Condominium purchasers can finally feel relief

• 15 November 2019
• Local News
• 2696 Views

By Eric Wong Chon Lap

This is the year when condominium end-user purchasers can feel relief, with many developers saying that they will concentrate on completing their existing developments, and also focus on the unsold condominium inventory in response to the weaker demand, partly due to surge of condominium inventory in recent years. The reason end-user purchasers should be cheerful is that many developers are going to offer impactful incentives for the buyers to purchase, including some significant discounts, while developers will also launch aggressive promotional campaigns to sell their properties in the market.

The residential market from this year onward will be more driven by end-user demand, with fewer investors or speculators compared to the past. In general, the condominium market is going to be slower this year. Major condominium developers will concentrate more on unloading their ‘built-but-unsold’ condominium inventory, completing the under-construction buildings, transferring titles to existing purchasers, and selling remaining units, instead of planning new launches.

On the other hand, many developers said they would focus more on affordable new residential launches with single detached houses and townhouses in the outskirt of Phnom Penh, rather than condominiums. The residential market of detached houses and townhouses, together with the affordable condominiums are entirely driven by local Cambodian end-users, not buy-to-rent investors, foreigners or speculators. The market is expected to see a significant increase in new affordable developments, raising the level of competition in this segment. In the future, the market is going to be driven mainly by the end-users, people who buy units to live in themselves.

Buy-to-rent investors will have to be more selective on the purchase decision because the number of expatriates, which is the main source of demand for the entire rental market in Phnom Penh, is not increasing as fast as the number of investors purchasing the properties, nor has the increase in expatriates’ rental budgets.

For any purchasers, they will be able to see a range of completed projects – in any of their preferred locations and they are able to compare the surrounding completed products, or the products constructed by the same developer, rather than rely on brochures, or be shown units of under-construction developments. They can see exactly what they will get, as many of the developers in the market have the experience to develop more than one project, making comparisons much easier.

For any developments that offer discounts by the developers, these discounts will mainly only be available in buildings with unsold inventory. Until now there has been no expectation on a fall in prices across the whole residential sales sector in the capital. In fact, the opposite is the case with prices still rising in some the most sought-after locations with existing / new commercial developments, such as in Boeung Keng Kang 1.

Overall, these market cooling measures will be positive in the longer term, preventing any excessive bubble and allowing real demand to take over from speculative demand on residential properties. Developers will be more cautious and increasingly focus on domestic end-user purchasers, particularly focusing on the entry and mid-level market. This means they will have to provide products that people want – this can be in terms of design, size and specification, in their preferred locations, and at a price purchasers can afford.

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