Cambodia real estate market in 2023 to slightly recover along with lingering risks

• 28 January 2023
• Local News
• 3648 Views

Local experts have projected that the Cambodian real estate market in 2023 will improve slightly, while still facing lingering risks that will last longer than expected.

Mr Sorn Seap, President Cambodian Valuers and Estate Agents Association (CVEA), said no one could predict that the market would recover to the pre-COVID-19 rate as crises have yet to end.

“In 2008, during the financial crisis, the Cambodian real estate market plummeted. However, after the crisis, the market took only four years to recover to the pre-crisis level and stabilize,” Mr Sorn Seap explained.

“Now we are facing the economic crisis, combined with the spillover effects from the 3-years COVID-19 crisis and ongoing Russia-Ukraine war. This is a far larger scale than the 2008 financial crisis. So, if the market is to recover, it will take more than 4 years in a condition that the crisis ends. However, the crisis is still ongoing and no one knows when it will end,” he added.

This analysis is similar to that of CBRE Cambodia Chairman Marc Townsend who predicts that the market will continue to be under pressure and will not be able to recover to the rate where everyone wanted, while the slowdown will last even longer than expected, mainly due to the negative spillovers of the COVID-19 crisis, the Russia-Ukraine war, and the global economic downturn. (Read more)

However, the market will be better in 2021 and 2022. The main driver of the recovery is overall economic growth, which will also have a positive impact on the real estate sector.

“Cambodia’s most important hope is the inflow of foreign investment, especially from China after the country’s reopening,” said Mr Sorn Seap.

“After the reopening, there will be an influx of tourists to Cambodia, which will also bring in cash flows that will boost economic growth. Inevitably, the real estate sector will also benefit, ”he continued.

He added that such a crisis also taught all real estate players to acknowledge the cycle of the market.

“There will be no more land speculation as before. Land investment is a long-term investment. What happened in the past few years before COVID-19 was the irregular cycle of the market. Now, it is just returning to a stable rate.” said Mr Sorn Seap.

He explained that although the market has not yet fully recovered, those who see the opportunity can still make a profit.

For example, some people say that in such a situation, the secondary sale is almost impossible as new residential projects are growing more and more.

“However,  those to can seize the opportunity will be able to sell their secondary properties. The key is to find clients who have real demand and prefer immediate use of the property for opening businesses or to live. With a good price, the client will buy secondary property rather than waiting for the new one that hasn’t been constructed,” he added.

Likewise, the stagnant real estate in Sihanoukville is also an opportunity for far-sighted investment. The government is working on solving the problem with a mega plan to turn this city into a multipurpose industrial zone. Thus, in near future, there will have high potential.

In such a situation, Mr Sorn Seap on behalf of CVEA has been working together to help restore the market by bringing together all experts and key players in the sector and helping each other create market potential rather than completing each other.

He also recommended that one shall manage expenses carefully and beware before investing as the market is not yet stable.

• Analysis