Phnom Penh’s suburban developments gather steam, slowly capture investors’ interest

As FDI slows, suburban developments in Phnom Penh begin to make a splash — powered by improved infrastructure, a boom in retail, and the introduction of residential properties affordable to Cambodia’s affluent class

A Statue of King Father Norodom Sihanouk in central Phnom Penh, Capital of Cambodia. Chaay_Tee/Shutterstock

When Camko City launched more than 10 years ago as one of Cambodia’s most ambitious real estate developments, Sen Sok, the suburb in which it sits, was a sprawling mess of dirt tracks.

While the fortunes of Camko faded fast amid the financial crash of 2008—and have not seen much improvement since—Sen Sok’s luck has undoubtedly turned. A once ramshackle neighbourhood unlikely to turn the heads of investors is now one of Phnom Penh’s trendiest neighbourhoods.

There is more demand from Cambodian buyers and also developers targeting that market. We mostly see this in the affordable to mid-range segment. I think that’s where the future of that segment is heading

Land prices in Sen Sok skyrocketed in the last five years, from USD200 per square metre to USD2,000 per square metre. “Last year, the market in Sen Sok did very well and everything has been growing rapidly,” affirms Phou Sambath, assistant chief director of property development firm Borey Phnom Penh Thmey.

Sen Sok’s popularity follows the trend of investment in Phnom Penh’s secondary markets, as soaring downtown property prices vanquish bargains and a fresh crop of local investors emerges.

“The local market is where things have been heading for some time,” relates CBRE Cambodia director James Hodge. “There is more demand from Cambodian buyers and also developers targeting that market. We mostly see this in the affordable to mid-range segment. I think that’s where the future of that segment is heading.”

Properties at the centre of this demand comprise mostly landed developments and boreys or gated communities. Data compiled by Knight Frank reveal that by mid-last year, Sen Sok had the highest concentration of borey developments, representing 27 percent of the total existing stock. This was followed by the districts Russey Keo and Kamboul, with 12 percent each, Dangkao with 11 percent, and Meanchey 10 percent.

Improved infrastructure and a rise in high-quality shopping malls are driving the flurry of activity in these suburbs as investment in roads and bridges over the years has addressed one of the biggest barriers for mall operators and property developers to invest outside central Phnom Penh.

Landmarks such as the city’s Royal Palace point to Phnom Penh’s past, but the preponderance of showpiece projects in the skyline signposts its future. NathanBai/Shutterstock

Sen Sok, which gained a boost after fresh roads were laid and existing ones widened, “became doubly enticing for its low land prices and proximity to Tuol Kork, a bustling neighbouring district,” says Sambath. Like Tuol Kork where land prices have been largely driven by shopping malls, property values in Sen Sok started soaring after it became the site for Aeon Mall Co. Ltd’s second launch. According to Sambath, property prices in the district went from USD500 to USD1,000 per sqm almost overnight.

Largely owing to Aeon Mall, Sen Sok accounts for the largest supply of total retail space in Phnom Penh’s suburban areas at 27 percent. Prampi Makara district, which awaits the launch of Olympia Mall—set to feature sought-after labels like Versace, Vans and Lacoste—trails Sen Sok with 25 percent.

The link between a boom in malls and residential real estate is evident in other secondary markets.

Aeon is slated to begin construction of its third mall in Meanchey district, south of Phnom Penh, with an investment of nearly USD300 million. The mall will be located in the 2,600-hectare ING City, a mixed-use development which once completed will become the country’s largest single development. The slated projects have seen land prices in Meanchey soar, with a growth rate of 16 percent at the start of last year, the second highest in the city after Sen Sok with 17.1 percent, according to Key Real Estate.

Japanese retail giant Aeon has made its presence felt in Phnom Penh since opening its first mall in the city back in 2014. slyellow/Shutterstock

In Prek Pnov district, the third fastest growing outer district, land prices grew by over 27 percent in the first six months of 2019. Plots that were between USD280 and USD1,500 per sqm at the start of 2019 grew to between USD300 and USD1,700 per sqm. In Prek Pnov’s case, a big factor was the arrival of big-ticket infrastructure, notably near the ring road, National Road 51, and the railway station at Bandoeng Market.

Sorn Seap, founder and CEO of Key Real Estate, told local media that while average land prices in central Phnom Penh—around USD5000 per sqm—remain mostly unchanged compared to last year, prices in the suburbs are growing fast.

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Many experts see secondary markets as vital counterweights to further damage expected from the coronavirus pandemic.

According to CBRE, “Most recent launches, conducted amidst concerns over the COVID-19 outbreak, were seen from the key local developers. Borey developers’ confidence remains strong, signalled by the 14 newly launched projects witnessed during the past six months.” These include three new projects by Borey Peng Huoth Group, one by Chip Mong Land, and one by Borey Chea Ry.

Many will see robust local demand as picking up some of the slack left by plummeting investment from China —a mainstay of the real estate market—as a result of the pandemic.

After a positive start to the year with a 47 percent year-on-year increase in approved investment in construction across public and private projects, the market has slowed.

Chinese investors—a mainstay of the real estate market—have shied away from investment, decimating overall FDI to Cambodia.

This has been felt most keenly in Sihanoukville, a coastal city where Chinese investment fuelled hotel, gambling and manufacturing industries and where real estate rocketed ten-fold. Land prices have since fallen by 30 percent, partly due to the virus and partly due to a ban last year on online gambling, which cut off the city’s main driver of growth.

The COVID-19 pandemic has hit markets around Cambodia with hotspots such as Sihanoukville hammered by a decline in Chinese buyers. NhutMinhHo/Shutterstock

In Poipet by the Thai border and Kampot, a popular tourist spot, whose property markets have also been boosted by Chinese money, realtors have spoken of going from selling tens of plots a week before the pandemic to nothing now.

Yet analysts expect it won’t be long before Chinese money flows back in as ties between Beijing and Phnom Penh have strengthened amid a resounding show of support for each other throughout the health crisis.

Since the outbreak began, relations between Phnom Penh and Beijing have strengthened as each has shown support to the other. Prime Minister Hun Sen stood by President Xi Jinping very early on in the pandemic, played fears around the virus and became the first leader to visit him since the outbreak started. China, in turn, sent aid in abundance to Cambodia to prepare it for the virus.

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Georg Chmiel, executive chairman of, an international property portal for the Chinese, says there is still some short-term coronavirus-related uncertainty in Cambodia from Chinese, but that should ease in time. In the long-term, predicts Chmiel, several factors combine to make it likely that Chinese residential real estate investment will continue to grow.

“The close ties between the countries, the low entry price for luxury real estate by global and even Asian standards, the US dollar economy, the proximity to China, the ease with which new buildings can be approved and built, the China-savvy property developers and marketers, and the long-term prospects of fast economic growth. Many Chinese feel their money is safe in Cambodia.

”Until then, Cambodia can look to local investors to continue to fuel its booming real estate industry.”

This article originally appeared in Issue No. 160 of PropertyGuru Property Report Magazine