2014 Phnom Penh Condo Study Released
New market research on Phnom Penh’s condominium sector by global real estate agency Century 21 has identified some of the key factors behind the healthy growth of the condo market. These include; the impacts from ASEAN integration; rising incomes especially among working couples; increased population; better housing loan services; and the trend of citizens desiring a more modern lifestyle.
According to a recent study by Park Café, 13% of the professional population in Phnom Penh earns between US$600 to US$1,000 per month, while 6% of the population earn between US$1,000 to US$2,000 per month.
Released in December 2014, the report suggests the correlation between increasing demand on housing with the increased number of households, with the trend steadily shifting from extended families to nuclear families, who potentially look to buy separate housing units themselves.
This trend is backed up by the Phnom Penh land price survey in 2014 by Vtrust Group that showed up to 27% of property sellers, both of whom are real estate and non-real estate individuals, are anticipating buying another housing unit in 2015 and 2016. This may reflect a trend among home buyers of buying a house as an investment or relocating to another more desirable housing unit.
Availability of longer-term housing loans by banks has largely contributed to the rising demand for housing, since this has enabled middle-income buyers to afford installment plans for housing and condominium units. Housing loans have soared, reaching US$330 million in 2012, growing on average 20% year-on-year. In the first two months of 2013, total housing loans grew to US$344.5 million.
SUPPLY SIDE
By the end of 2014, the study found that only 13 completed condo projects with about 3,090 units were available on the market. These include; De Castle-TK 24 with 300 units (2008), and De Castle-TK 83 with 200 units (2009) in Touk Kork District; and the partial completion of Camko City (R1) with 6 condominium towers out of 9 completed towers with over 1,000 units which is behind its scheduled completion date of 2010.
By 2018, the projected total supply will reach about 10,000 units with 30 condo projects, and 18 projects currently under construction. Feasibility studies for more projects are underway by Asian investors from Macau, Taiwan, Hong Kong, and others.
From 2014 onwards, the condo market is projected to grow considerably due to major developments in the eastern part of Phnom Penh such as Bali Scenery (2016), Casa Meridian (2017), D.I. Rivera (2017), Diamond One (2017), and the Bridge (2018). While the average growth rate of condominium supply from 2008 to 2014 is 20% year-over-year due to market fluctuation, from 2015 to 2018 the average growth rate of supply is projected to be more stable, growing at 40% year-over-year.
DEMAND SIDE
Demand for condominium units has increased steadily despite a current oversupply. Sales rates of units, both off-plan and post-plan, has been reported by developers as reaching an average of 70%.
However, most condominium buildings are still largely vacant due to two reasons. Firstly, many buyers are international purchasers who buy units for investment or expect to resell at a profit. Secondly, there is a slow cultural shift among the local population towards relocating to such residences.
Despite the high rate of reported sales by developers, it has been found that some of the reported figures are based on small deposits rather than actual sales transactions where the rate remains low.
MARKET ENVIRONMENT
The condominium market is still at a nascent stage and is projected to be well-saturated within the next 10 years because the trend of moving toward a condo lifestyle is still slow. Most buyers of luxurious condo units are local and international investors who purchase for investment opportunities either to rent or resell at a profit.
Based on the study, while 5% of the projects have gone behind the schedule, 31% were already complete, and 64% are still under construction and expected to be finished between 2015 and 2018.
SIZES OF CONDOMINIUM UNITS
While the terms condominium and apartment may be similar elsewhere, they are legally different in Cambodia. In Cambodia, a condominium is usually a high-rise building with multi-freehold strata titles that allows for both foreign and domestic owners with ownership terms as lease hold or freehold based on location. This term is different from an apartment (usually a serviced apartment), which is usually owned by only one legal owner, serving only as rental properties.
Condominium developments in Phnom Penh come with different ranges of unit sizes. Similar to serviced apartments, the average size of one-bedroom condo unit is about 80sqm, while that of two-bedroom units is 120sqm, and three-bedroom units 190sqm.
For minimum size, one-bedroom units often come up with 50sqm, while that of two-bed room units is about 65sqm. The minimum size for three-bedroom condo units is 90sqm.
The maximum size of condominium units starts with 150sqm for one-bedroom units, while 200sqm for two-bedroom units. The three-bedroom, the units usually come up with 440sqm to 500sqm.
Penthouses are usually the same size as two and three bedroom units, though four-bedroom units are also available. De Castle Royal offers five and eight-bedroom units at between 400-500sqm.
CONDOMINIUM PRICES
The average price of condominium units in Phnom Penh is about US$1,900 per square meter. The minimum market price is US$1,100 per square meter, while luxurious condominium developments such as The Bridge have the highest current asking prices at US$3,300 per square meter.
By unit, the average two-bedroom unit costs US$250,000. The minimum asking price of condominium units is $21,000 per unit, offered by Condo 999 Project, while the maximum asking price reaches slightly over US$1 million, offered by De Castle Royal, Casa Meridian, and The Bridge.
SCALE OF CONDOMINIUM PROJECTS
Condominium developments often represent large-scale investments in residential property. The smallest condo development project cost US$10 million while a medium-scale project requires US$70 million, while the 75%-scaled project was about US$250 million. The largest project ever developed has been the US$700 million D.I. Rivera.
Most condo development projects in Cambodia depend on pre-sales and off-plan sales to fund the entire project.
CONDOMINIUM CONCENTRATIONS
In the past six years, the development of condominiums has been concentrated in the western part of Phnom Penh, namely Toul Kork, where a number of De Castle developments were the first in the capital. Known as the most desirable residential area and home to many of the rich and elite, Toul Kork has been favored by developers thanks to its non-industrial/commercial nature.
Since then, condo developments have also shifted to the north-western part of the Phnom Penh, with Korean developer World City Co., Ltd. building “Camko City” in Toul Sangke, Russey Keo District, adjacent to Toul Kork District, which has brought thousands of units to the area.
By the end of 2014, 38% of the total condo supply was concentrated in Touk Kork District, with 23% of the major developments in Russey Keo District namely; Camko City, Galaxy Residence, and Mekong View Tower.
Although mid-high apartment buildings dominate the Boeng Keng Kang areas (Chamkarmorn), there are not many high-rise condo developments due to height permit restrictions. In Boeng Keng Kang communes, the supply of condominiums was about 23% of the completed projects. There were only 8% of the condo developments in Daun Penh District and another 8% in Po Senchey.
By 2018, the development of condominiums will change direction from the West to the East of Phnom Penh. More than 50% of the total condo supply will be concentrated in Chamkarmorn District, followed by 38% in Toul Kork.
By communes (Sangkat), most condominiums will be concentrated in Tonle Bassac (28%), the majority of which are on Diamond Island, and Boeng Keng Kang areas (24%). Condo developments will also be concentrated in other communes such as Olympic (10%) and Chroy Changva (10%).
The rapid shift in the direction of condominium concentration to the East is due to the recent major developments in Tonle Bassac, especially on Diamond Island, where a number of international community development projects have been mapped and due for completion within the next 5 years.
This further attracts both investment and developers to potentially map out many other projects in the eastern part of the capital.
MAJOR DEVELOPERS
Major recent condominium developments have shifted to the East of the capital including The Bridge, D.I. Rivera, Casa Meridian, Diamond One, and Bali Scenery.
In the commercial district of Phnom Penh, especially Olympic Commune, there are some recent major developments such Olympia City, Sky Villa, and Times Centre, all of which will bring about thousands of housing and condominium units ?
Building Total Units (Residential) Avg. Price (per sqm) Location Developer Completion
The Bridge 762 US$3,000 Tonle Bassac Worldbridge Land, Oxley International Holdings 2017
D.I. Rivera 900 US$2,500 Diamond Island OCIC 2017
Casa Meridian 414 US$2,000 Diamond Island M.D. H.K Property 2017
Diamond One 372 US$1,500 Diamond Island Xin Tian Jian (Cambodia) Real Estate Development Co, Ltd., & OCIC 2017
Bali Scenery 522 $1,500 Tonle Bassac Bali Resort 2016
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