The Phnom Penh real estate market has slowed down as a result of macro factors in the global ecnomy according to International Real Estate company CBRE’s Q1 Market Insights report. Citing international factors such as the conflict in Ukraine, Lawrence Lennon, Managing Director of CBRE Cambodia was bearish in the short and midterm.
Rising constraints in the global economy whether it be rising interest rates, western economies on the brink of recession..the conflict in Ukraine and the Chinese real estate market under pressure..we face a great number of headwinds that are expected to persist into the short to mid-termLawrence Lennon, CBRE
He later added that “the game has fundamentally changed as supply continues to rise and demand remains lackluster.” Specific to the residential condo market, the CBRE report indicates that only a few condos are able to maintain their asking price while most developers are being forced to offer discounts or favorable terms to get units sold. Q1 alone added 1,300 units to the market, adding to the oversupply.
In landed property, there was a bright spot, linked houses saw an increase of 7% in sales price in Q1 due to their attractiveness to a wider group of buyers.
Deputy Managing Director of CBRE Cambodia noted that Phnom Penh real estate developers have to extend longer payment terms to make the properties more affordable to Phnom Penh real estate buyers.
Phnom Penh Real Estate – Hospitality
Tourism in Cambodia is forecast to rebound to 4 million, which is 70% of the peak in 2019 partially benefiting from the tailwind of the very successful SEA Games. Meanwhile, Phnom Penh luxury hotels are expected to add 1,500 additional rooms, which is an increase of 11% to the supply of 4 and 5 star hotels.
Phnom Penh Real Estate – Retail
Q1 saw just one new major retail development, Prince International Plaza, however construction is expected to add a whopping 119,000 sqm by the end of the year. Eight new projects will add 30% additional supply to Phnom Penh Real Estate’s Retail sector with Phnom Penh’s south being lauded as the new hot spot.
With the expected supplies by the end of the year, combined with high inflation rate, we still forecast the occupancy rates and rental rates to continue to experience downward pressure over the rest of this yearDaluch Chin, Senior Manager, Valuation & Advisory of CBRE Cambodia.
The average Phnom Penh retail occupancy rate is at 70.2% according to the report.