A new era in the Phnom Penh housing market

• 23 September 2019
• Local News
• 3190 Views

By Eric Wong Chon Lap

The condominium market in Phnom Penh has slowed recently due to the accumulation of unsold stock and surge in supply. This has caused buyers to be more careful, resulting in less demand from speculators and more emphasis on real demand from the end-users. This explains why many developers are shifting their overall development portfolio to the low-rise housing market where demand for single-detached houses and townhouses is driven entirely by local Cambodian end-users – the owner-occupier purchasers.

For any house purchasers, they have specific needs in terms of design, functionality, location and size. They also have a fixed budget. As such, developers need to focus on these needs and deliver the right product in the right place at a price where all these house purchasers can afford. In Phnom Penh, developers are capitalising on new popular locations such as the National Road No. 1 and No. 6 area, which has become popular for housing developments because of improvements in the road network. Many developers have adapted to the change in residential market conditions by transitioning from mainly condominium developments and launching their first housing developments – the first phase of an affordable-home project by the Cambodia-based Worldbridge Homes Co Ltd. for example, to have their entire development finished in the first quarter of 2020. This development is located in Kandal province’s Sa’ang district, which is about 18km from Phnom Penh and near Takhmao town. It consists of 2,457 two-storey units and 90 shophouses. As the first affordable residential development project in Cambodia, it broke ground in January 2017 on a 45ha of land, with an investment worth about USD $100 million.

More developers will focus on the low-rise housing market. Demand is expected to grow significantly as there is a big improvement in the economy and potential purchasers’ disposable incomes for the rising middle-class population living in Phnom Penh. The volume of sales has also increased, as the increased levels of affordability and buyers’ minimum size requirements have been met by many of these low-rise housing developers. This is also made possible as new roads are being completed on the outskirts of Phnom Penh which makes land prices cheaper in locations that are attractive to purchasers, and developers to construct low-rise housing. If it is not possible to produce affordably-priced products such as these low-rise housing developments, then more developers will be fighting for a share in an unchanged level of local demand in the high-rise condominium units. In the end, the competition will increase and only those developers who can produce attractive products will be able to sell.

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