Phnom Penh Remains Centre of Real Estate Investment

• Proeksa Meas
• 31 December 2015
• Local News
• 1587 Views

By Pich Kanhchanak

Following the 2008 global economic crisis, investment in the construction and real estate sectors have significantly contributed to Cambodia’s economy rebounding.

Propelled by the progress and growth of the economy, the sectors have a strong influence on the nation’s housing market. Real estate experts from a number of agencies have confirmed that housing sales will increase by up to 20 percent in 2015 compared to last year.

“In my estimation, housing sales will rise 20 percent this year compared to last year,” said Sok Chanra, representative of Khmer Real Estate, adding that the rise is caused by the increase in the local population. People who want to live in residential properties prefer Borey New World and Borey Peng Houth, he added.

“Most of the houses that have sold out are in boreys,” said Sear Chailin, chief executive officer of CL Realty Co. Ltd, who agreed that overall housing sales in the nation will rise up to 20 percent this year. “People are interested in buying house in boreys because of the good environment and they are also cheaper than detached houses on the main road,” he added.

Experts suggest that home prices will continue to rise gradually, more or less depending on their location and features. Phnom Penh has been identified as the location at the centre of the national market economy, and is also the first choice of location for residential buyers.

Thanks to the growth in the economy, most of the customers who are looking for a house are from the middle class. Chailin pointed out that flats and villas are highly marketable in Phnom Penh with prices ranging from $30,000 up to $1,200,000 depending on the location and features. “Most buyers prefer buying through installments because they can own a house immediately as they don’t have the budget to purchase the total value of the home value,” he said.

Buyers can approach banks to get loans to buy houses – housing loans – by following the conditions set by respective bank.

“While some buyers who don’t have enough money can get loan(s) from the banks, home hunters that buy a house in a borey can enjoy easier installment loan policies then the banks,” Mr. Chanra said.

Many newly-married couples are choosing housing loan services. Couples who have decent job(s) or businesses can get a loan to buy home(s) because their employment contracts can ensure that they have sufficient capacity to repay the loan.

ACLEDA Bank provides housing loans of up to $300,000 to a limit of 70 percent of the house price with a maximum term of 10 years. Owning a first home through ANZ Royal Bank is a bit easier. For ANZ, buyers can borrow up to 60 percent of the home value with up to 20 years repayment terms at a competitive interest rate.

Compared with other provinces, Phnom Penh remains the largest market for home sales. The growth of sales can be credited to the development of the market economy along with the future vision of the clients.

In the face of the global economic crisis in 2008-2009, Cambodia experienced minimal impact. Furthermore, economic crises operate like a loop every 30 to 40 years, so experts believe that risk exposure is not a concern for Cambodia in the next 10 years.

They also envision that investment in real estate today will see a satisfactory return on investment (RoI) in the short term while the Kingdom awaits a positive impact from regional integration.

Despite ASEAN integration perhaps not having a strong impact on the economy in the near future, many foreigners are expected to flow into the country for work and business, so local people with sufficient financial resources should consider investing in accommodation-related services.

2015 is the best year to buy a home, because soon ASEAN integration will bring more economic growth to Cambodia. Therefore, the price of products in the market will rise more or less in line with the price of residential properties. In order to avoid the burden of volatile real estate prices, many real estate insiders are advising clients to consider investing this year or early next year.

“House prices will increase next year after Cambodia opens the gate for regional integration. So, buying house(s) this year is the best way.” Mr. Chanra concluded.