More affordable condos needed in Cambodia: report

Focus on low-end tiers a step in the right direction, say analysts

Condo blocks in Phnom Penh. slyellow/Shutterstock

Plenty of condominiums are in the pipeline for Cambodia this year, but developers should target units in the low-end segments, leading market observers suggested.

The supply of affordable condominiums is poised to top 7,000 units in 2019, with total condo supply expected to rise by 120 percent, CBRE Cambodia reported.

Such influx of units will lead to a moderation of in rental rates. Monthly condo rents currently average around USD8.3 per square metre in Phnom Penh.

Although mid- to high-end condo projects will continue to be completed in Phnom Penh, future launches should lean toward more affordable pricing tiers, according to James Hodge, the consultancy’s associate director, speaking with Southeast Asia Globe.

“There needs to be one eye on the sustainability of affordable development, ensuring that supporting services and amenities are included in the developments aimed at the affordable market, and making sure that traffic congestion doesn’t cause too many issues around that development ground.”

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Asking prices of affordable Phnom Penh condos currently average around USD1,473 per square metre or 73 percent higher than those in Ho Chi Minh City.

“Whilst the affordable condominium sector is comparatively expensive when compared to some of Cambodia’s neighbours, the recent influx in launches within the sector is a refreshing step in the right direction to meet local demand,” CBRE noted in a recent market update.

Suburban locations such as Sen Sok, Toul Kork, and Chroy Changva districts are seeing an upswing of new launches as a result of dramatic land appreciation in downtown Phnom Penh.

“The central districts – Tonle Bassac and BKK1 for residential supply are quite strong, but from a commercial perspective there’s not too much coming in the central districts in 2019,” Hodge told the Globe.

Buoyant demand for serviced apartments has led to strong occupancy rates in the sector, he added.