Condominium Development Shifts to Affordability After Decrease in Roi on High-end

• Proeksa Meas
• 11 July 2019
• Local News
• 3431 Views

The development trend in the Phnom Penh condominium market has now shifted toward the affordable segment following a decrease in return of investment on the high-end segment which industry insiders believe is a positive sign for the market.

According to the recent Q2 2019 Phnom Penh Market Update report by international real estate agent CBRE Cambodia, eight new condominium projects totaling 5,853 units were launched in the second quarter of 2019 with most projects targeting the affordable segment.

Of the total newly-launched projects, 56% (or 3,252 units) were affordable projects located in Sen Sok, Chroy Chongva, and Mean Chey districts.

According to CBRE Cambodia Director Ms Ann Sothida, this changing trend is because the return of investment from putting out high-end units for rent, a market driven by foreign investors, had fallen.

“Before, condos were focused on foreigners; they invested in Cambodia and got a return on investment of between 8 to 10%, but now the income from rents has falled to only 6%,” Ms Sothida said.

“The condominium market does not have so much potential for foreigners [buyer], that is why developers have a challenge to sell to foreign investors, so they continue to focus on end-user buyers,” she added.

According to Ms Sothida, the move towards affordable projects with a price range of about US$1,500 per square metre or US$75,000 per unit is a positive sign for the market.

“This trend is a success; the local market is a market that has a foundation and the condominium buildings will have people living in them. If they [developer] sell to only foreigners, it makes the market have risk because they [foreign] invest but they do not live in the condo,” she said.