Phnom Penh Stars Property Performer

• 31 December 2015
• Property Focus
• 1291 Views

Knight Frank Property Indexes show strong property performance by Phnom Penh as Cambodia’s economic growth continues.

Knight Frank’s Prime Asia Development Land Index reflected a generally positive land market in the region. Helped by improvements in several markets, the land price index for office sites grew 2.7% in H2 2014, faster than the 2.3% increase seen in the previous six months. The growth of residential land prices, however, moderated to 3.4% from 3.8%.

Phnom Penh was the star performer with residential and office land prices registering 10.7% and 11.1% increases respectively over the last six months of 2014. Residential properties continued to enjoy robust sales to overseas investors – particularly Taiwanese, Japanese and Singaporeans – and fetch benchmark prices while commercial buildings witnessed sustained healthy leasing demand from foreign firms seeking to tap into the strong economic growth in the city.

Although land prices on the regional level continued to climb upwards, the sales volumes in Asia tumbled by 31.0% last year from an extraordinarily high base in 2013. This was due to a 33.5% plunge in China, as the inventory of unsold houses swelled. In the meantime, the rest of Asia still saw volumes increase marginally. While Asian developers are making less cross- border acquisitions within the region, non- Asians pumped in 118.5% more investment.

The Knight Frank Asia-Pacific Prime Office Rental Index also increased 0.5% in the last quarter of 2014, slower than the 1.3% and 0.9% registered in Q3 2014 and Q4 2014 respectively. The average vacancy rate continued falling, as two thirds of the markets surveyed saw improving occupancy rates.

In Southeast Asia, Bangkok experienced the lowest vacancy rate in eight years, as demand continued to outpace new supply. In neighbouring Kuala Lumpur, office rents barely moved. Jakarta registered the strongest quarterly rental growth of 6.2%, as vacancy dropped to the lowest rate of 4.2% in our records. Phnom Penh, where rents increased by 3.2%, on the back of steady demand from foreign companies seeking to capitalise on Cambodia’s strong economic growth.