The changing demand for residential rental units

• 2 December 2019
• Property Focus
• 2413 Views

By Eric Wong Chon Lap

As the number of expatriates grows in Cambodia, even though as those staying in Phnom Penh slows down, the market is seeing a change in demand. This is creating an impact on the rental apartment and condominium sectors in Phnom Penh, despite continuing healthy performance.

Typically, when expats move to work with Cambodia, either individually or with their family members, a few companies will cover accommodation for the whole family, children’s tuition fees and even allowances for housewives. However, we are now seeing more expatriates moving here individually rather than with their whole family as companies look to lower their operating costs.

In a change from previous trends, the market is seeing more active demand for one-bedroom units. Three-bedroom or four-bedroom units used to be more popular for expats moving to Cambodia with their families. Now, many apartments or condominiums have their one-bedroom units fully occupied, with two-bedroom units also full in certain buildings with demand still increasing. Another constraint on the rental apartment and condominium markets are the accommodation allowances from corporates, which have not increased in many years, as many smaller companies have decided not to offer accommodation allowances in order to cut costs. This puts pressure on landlords, as they cannot ask for higher monthly rental rates as it will risk losing their tenants to landlords of other properties.

On the other hand, the number of expatriates living in Phnom Penh could possibly be compensated by the rise in the biggest feeder market – the Chinese expatriates. This increase may become a new wave of demand for Phnom Penh’s rental apartments as Chinese expatriates prefer to rent condominium units in the Diamond Island, and Boeung Keng Kang 1 (properties located closer to the Monivong Boulevard) areas where the Chinese communities are more prominent and easily accessible to all the Chinese restaurants and supermarkets etc.

With increasing competition from apartment and condominium units for rent in the market, budget control for expatriates’ accommodation and the newly completed apartments and condominium units on offer in the market, the biggest hit will be felt by the landlords of older apartment buildings or condominium units, as they will be forced to up their game to compete in the market.

• Business and Market