Lettable Residential Properties

• 10 March 2018
• Local News
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Since the introduction of apartment and condominium living in Phnom Penh in the early 2000s, there has been a significant growth in total amounts of rent paid by expatriates for their residential accommodation. But this will be likely to change with the significant growth in the number of apartment and condominium units. Rents for expatriate standard apartments and condominiums are likely to drop in the coming years due to the current projected volumes expected to outweigh demand for the next several years.

Many expatriates in Cambodia are posted in Phnom Penh, with some in Siem Reap, together with their family members. They generally want to stay in a limited number of locations and have a variety of choices when it comes to choosing a place to stay. A significant number of apartments were built and the condominium (multi-ownership) has increased by almost five times over the last five years, and the majority of that new supply has been one bedroom units.

As the supply continues to grow, I believe the market is almost at the stage where there is excessive supply – oversupply of choice for expatriate standard apartments and condominiums in the preferred locations. The current occupancy in the most popular expatriate areas of apartments in Phnom Penh range between 80- 90 percent; for the condominium units, 70 percent has been occupied by owner occupiers and tenants.

Generally, most of the apartment buildings in Phnom Penh have been well maintained where the interiors and common areas have been refurbished. Because of this, most of the units can still attract tenants. Major renovation is not required for the older condominium buildings. But they may be required to replace furniture and appliances since the day they bought the property to make the property become lettable. Otherwise, these un-refurbished properties will become unattractive and people will not bother to pay the rent even at a discounted rate.

Until now, very few long-term expatriates have been keen to buy properties in Phnom Penh. A significant number of expatriates are single and choose to rent an apartment, a studio or a one-bedroom condominium unit; only a small number of expatriates come with families, or couples who want a two- or three-bedroom unit. I estimate that there are over 20,000 condominium units under construction; approximately 30 percent of these will be two or three bedroom units and the rest being studios and one-bedroom units, while the number of expatriates with work permits in Phnom Penh has an average increase of only 10 percent year on year.

Therefore, it is only a matter of time before this oversupply translates into a substantial price fall.

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