Fearless Projections of Real Estate Market Trend in 2023

• 21 January 2023
• Local News
• 3194 Views

The Cambodian real estate market in 2023 will continue to be under pressure and will not be able to recover to the rate where everyone wanted, while the slowdown will last even longer than expected, mainly due to the negative spill overs of the COVID-19 crisis, the Russia-Ukraine war, and the global economic downturn. 

The real estate market situation in 2023 is similar to the city after the big storm. The sky could be clear, but the leftover issues caused by the storm such as flood, trash, and other damages remained, and no one can predict when these lingering issues will end. 

This analysis is based on the latest report of CBRE Cambodia entitled Fearless Forecast 2023: Onto A New Cycle. 

Despite the slow recovery, CBRE Cambodia Chair Marc Townsend still expressed his optimism that the 2023 market will be at least better than 2022 due to the higher overall economic growth projection. 

During the report representation, Townsend also outlines the key trends that will emerge in the real estate market in 2023. 

1) This is the biggest and the best opportunity for 10 years 

For those who have high cash flow on hand, this is the best opportunity to buy real estate at a low price for future profit. However, the cash flow must be high enough to wait at least 5 to 10 years. In this circumstance, cash is the oxygen for your business.  

2) Buying land no longer the best option  

In 2023, investing in land known as future development sites might no longer be the best option for everyone like before. Income-producing assets such as houses, buildings, offices or shopping malls that provide regular rental yield have greater appeal. Investing in land now, especially for those with low cash flow could result in cash storage for at least 5 or 10 years before being able to sell the land for profit. 

3) No secondary sales market 

Secondary sales or the sale of property from an end customer to another end customer is challenging. For instance, if you own a house in a borey and want to sell it to another buyer, it will be very tough to sell or almost not possible as the new borey supply is growing every day. Buyers have more choices, newer house designs, and better payment terms to buy them from the developers. Why would they buy the second-handed house unless the price is much lower than the market price?  

4) Speculative real estate FDI to fall  

Due to the decrease in foreign investors’ inflow, land speculation by local brokers will no longer work. Given so, land values will also fall until a new inflow of foreign investment arrives.  

5) Condo prices continue to fall 

The lack of foreign investors will also cause condo prices to continue to fall in 2023. Besides, the oversupply is also another factor lowering condo prices further. Most condo developers will delay the construction of the project until they have sold out to the rate that they had set. In some cases,  they might not build the project at all. The possible way out for those who already built the project is to shift the functions of the building to types that produce income. 

6) Change of Use 

In 2023, players in the market should be flexible. It’s time for changes of use, a switch of asset class, and diversification. Other asset classes that deserve attention include self-storage, PBSA, workers’ dormitories, international schools, cloud kitchens, vertical farms, cold storage warehousing, data centres, retirement living, and backpacker hostels, among others. 

7) Customer-Centric Strategy 

Another trend that is emerging in the real estate market in 2023 is that customers will have more power. Thus, project owners need to implement more client-care strategies to keep old clients and also attract new ones.  Given the amount of supply, vacancy rate and the slower speed of new business expansions or entrants, it’s important for landlords to take care of their clients, especially in areas that their clients care. For example, make sure that the buildings are well maintained, and the lifts are working well, while also refurbishing the exterior or interior of the buildings as needed to keep the building new, among others. 

• Analysis