Real Estate Market Update in Q3 and Roadmap for Recovery

The Phnom Penh Real Estate Market in Q3 of 2020 remains under pressure from the COVID-19 pandemic. However, compared to other neighbouring countries, the Cambodian market shows the most significant recovery steps, according to a report from CBRE Cambodia.

The same report also projects that due to the very low number of cases, thanks to effective government policy in coping with the pandemic, the market from Q4 onward will start to stabilise. Though it will not reach the pre-COVID-19 baseline by then, progress is expected to grow fast, as landed properties (boreys) always remains robust.

Condominium

Condominium supply sees a 3.97% q-o-q growth, among which the mid-range takes almost half of the proportion. There is only one new completion, adding 828 units to the existing supply. Though without any new launches, there are three new expansions: Urban Village Phase 2, Arakawa Residences Phase 2, and Yuetai Harbour Bay. These expansions will add over 2,000 units to the supply pipeline.

The quoting sale prices drop by 1%, 1.4%, and 1.2% for high-end, mid-range, and affordable. While the rent also sees a slight decrease of 2.88% for high-end and 1.71% for mid-range. This downturn illustrates that rents remain under pressure, though landlords keep offering more with facilities and amenities.

The report also suggests a 4-step roadmap to recovery for the condo market. The first step is to focus on local buyers by introducing new marketing strategies such as attractive sale prices and flexible payment terms. The next step is to set a suitable price growth date and total unit quantum. Step 3 involves innovations, which mean developers shall adjust their unit mix and size to match the market demand. Lastly, the final step is waiting for international buyers to return.

Borey (Landed Property)

Boreys are the only sector remaining robust and see prices increase despite the pandemic. There are 18 new launches across five districts, and four new completions in four districts with four new developers joining the market.

Compared to Q1 of 2020, the average quoting sale prices this quarter rise by 3.4%, 12.5%, 5.4%, and 9.2% for flats, link houses, shophouses, and twin villas. While single villas and king villas are on average down by 4.9% and 5%. To keep the market stable, developers have been introducing plenty of promotions during the COVID-19 period.

Though staying robust, CBRE also suggests four recovering strategies for developers. Those include giving more promotion, speeding up on construction activity, developing more low-to-mid range mixed-use developments, and focusing more on the project’s affordability in the future.

Office

The office market is still one of the hardest hit across the sectors, with over 50,000sqm of supply being delayed until 2021. There are no new launches, but there are three completions, adding over 30,000sqm to the market. The three completed projects include two Grade B—TK Central and The Point, and one Grade C—the Sayon Phnom Penh.

Centrally owned office supply sees an 8.9% q-o-q drop in occupancy rate. Similarly, rents also decreased by 6.3% and 9.4% for Grade B in the Central Business District (CBD) and the Non-Central Business District (NCBD). Surprisingly, the quoting rent price for Grade C offices in CDB rises by 2.6%.

Meanwhile, there are two newly announced projects for the Strata-Title Office Supply, which are Benrich Tower in Duan Pen district and Odom Tower in Chamkarmon district. Due to the pandemic, over 28,000 sqm of supply will also delay to 2021.

The roadmaps to recovery for the office market include reviewing lease agreements with more flexible terms and incentives, diversifying supply by giving more options to tenants, considering future market trends and digitalisation, and improving working strategies by optimising working environment and spatial requirements.

Retail

The retail sector remains the hardest hit. According to Google Mobility Tracker (17 Feb to 20 Aug), there retail & recreation is still 11% below the baseline. The vacancy rate has reached 10.97%, a 0.77% increase compared to the previous quarter.

There are two new completions and four new brand entrants, adding over 21,800sqm to existing supply, or equal to a 6.1% q-o-q increase. The two malls are 312 Quayside Mall in Daun Penh and The One Mall in Chamkarmon, which are both community malls.

Compared to the previous quarter, there is no change in renting price for prime shopping, prime retail podium, and prime high street (average of US$28, US$26, and US$26, respectively). However, there is a slight drop (-0.4%) for the community mall (US$22).

Regarding the roadmap to recovery, there are three steps for both retailers and landlords. Retailers can start with improving marketing strategy in the first stage, then follow by cautiously expanding the omnichannel system and digitising the customer experience in the future. For landlords, making lease agreements more flexible by providing more incentive to anchor tenants should be the first step, followed by enhancing marketing strategy and proactively managing assets accordingly.

- Video Advertisement -

Related Post

USAID’s Withdrawal Paves the Way for China’s Expanding Influence in Cambodia & ASEAN

The abrupt freezing of USAID funding under the Trump administration has halted vital infrastructure and development projects across Southeast Asia, leaving a geopolitical vacuum that China is poised to fill. With USAID’s cessation, critical services in Cambodia—including healthcare, education, and demining efforts—face significant disruption. The United States, which allocated nearly USD 68 billion in foreign […]

ASEAN Real Estate Markets Navigate Headwinds as China’s Economy Falters

The USD 722 billion trade relationship between China and ASEAN faces unprecedented pressure as China’s property sector, which accounts for over 25% of its GDP and 70% of household wealth, shows serious signs of distress amid plummeting consumer confidence that reached near-record lows of 86 in July 2024, according to Evrimagaci.org on 31 January 2025. […]

Southeast Asian Real Estate Markets Poised for Unprecedented Growth

Southeast Asia’s real estate landscape is experiencing a transformative shift, with premium properties in Singapore’s city center commanding USD 20,000 per square meter while emerging markets like Cambodia offer entry points as low as USD 1,000 per square meter. This comprehensive market analysis draws from extensive regional property data and market forecasts across five key […]

Despite New Loan Not Yet Approved, Chinese Investment Dominates Cambodia’s FDI

Cambodia continues to attract substantial Chinese foreign direct investment, maintaining a commanding 47% share of total FDI as of Q2 2024, despite recording no new Chinese government loans in Q3 2024. This sustained dominance in foreign investment follows a consistent pattern, where Chinese FDI has maintained majority control ranging from 48% to 56% since 2020, […]

Cambodia’s Real Estate Market Faces Mixed Signals Amid Regional Benchmarks

Cambodia’s commercial real estate market reveals significant challenges with office occupancy rates at 65.1%, well below the international benchmark of 85-90%, while maintaining premium rents at $27 per square meter, according to the “Fearless Forecast” report presented by CBRE Cambodia Chairman Marc Townsend at Novotel Phnom Penh BKK1 on 14 January 2025. The retail sector […]

Cambodia Poised for Economic Windfall as U.S. Trade Policy Shifts from Vietnam

Cambodia stands to emerge as a major beneficiary of potential U.S. trade policy shifts, with experts predicting significant manufacturing opportunities if Donald Trump returns to office, particularly as Vietnam faces possible trade tariffs similar to those previously imposed on China, according to 2025 Fearless Forecast shared at a Real Estate Forum in Novotel Phnom Penh […]