Real estate in Cambodia
When planning to do business in Cambodia, one of the essential steps is to look for suitable office space and a place to live. As both represent a large part of overall fixed costs and will affect business performance, location and a good relationship between lessor and lessee are things to look out for when renting property.
■ Land prices
In recent years, the ranking of the most expensive places in Cambodia remains unchanged and the highest priced lands are still in the central Phnom Penh, where among the foreign residents, particularly popular areas being Boeung Keng Kang 1 (BKK1) and Tonle Bassac (TB).
According to the report published by the biggest real estate company in the world, CBRE Group, Inc., the land prices in the main city areas has risen during the first quarter of 2018 about 4.2%, where we could observe only 1.2% growth during the previous year. On the other hand, the average land prices have risen from 1.4% since the last quarter and 5.4% comparing to the last year.
Mr. Ross Wheble of Knight Frank, a real estate consultancy firm, gave his insight that “City is growing in all directions and in expanding rapidly Sen Sok, there is currently ongoing construction of the second AEON MALL. This area also has attracted a plenty of investments in infrastructure as well many road improvements and even the corresponding land prices effectively have gone up by almost 100% over the past three years.”
In addition, when asked about land prices, he predicts, “The elections are coming up next year, so the market will slow down a bit. But when you look at the economic fundamentals for Cambodia, we foresee that the real estate market in Cambodia will continue to grow for many years. Still, the real estates’ and land prices’ growth rate are both difficult to predict individually. But I think for the lands, we will still be looking at around 10% per annum in the prime locations, and for the other areas it may be much higher”.
■ Office rental
Lately, in Phnom Penh we can observe a rise both in supply and rental of office spaces, including the best, grade A offices. With opening of the Vattanac Capital Tower in 2014, followed by also recently opened 2nd largest grade A office building, the Exchange Square, the office space market continues to diverse even more.
Regarding the office space rent, in the first quarter of 2018 the average rent for the grade A (without service charge) oscillated between 28 and 38 dollars per 1 ㎡, while for the grade B from 15 to 26 dollars per 1 ㎡ and from 8 to 18 dollars per 1 ㎡ in case of the grade C offices. Even now, in Phnom Penh we can expect new office buildings in the near future.
■ Renting of commercial space
According to Knight Frank, the existing supply of retail space is right now 162,405 square meters. It is estimated that by 2020 it will rise up to about 265%, which give an increase up to 430,275 square meters.
AEON MALL, which became the first international standard mall in Cambodia, still holds 100% occupancy rate and in 2018 AEON Mall 2 opened in Sen Sok district. Additionally, they announced that they are planning to open in future 30 other malls just in the capital and its close areas.
Mr. Ross of Knight Frank said, that “Even the new commercial complexes have plenty of space holders already”.
Regarding the ongoing change in the commercial space market, Mr. Grant Fitzgerald of Independence Property Service (IPS) noted “With the growing number of condominiums, residential and commercial spaces, the importance of property management is also increasing. Previously, you could attract tenants just by placing a manager, but now there are many competitors and professionals with a high level of expertise, which is needed when doing the business both in case of commercial facilities and condominiums”.