Real Estate Market Outlook: Cambodia
Real Estate Market Outlook: Cambodia
Real Estate Market Outlook: Cambodia
R E A L E S TAT E
MARKET
OUTLOOK
CAMBODIA
TABL E O F CONTENTS
01 02
MARKET OUTLOOK ECONOMIC OUTLOOK
SUMMARY
03 04
OFFICE SECTOR RETAIL SECTOR
05 06
INDUSTRIAL SECTOR RESIDENTIAL SECTOR
07
RISKS & OPPORTUNITIES
CBRE RESEARCH | © 2019 CBRE, Inc. ASIA PACIFIC REAL ESTATE MARKET OUTLOOK 2019 | CAMBODIA
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ASIA PACIFIC REAL ESTATE MARKET OUTLOOK 2019
CAMBODIA
G R O W I N G I N T E R N AT I O N A L I N T E R E S T
B O O S T S D E V E LO P M E N T
CBRE RESEARCH
This report was prepared by the CBRE Cambodia Research Team, which forms part of CBRE Research – a network of preeminent researchers
who collaborate to provide real estate market research and econometric forecasting to real estate.
© 2019 CBRE , Inc. Information contained herein, including projections, has been obtained from sources believed to be reliable. While we
do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to
confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals
and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.
ECONOMIC OUTLOOK
ECO NO MIC OU TLOOK
CAMBODIA
5
OFFICE SECTOR
O F F ICE SECTOR
CAMBODIA
Phnom Penh’s office market has expanded substantially in recent years, seeing rapid
development and improving occupancy in all grades. The development of new supply
has been driven primarily by tenants looking to expand and establish themselves
within multi-let commercial offices, as well as by new market entrants.
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O F F ICE SECTOR
CAMBODIA
Overall, centrally-owned office stock is anticipated to The most notable trend anticipated in Phnom Penh’s
witness an increase of approximately 54,514 sqm in 2019, office sector in 2019 is an influx in strata-title supply. As
pushing total supply up to 394,605 sqm by the end of of Q1 2019, Phnom Penh has 20,264 sqm of Grade B
2019. Incoming supply is dominated by the Grade B strata-office stock, namely TK Royal One, the first strata-
segment and is forecast to be accompanied by a title office completed in early 2018, and East Commercial
compression in occupancy across all grades to Centre which entered in Q4 2018.
approximately 78%, compared to 81.8% in Q4 2018.
It is forecast that the market will see a significant increase
This fall in occupancy rate anticipated as a result of new in Grade B strata-title supply in 2019. Three projects are
Grade B centrally-owned supply, is forecast to be further expected to complete this year, including Diamond Twin
exacerbated by an anticipated growth in strata-title office Tower, Fortune Tower and Star City, which are expected to
supply of circa 72,921 sqm before the end of 2019. increase strata-title stock by circa 61,414 sqm. This influx
Nonetheless, the prevailing market demand is positive is also expected to spread to the Grade A sector next year,
and excess supply will be absorbed in time, as such an through the anticipated completion of The Gateway,
improving occupancy rate is forecast for 2020. which comprises approximately 28,565 sqm of net
leasable area.
NON-CBD RENTAL RATES TO DROP DUE
TO INCREASE IN STOCK Strata-title office remains a relatively untested concept in
the Phnom Penh market. Similar to trends seen in the
Office rents in Phnom Penh have increased considerably condominium sector, developers of strata-title offices
since 2012. The lack of available supply within the CBD have commenced significant overseas marketing
has fueled further rental growth, contributing to the campaigns, principally in Taiwan, Singapore and China.
increase in Grade B average asking rates within the CBD
by circa 39% over the past 7 years. Sales prices have been broadly stable during the past 12
months. As of H2 2018, the average sales price of strata-
During 2019, Grade B offices in non-CBD locations are title offices stood at circa US$3,400 per square metre
anticipated to see a slight downward adjustment in based on net leasable area, with prime sales prices
quoting rents to circa $17.2 per sqm due to the exceeding US$4,000 per square metre. It is forecast that
introduction of new stock in secondary districts. newly completed stock will require a period of bedding-in
before absorption rates pick-up.
Figure 1: Phnom Penh Centrally Owned Office Supply Figure 2: Phnom Penh Strata-Title Office Supply
CBRE RESEARCH | © 2019 CBRE, Inc. ASIA PACIFIC REAL ESTATE MARKET OUTLOOK 2019 | CAMBODIA
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RETAIL SECTOR
RETAIL SECTO R
CAMBODIA
Phnom Penh’s retail sector has entered a new phase, characterised by rapidly
accelerating levels of new supply as developers seek to capitalize on predicted growth
in consumer purchasing power. As such, a marked increase in retail stock is anticipated
to be introduced in 2019, particularly within the community mall and retail podium sub-
sectors. 2019 is also set to see a continuation of the increasing numbers of
international retailers entering the Cambodian market.
As a result of the reported growth of Cambodia’s middle- Peng Huoth Group and Chip Mong Group, are currently
class, overall levels of disposable income increasing and actively involved in expanding the presence of their retail
the number of foreign visitors expanding, Phnom Penh portfolios across Phnom Penh.
has witnessed a shift away from traditional retail formats
such as wet markets, hawker stands, shop houses and Chip Mong has recently announced plans to develop up
independent grocery/provision stores, towards more to six retail projects across Phnom Penh over the next
modern retailing concepts such as shopping and three years. Similarly, Peng Huoth Group has scheduled
community malls. Whilst these concepts are relatively the launch of two shopping malls by the end of 2023.
new to the market and thus the evolution of local
consumer behaviour continues to adjust, this shift is a Similarly to 2018, the Phnom Penh retail sector in 2019 is
promising sign which has acted to increase the number of expected to see a sharp influx in supply in all sub-sectors,
international retailers entering the market. with most projects in the community mall segment. The
accumulated retail stock by the end of 2019 is forecast to
International developers including AEON and Oxley reach circa 353,415 sqm, a y-o-y increase of approximately
Holdings Ltd., together with local developers such as 35.7%.
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RETAIL SECTO R
CAMBODIA
This anticipated increase in supply is focused upon the Cambodia is becoming increasingly attractive in the eyes
community mall segment where 6 projects are to complete of international retail brands as a result of the
this year, including; MiDTOWN Mall, Downtown 93, Chip development of modern retail formats and growing
Mong Noro Mall, WB Arena, The Point and Chip Mong domestic purchasing power. Overseas fashion retailers
Baktouk Commercial Centre. Accumulated retail stock including Superdry, Under Armour and Converse all made
being injected into the market by these projects stands at their first forays into the market in 2018, continuing the
circa 28,857 sqm. Space within community mall penetration of international brands within Cambodia’s
developments is expected to be largely absorbed by Q4 retail sector. Particular growth has been witnessed within
2019 while rents in the sector are forecast to stabilize the food & beverage, cosmetics and electronics sectors
before the year end as a result of this anticipated high net both at a local and international level.
absorption. Figure 3: Vacancy Rate of Phnom Penh Retail Supply
40%
Notable expansion is also expected in the retail podium 35%
sector with an anticipated increase in retail podium stock 30%
of approximately 207%, primarily a result of the 25%
anticipated completion of projects such as Oxley 20%
Worldbridge’s The Bridge. Furthermore, the forecast 15%
completion of the first phase of The Olympia Mall (circa 10%
15,000 sqm) and Phnom Penh Megamall in Q1 2020 5%
comprising approximately 40,000 sqm (NLA), are set to 0%
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019F
2020F
boost retail stock considerably.
600,000
525,000
450,000
375,000
300,000
225,000
150,000
75,000
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F 2020 F
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INDUSTRIAL SECTOR
INDU STRIAL SECTOR
CAMBODIA
The Ministry of Economy and Finance estimated growth Figure 5: Planned Route of Ring Road No.3
of 10.9% for Cambodia’s industrial sector in 2018. The
brightest spots of the industrial economy were
construction (18.1%), followed by non-textile CBD
manufacturing (9.3%) and textile manufacturing (7.8%).
Chom Chao
Roundabout
Cambodia’s industrial sector is also benefiting from the
rapid development of infrastructure both within and
around Phnom Penh. Major projects to commence in
2019 include Ring Road No. 3, the Phnom Penh-
Anlong Chen
Sihanoukville Expressway and the expansion of several
National Roads. These infrastructure projects will
significantly improve connectivity within Cambodia and Source: Ministry of Public Works and Transport & CBRE Cambodia
will help to boost logistical integration with key industrial
locations around the region.
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INDU STRIAL SECTOR
CAMBODIA
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RESIDENTIAL SECTOR
RESIDENTIAL SECTOR
CAMBODIA
Condominium supply continues its rapid growth, particularly in the high-end and mid-
range sectors. The anticipated impact of continued supply increases is a downward
adjustment to average sale prices and rental rates across the sector, and a rise in the
conversion of condominiums into serviced apartments in an attempt to alleviate the
projected over-saturation throughout the market.
The rapid growth in Phnom Penh’s condominium sector indicating increasing interest from Cambodian
since 2014 has primarily been fueled by interest from purchasers in the affordable condominium sector. As
foreign purchasers predominantly from China, land prices continue to appreciate, Phnom Penh has
Singapore, Taiwan, Malaysia, Korea and Japan, motivated witnessed a rise in launches of affordable projects in
by comparatively high rental yields which range between secondary locations that aim to target local buyers.
5% and 8% as well as the continued stability and
opportunity afforded by Cambodia’s dollarized economy. The vast majority of serviced apartment supply continues
to be located centrally within the capital and remains
Premium condominiums in central locations are still out tailored towards the expatriate community. Supply has
of reach for the majority of domestic buyers. Whilst there steadily increased in recent years with little change
has been clear take-up from wealthy domestic buyers expected within the Grade B segment. More notably, the
looking to invest in flagship condominium projects, only market is witnessing an increase in international
a small portion are being purchased as a primary operators within the market, with Somerset opening their
residence. However, in recent years a trend has emerged first fully branded residence in Q3 2018.
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RESIDENTIAL SECTOR
CAMBODIA
PROJECT DELAYS RESULT IN INCREASED In recent years, rapid increases in land prices across
PIPELINE OF NEW CONDOMINIUM SUPPLY Phnom Penh have led to landed property becoming
increasingly unaffordable for young Cambodians,
The condominium market in 2019 will see a spike in pushing young families and rising middle-class buyers
activity due to the delayed completion of 17 projects from towards the condominium sector. Thus, there has been a
2018 added to an existing pipeline of 26 new completions growing trend of local buyers focusing on the affordable
in 2019. The completion of these 43 projects will add a condominium segment where sale prices can be less than
total of 16,939 units to Phnom Penh’s condominium US$1,400 per sqm, equating to less than US$50,000 per
stock, equating to 120% growth in total supply y-o-y. The unit. Financing remains scarce especially for off-plan
biggest change is expected in the high-end segment with strata-title projects, presenting a barrier to entry for many.
an estimated increase of 243% y-o-y, followed by the
affordable and mid-range sectors at 100% and 78%, It is anticipated that the swift transformation of Phnom
respectively. Penh in general will play an increasing role in
condominium sales, particularly with regard to the
Through to the end of 2020, Chamkarmon District will growing traffic volume that is pressurizing the city’s
continue to host the largest volume of condominium infrastructure, a by-product of the rapid rate of
supply with a total of circa 12,000 units, followed by 7 urbanization. It is therefore forecast that there will be an
Makara and Sen Sok which are due to represent 14% of increase in demand for centrally located supply as second
the total supply each by 2020. homes in the coming years.
Figure 6: Phnom Penh Condominium Supply by Grade Figure 7: Future Condominium Supply by District as of 2020*
45,000 140%
Chamkarmon
40,000 120%
35,000 Sen Sok
30,000
100% 6% 4% 7 Makara
80%
6%
25,000 33%
6% Russey Keo
20,000 60%
15,000 7% Mean Chey
40%
10,000 Toul Kork
20% 10%
5,000
14% Chroy Changvar
0 0% 14%
Daun Penh
2019F
2020F
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
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RESIDENTIAL SECTOR
CAMBODIA
2,000 60%
1,800
50%
1,600
1,400
40%
1,200
1,000 30%
800
20%
600
400
10%
200
0 0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F 2020F
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RISKS & OPPORTUNITIES
RISKS AND OPPORTUNITIES
CAMBODIA
OPPORTUNITIES OPPORTUNITIES
• Cambodia’s economy to maintain robust performance • Shifting occupier demand towards more international
and macroeconomic stability. standard specifications could be a potential benefit for
• Political stability after the general election in 2018 to the market in attracting increasing numbers of
reinforce investor confidence as can be seen through corporate tenants to the capital.
the increased volume of approved investments in 2018.
RISKS RISKS
• The potential withdrawal of Cambodia’s access to the • The rise of strata-title office stock poses a challenge
“Everything But Arms” (EBA) preferential trade with regards to building management and regulations.
agreement could increase the price of Cambodia’s For instance, price differences could occur in the same
exports and hinder the country’s competitiveness as a development owned by multiple landlords, creating
manufacturing destination. confusion. In addition, the lack of control of tenant mix
• Over-exposure to foreign investment, particularly from within strata-title developments may deter corporate
China, could make Cambodia vulnerable to unforeseen tenants.
economic issues, particularly at a time of global
economic and political volatility.
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RISKS AND OPPORTUNITIES
CAMBODIA
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This report was prepared by the CBRE Cambodia Research and Consultancy Team, which forms part of CBRE Research – a network of preeminent researchers who
collaborate to provide real estate market research and econometric forecasting to real estate investors and occupiers around the globe.
All materials presented in this report, unless specifically indicated otherwise, is under copyright and proprietary to CBRE. Information contained herein, including
projections, has been obtained from materials and sources believed to be reliable at the date of publication. While we do not doubt its accuracy, we have not verified it
and make no guarantee, warranty or representation about it. Readers are responsible for independently assessing the relevance, accuracy, completeness and currency
of the information of this publication. This report is presented for information purposes only exclusively for CBRE clients and professionals, and is not to be used or
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