2021: Investing in Real Estate? What and Where?

• 9 February 2021
• Local News
• 12102 Views

In 2020, the real estate market in Cambodia came under pressure from the COVID-19 pandemic. According to the Cambodia Valuers and Estate Agents Association (CVEA), the number of transactions dropped by 15% – 20%. CBRE Cambodia has also reported the retail market is most affected, followed by the office and condo sectors. (Read more)

What about 2021? Given the introduction of the COVID-19 vaccination worldwide, experts in the field are optimistic that the market will gradually recover. CBRE Cambodia Managing Directer Ann Sothida has predicted that the real estate market in 2021 will improve by 60% compared to 2020. (Read more)

Despite the growth forecast, investors, in general, remain sceptical, particularly about whether or not to invest in real estate in 2021; and if they do, the frequently-asked question is where and what to invest in for success?
Construction & Property Magazine sat down with three local real estate analysts to discuss their insights and projections on how the market will look like in 2021.

Phnom Penh: Consider the Suburbs First

According to Ms Sothida, if you want to invest in 2021, the suburban areas of Phnom Penh should be the first destination you should consider. Whether north, south, east or west, they all have great opportunities, depending on the investors’ goal and the types of property they prefer.

North: Focus on the commercial and hotel sectors

The northern part of Phnom Penh has seen rapid infrastructure development lately. Moreover, the local standards of living there have also increased from moderate to above average. Thus, Ms Sothida advised that investment opportunities exist in the commercial and hotel sectors, as demand will soon increase.

South: Keep an eye on the residential sector

The southern part of the capital is full of major infrastructure development projects such as the new Phnom Penh International Airport project, the 60-metre road, and ring roads, among others. Compared to other regions, real estate prices in this area are quite high. Given that, many commercial projects have already been developed. Therefore, according to Ms Sothida, rather than developing more commercial real estate, investors should consider focusing on the housing sector.

West: Consider investing in retail

The population in the western area of Phnom Penh has also been rising given the better infrastructure. Ms Sothida advised that since many residential projects have been already been launched, potential investment opportunities remain in the retail market. However, local people’s income remains limited, so investors may have to carefully analyse the type of retail to invest in.

East: Invest in either the residential or commercial sectors

Some would say the eastern part of Phnom Penh is the least booming region, but it will become the one with the highest future potential after the planned bridge is built. This region is very suitable for residential estates as it is surrounded by rivers with less industrial development. Besides being a residential area, the eastern side will also soon become a commercial zone, said Ms Sothida. Thus, investment opportunities exist in both residential and commercial estate depending on investors’ purposes.

Apart from the suburbs of Phnom Penh, the real estate market in some other provinces is also growing. According to Founder and Director of Key Real Estate Co., Ltd Mr Sorn Seap, those provinces include Sihanoukville, Kampong Speu, Kampot, Kep, Siem Reap and Mondulkiri.

Sihanoukville: The Next Property Boom Post COVID-19

Mr Sorn Seap predicted that Sihanoukville’s real estate market will have the strongest momentum post-COVID-19 due to many favourable factors, such as infrastructure, special economic zones, the airport, the deep-sea port, beautiful beaches, islands, and especially the oil production.

For investment opportunities, he advised investing in the land around Ream district. Besides being coastal land, the price there is relatively low compared to prices in the city. Investors can either develop the land into resorts or sell for a profit in the future, as the land price there has yet to reach the cap.

In addition, Ms Sothida suggested that investors should focus on an industrial estate as a first priority, and the housing sector second, to balance the growth of the city. In other words, if the city becomes an industrial zone, the workers there also need decent housing. Thus, developing residential projects has future potential.

Kampong Speu: The Kingdom’s Future Industrial Zone

According to Mr Sorn Seap, Kampong Speu is the province with the highest potential after Kompong Som, especially along NR41, NR51 and NR44. These are very suitable for industrial plants due to the favourable infrastructures and location.

Besides those three routes, Cambodia Valuers and Estate Agents Association (CVEA) President Chrek Soknim also suggested other high potential areas such as Oral district, Tbong district, and Chbamon city. He added that those areas are more suitable for large investors rather than smaller investors, as the locations are very suitable for developing into warehouses or factories.

Soknim explained that Kampong Speu is a good location as it is located between two large cities, Phnom Penh and Sihanoukville. The land plots there are also large enough for factories and warehouses. Thus, for those looking to invest there should buy big plots of land.

Kampot & Kep: Ideal for Resort Development

Mr Sorn Seap projected that these two provinces will have great potential after the COVID-19 pandemic, especially for resort development. However, he did not recommend buying land and expecting to be able to sell for a higher price in the future, as the price will not jump fast.

Siem Reap: Needs More Time to Recover

All three analysts agreed that Siem Reap will need more time, at least three to five years for the real estate market to improve. However, given the economic downturn caused by the pandemic, those with a high budget should consider buying hotels that are being sold below the market price. Investors can renovate them and wait to earn profits after the pandemic ends.
Mr Sorn Seap also advised that investors or developers wishing to get involved in the Siem Reap real estate market should study the strict regulations carefully, as there are building height controls and prohibited development zones.

Experts also advise investors to diversify their investments to reduce risk, by not focusing too much on tourism real estate, but considering residential and commercial estate as well.

Mondulkiri: Great Potential, Though High-Risk

Mr Sorn Seap said that Mondulkiri is a great potential investment target for future high returns, yet investors must be very cautious as the location comes with both opportunities and risks.
At the moment, the real estate market there is quite risky as there are many uncertainties regarding the land ownership – the protected land issue, for example. Due to this uncertainty, land prices in this province are relatively low, which is an excellent opportunity for those high-risk investors who know the market well, said Mr Sorn Seap.

Border Provinces: Guaranteed Win

Last but not least, Ms Sothida suggested that the border provinces, whether along with the Thai or Vietnamese borders, also have great potential, especially for tourism and industrial estate. For example, Bavet and Poipet are two destinations investors can consider.

Overall, in 2021, the real estate market in Cambodia will begin to recover slowly. According to the analysts, 2021 is still an opportunity to buy real estate below market value. However, when asked in what and where to invest, the answer depends on cash flow, objectives, and the appetite for risk of individual investors, as each region has different characteristics and opportunities. To answer the last question on whether or not to invest this year, the three experts all agreed that good opportunities never last long, so do it now or never.

• Analysis
• Knowledge and Key Success