Outlook on Phnom Penh Retail Spaces

• 1 February 2017
• Property Focus
• 2308 Views

The retail market in Phnom Penh is more dynamic than ever. The expansion by retail developers, entries of new local and international retailers combined with a challenging economic outlook are all adding up to the mix.

In Phnom Penh, the latest major retail developments to be open in mid-2017 are the Exchange Square and Phnom Penh City Center, intensifying competition from existing shopping centers such as AEON Mall. “Most wealthy Cambodians prefer to shop overseas,” said Chan Mlop Sokha from Sokha Law Office. To anticipate the future supply, other developers choose to renovate their retail centres such as Sorya Mall. Sokhun Chev from KATA Appraisal Co., Ltd believes the market currently lacks quality spaces. “There are only a few shopping centres in Phnom Penh and the market is under supplied with quality malls,” she said.

The expansion of retail developments to the outskirts of Phnom Penh may draw consumers away, although the impact may be limited. In the future, the outlying areas of Phnom Penh will be well served by quality retail centres, adding competition to existing shopping centres.

AEON Mall has their second shopping centre under construction, with a total area of 151,000 square metres and expected to be completed in 2018. To the west of Phnom Penh, Lion City will open in 2018 across the road from Phnom Penh International Airport, adding a major retail centre to an area with limited retail developments. Other shopping centres in the development stages include the retail podiums of The Bridge, and projects such as The Peak, The Skyline, the retail arcades of Naga CityWalk (Phase 2 and Phase 3), Olympia City and Orkide the Royal Mall which will form part of their mixed-use development. Furthermore, whilst major international brands will typically enter the prime locations first, the completion of road infrastructure and quality suburban shopping centres, located in Sen Sok, Chroy Changva etc. will also pave way for future expansions.

On the plus side, retail expansion will create room for new brands and retailers to enter the Cambodian market. This also creates room for both domestic and international retailers to expand. In addition to the new local and international comers in the fashion and F&B industries, another major area with growth potential is the retail sector for lifestyle and recreational activities. The retail sector can focus more on the lifestyle options. For example, offering an indoor play city where kids can have fun, opening a fitness centre inside a mall etc. These retail types will play a significant role in the space take-up as they have larger space requirements where new retail developments can meet their standards.

In the future, street-front retail stores will have the most challenges amidst the competition. The lack of quality street-front space in Phnom Penh explains in a large part why so many retailers end up setting up shop in shopping centres. In the end, these street-front retail stores will be forced to adjust their strategies, and have clear unique selling propositions in order to draw in consumers. Otherwise they are likely to be overshadowed by major shopping centres with bigger budgets.

For the shopping centre operators, they should retain quality anchor tenants to compete in today’s fierce market. It is crucial to understand the target consumers’ needs in order to maintain the competitive advantages, to stay profitable and ahead of the game.

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