A Difficult Year for Real Estate Developments

• 22 January 2022
• Local News
• 1696 Views

By Eric Wong Chon Lap

As another difficult year for the real estate market come to an end, the market has seen a series of interesting and unprecedented events in various sectors in the Year 2021.

New condominium launches in Phnom Penh has slowed down, while low-rise affordable housing demand surges. The retail market is slowly picking up with more international brands entering the market, while the hotel sector has been very creative with its adaption to the COVID-19 situation. The office market is heavily impacted by the surge in available stocks and concern over the Omicron strain.

The condominium market did not see any new project launches. While the suburban market lower density community has seen some new launches, however, it is far from its usual level of activities prior to COVID-19. With the necessity for more space and flexibility, the demand and appeal for low-rise housing projects have increased each year. This increase in demand also resulted in some developers adding more inventory to meet the needs of the buyers.

For Retail, because of the COVID-19 and negative financial impact, business interruptions occurred during the first half of 2021. However, this uncertain situation has changed after the official reopening of all economic sectors in November 2021. On the other hand, the hotel industry has been the most creative in terms of adapting to the restrictions and changes in customer behaviours. Some of the hotels are shifting to an almost purely domestic-driven market – including staycations, promotions and family packages catered to local Cambodians, as these hotels try to claw back occupancy rates.

As businesses have not been able to operate normally for two years, the office market has been heavily impacted by contractions. The net take-up of office space has not seen any changes, as Phnom Penh faced another wave of COVID-19 on April and May 2021. Apart from the future supply available to the market, Cambodia is concerned over the Omicron strain, which has been on the rise, prompting the government and business alike to prepare to tackle these new challenges.

After all, how the real estate market will respond to these uncertainties, will highly depend on the actions the government take to handle the situation, and how the market sentiment will respond to the COVID-19 situation.

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Eric Wong has extensive experience in the field of property consulting and development sectors, primarily within the emerging markets of Southeast Asia. From the property consulting perspective, he has led market research assignments inclusive of providing descriptive, exploratory market research and analysis reports within the office, residential, hotel, and retail segments in both quantitative and qualitative methods to determine suitable development types, scale, and product mix, and address property-related matters from project positioning to absorption rates, phasing, and pricing and marketing strategies, etc.

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