only factor that brings up the price premium. In real estate, a top location also requires the presence of other mixed-use developments, for example, a cluster of good hotels, retail and schools of a similar quality. Because of this reason, condominiums in Boeung Keng Kang 1 are easy to rent out with a very good yield, as they have a quality location close to park and numerous international schools.

Boeung Keng Kang 1 has the highest average price per square metre in Phnom Penh. The most attractive price range worth the investment for a condominium unit at this location is USD2,500 to USD3,500 per square metre. High-end condominium units in this area are easy to rent out with a very good yield, as they have a quality location close to the parks and riverside. In general, it is very difficult to find a plot to develop a high-rise residential project with a park view in Phnom Penh. Because of this, the Boeung Keng Kang 1 location has a very high take-up rate.

Due to land scarcity for new developments, luxury condominium developers have moved to the Boeung Keng Kang 2 and Boeung Keng Kang 3 areas in the past two years.

However, the most popular areas for luxury residential projects with sky-high sales prices are still confined to Boeung Keng Kang 1 and towards the riverside. In the past, developers offered a wide range of projects in this area, from mid-range to luxury properties. But new projects launched these days have shifted to luxury developments. 

This includes Embassy Central and 352 Platinum as well as the recently launched Imperial Crown Condominium developed by Taiwanese company Rock Stone International. Because of limited land plots for future developments, it has caused prices of land to soar too high for any low to medium range condominium projects. Therefore, the new destination for luxury residential projects is Boeung Keng Kang 2 and Boeung Keng Kang 3, as well as the riverside area of Chroy Changva.

“I think demand for residential units in prime locations of Phnom Penh is still big. I foresee that people will get fed up commuting back and forth from home to work and getting stuck in the traffic. Living in a condo will save them time and money. They also have more quality time to spend with their family if they choose to live in a prime location condo,” explained Chhayleang Nguon, CEO of Ratanaka Realty.

Two new shopping centres are located along Russian Boulevard: The Gateway Shopping Arcade and Parkson Mall. The average price of The Gateway has risen to nearly over USD3,000 per square metre. It is worth noting that the prices of condominium units on main roads are higher than those located further inside streets.

Launches in the luxury residential market have been slow because developers had difficulty finding good locations for development. On the other hand, given the sluggish market and poor sentiment, some developers were in no hurry to introduce new luxury projects. At the same time, they continued to pay record prices for land in prime locations. Sales of existing projects and resale were also affected, as buyers and investors took a wait-and-see attitude.

But sales should be good in the long term, considering continuous demand for long-term investment and from end-users. As a result, the capital value of condominium units in the best locations will continue to appreciate over the coming years. Although prices will not increase sharply every year, potential appreciation could be 30-40% by 2020 to 2025. “In the next three to four years, I believe prices for residential condominium units still in demand will go up modestly,” according to Chan Mlop Sokha from Sokha Law Firm.

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