Experts Predict Recovery for Phnom Penh Real Estate Market with Strategic Adjustments

• 23 July 2024
• Local News
• 4816 Views

The Phnom Penh real estate market is currently undergoing a necessary correction phase, which is painful yet vital for moving forward to the next cycle. This correction is seen as a necessary step to stabilize the market and prepare it for future growth, according to Ms. Kim KinKesa, Managing Director of CBRE Cambodia in a Phnom Penh Real Estate Market Update Workshop on 16 July 2024.

During the event’s panel discussion, industry experts shared their insights on the current state of the market and potential recovery timelines, centred around the key question: “When will Cambodia’s real estate recover?”

Prices Settling Down to a Moderate Level Signal Recovery

Ms. KinKesa noted that while prices have moderated, which has been challenging for developers, this phase is crucial for bringing the market to a sustainable level.

Price will not go down forever either, as it’s not going up forever. When prices are at a moderate level that is acceptable for the market, absorption will improve,” she stated.

Mr. Channdara Latt, Manager of Research & Consulting, CBRE Cambodia, highlighted the cyclical nature of market predictions. “We have a famous phrase that next year is going to be better,” he remarked, noting that this optimism has persisted since 2020. He attributed the current situation to overbuilding for future demand rather than current needs, causing a market correction where supply and demand must be balanced.

Not Just for Tomorrow’s Demand, but Aso for Today’s Need

Too many houses were built expecting more buyers in the future than there are right now. This is like having extra cookies baked when nobody is hungry.​ He emphasized the importance of other key economic sectors such as trade, import-export, retail, and tourism in influencing the real estate market’s recovery.

Diversify investments beyond real estate and allow time for growth

Mr Ramzi Sharif, another panellist, discussed the impact of rising non-performing loans (NPLs) and the role of investor behaviour in the market’s downturn. He pointed out that the rapid increase in property investments led to an asset bubble, with many investors overextending themselves. This has resulted in financial strain, affecting their ability to maintain other business operations. Ramsy suggested that recovery would be gradual, dependent on broader economic growth and diversification beyond tourism and real estate.

The panellists collectively agreed that a full recovery in the Phnom Penh real estate market would depend on the health of other economic sectors. As these sectors grow, the real estate market is expected to follow suit, albeit with a delay of six months to a year.

Mr. Youdy Bun, another expert on the panel, urged developers to focus on projects that meet actual demand rather than speculative developments. He emphasized the importance of listening to the market and addressing the real needs of consumers.

Maintain optimism while implementing a strategy focused on value creation

In conclusion, while the exact timeline for a full recovery remains uncertain, the panellists were optimistic about the long-term potential of the Phnom Penh real estate market. They advised a cautious approach, focusing on sustainable development and diversification of investments to ensure a more balanced and resilient market.

The overarching message from the discussion was clear: remain patient and strategic, focus on value creation, and keep faith in the long-term potential of the Cambodian real estate market.

• Analysis
• Business and Market