Residential Demand Slowly Returns to Sihanoukville

• 14 January 2022
• Local News
• 1415 Views

By Eric Wong Chon Lap

Sihanoukville has brought some life back, after the Cambodian government decision to lift the ban on flights from other countries, and having to depend solely on the domestic market for almost two years. While there may not be a large number of tourism or business traveler arrivals to the city and surrounding islands, it is the beginning of preparations for the country’s reopening, and this increase in activities was also seen in the residential market.

During the lockdown period, property inquiries have been from local buyers who are looking for investment, vacation or second-home properties. In the past two months, the inquiries expanded to mainland Chinese, expatriates and some international tourists. This led us to believe the market has helped bring back some buyers and investors who have had their eyes on properties for the past years, but they could not travel due to travel restrictions. However, investors have yet to fully return, and only a very small percentage of them return due to uncertainties over the global economic outlook and the oversupply of residential housing available in Sihanoukville.

Sihanoukville residential market used to be perceived as a market for mainland Chinese buyers. The availability of residential properties has now expanded to serve a broader range of buyers and market. As a result of COVID-19, the market has been reset to become more of a buyer’s market with more negotiable options and opportunities. Almost every developer in Sihanoukville have been waiting to clear their unsold stocks. This buying opportunity will remain until the supply demand balance stabilizes, which may not happen given the sheer amounts of residential units available. The only exception is the ultra-luxury market located in the islands of Koh Rong. There has been limited new launches in this segment with the scarcity of prime beachfront land with sea-view. There is always a trend of buyers, from the upper-class segment in particular, preferred the ‘ready-to-move-in’ properties as these make them feel more secure, especially as they are able to experience the actual product right away, and their preference to use the properties as their retirement or vacation property.

According to the Ministry of Public Works and Transport in Cambodia, the construction of Phnom Penh-Sihanoukville expressway is more than 70% completed as of December 2021, and the completion of the project is set for mid-2023. This made it easier to shift between city life and beach life and eventually creating demand from those seeking vacation homes. Units with sea views, beachfronts and those with modern styles can be attractive from the buyers’ perspective. Despite the slightly increase in demand and COVID-19 disrupted all the business activities, the existing residential supplies in Sihanoukville is still way above its demand. To sell out these properties, developers must give away generous discounts. Property prices in Sihanoukville has been fallen since the early stage of COVID-19 pandemic, and it has not, or it will not be recovered to the level of pre COVID-19 under the worst scenario. Going forward, as travel restrictions are eased, attracting more tourists and investors to consider acquiring vacation homes are the only way to clear the existing residential stocks in Sihanoukville.

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Eric Wong has extensive experience in the field of property consulting and development sectors, primarily within the emerging markets of Southeast Asia. From the property consulting perspective, he has led market research assignments inclusive of providing descriptive, exploratory market research and analysis reports within the office, residential, hotel, and retail segments in both quantitative and qualitative methods to determine suitable development types, scale, and product mix, and address property-related matters from project positioning to absorption rates, phasing, and pricing and marketing strategies, etc.

 

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