Oversupply and a lack of foreign buyers are pushing down condominium in Cambodia prices across the range from high-end to affordable in Phnom Penh and causing many developers to delay and reposition their projects, according to the local arm of the world’s biggest real estate company. CBRE Cambodia says it has seen sales prices fall by between 1.8 percent and 3 percent across all grades in the third quarter of the year, compared with the previous quarter.
“High end condominium prices right now are looking at around $2,700 per square metre,” said Kinkesa Kim, senior manager of research and consulting services. “For the mid-range we are looking at a price of around $2,300 and around $1,300 for the affordable segment,” she said.
The lack of foreigners in Phnom Penh is hurting condo sales and online events are doing little to increase business so many developers are turning to look at local buyers, according to Kim.
“Overseas sales are particularly challenging because of the restrictions on travel and we have heard a lot from developers that this is not helping at all. Any virtual site visits, or sales events they are conducting in particular, help them to keep their names heard in the overseas market but that doesn’t necessarily translate into sales. What we are seeing right now is that a lot of condominium projects are shifting the focus into the local market and fighting for a share of the pie,” she said.
Kim said many condominium developers are finding it hard to attract locals because they like investing in landed property and want to pay for high- to mid-range condominiums with high-specific fixtures and fittings. As a result, developers are pushing some projects down to the affordable end and putting in cheaper furniture and appliances.
Others are shifting from individual to bulk sales, targeting investors who want to create serviced apartments and apartment hotels. Kim said the landed-property segment was relatively healthy because locals have few other ways to make speculative investments, given the lack of liquidity in the stock market.
As for the rental market, Kim says there was a big drop in the prices landlords could charge in the third quarter. Rents have dropped by between 5.6 and 7.8 percent quarter-on-quarter.
“This is particularly challenging for condominium rental rates because they are now also competing with the supply of service apartments in the market and a lack of momentum in the pickup rates as the majority of the expat community is still overseas and hasn’t returned,” Kim said.
There may be a rebound at the end of the fourth quarter and going into next year as the country is expected to ease entry restrictions on foreigners, with the government considering whether to issue tourist visas and cut the 14-day quarantine in half as early as next month.
This article was first published in Khmer Times. All contents and images are copyright to their respective owners and sources.