Demand for affordable residential housing within Phnom Penh and its surrounding urban areas has already proven to be a swiftly developing trend in the real estate market in 2017, and is anticipated by market experts to continue to prosper throughout 2018.
Already, many developers have responded to this shift in demand by proposing and constructing more modestly priced housing projects throughout the capital’s suburbs.
One of the areas demonstrating significant potential for the development of low-cost residential housing projects is Prek Pnov – situated northwest and approximately 15 kilometres from central Phnom Penh.
This area (Khan) is divided into five key districts (Sangkats) – Ponhea Pon, Prek Pnov, Samraong, Kouk Roka and Ponsang.
Market experts have voiced their views on the seemingly untapped potential of this area, saying Prek Pnov is an area that developers and investors alike should seriously take into consideration when looking at where to construct their upcoming projects.
Oung Mean, a local independent plot land agent, said: “Prek Pnov is an economic and tourism area. Among all land surrounding the city, Prek Pnov is relatively cheaper.
“Compared to areas such as Chamkar Doun where one piece of plot land averages $15,000, an amicable plot land investment in Prek Pnov averages at approximately $7,000,” he added.
With similar land to that of Koh Pich, Mr. Oung added: “Prek Pnov will be likely to become the second Diamond Island after it reaches its full development potential.”
Kim Heang, the President of the Cambodian Valuers and Estate Agents Association (CVEA), agreed with the positive outlook of the area.
“Compared to all suburbs around the city, Prek Pnov is the most attractive location for low-cost housing projects, thanks to its relatively low land price,” he said.
“At present, low-cost or affordable housing projects are in high demand among lower-middle and middle-income family and Prek Pnov – being within a distance from Phnom Penh that still allows ease of accessibility – is the best location for developers to build projects of this kind.
“Over the past few years, developers have built borey projects within the $80,000 to $100,000 price bracket, and those who could afford this price have already bought them.”
He believes that projects that are within the $30,000 to $40,000 bracket are reflective of what the majority of the local market can afford, based on income, and therefore Prek Pnov offers potential in this respect.
Although demand for affordable residential housing is indisputably rising, so too is the demand for plot land that enables investors and developers alike to find inexpensive land to either solely invest in or host their development projects.
Commenting on the plot land potential of Prek Pnov, Mr Kim said: “If you are looking to buy plot land for investment or development, you should purchase in Prek Pnov, given that the city’s development trend has proven to be focused on the northern areas of the capital.”
However, he also said it was of paramount importance to have secure ownership rights, warning: “If the land in Prek Pnov has no hard title, do not purchase it.”
This advice is a general consensus amongst market experts, because with an absence of hard title ownership, the purchaser does not have any legally enforceable rights to their land and therefore no security in their investment should any dispute arise.
Looking further at the investment potential of plot land in general, Cheng Kheng, the Chairman of Cambodia Properties Limited (CPL), said: “Plot land is a prime investment opportunity – as long as sellers have a clear plan for their projects.
“Sellers of plot land should ensure they provide basic facilities such as sewage and electricity systems, as well as ease of road access and other necessary infrastructure if they want to ensure the successful sale of their project to customers.”
However, Mr Cheng explained that in reality, many developers will promise buyers that these infrastructure frameworks will be built, but in many cases, this does not take place.
“For example, they [developers] will promise to build 200-metre roads when announcing to sell their projects to buyers, but after they sell their projects, they end up only building 50-metre roads,” he said.
Mr Cheng urged developers to perform their due-diligence and keep their promise with regard to their projects, adding that plot land can significantly help lower-income families obtain a permanent residence when they cannot afford more expensive residential borey projects in central Phnom Penh.
Demand for plot land in Prek Pnov is rising remarkably at the moment.
Mann Chandy, the CEO of Premium Housing Co, Ltd invested in four plot land projects in Prek Pnov. Speaking of his investment, Mr. Mann said: “With the rising demand for plot land in this area, 70 percent of my project has already sold.”
Mr Mann stated that his plot land project, with a starting price of $2,700 for five square metres by 20 square meters of plot land, is the most popular among low and middle-income purchasers.
According to the latest Housing Market & Outlook Report 2017 by Vtrust Appraisal, Prek Pnov, since 2001, has only seen the commencement of nine major landed house projects and 12 sub-projects, amounting to just over 6,000 units.
There were only two completed projects when the report was released at the end of 2017, totalling 304 units. However, another 3,720 units are expected to finish by the end of the first half of 2018, which exemplifies a significant increase over a short period of time, aligning with the projections of other market experts.
Although there are presently very few projects in the area, Mr Mann and other industry insiders are optimistic that Prek Pnov, as an emerging suburb, will experience expeditious development over the coming years, due to the affordability of land, accessibility to central Phnom Penh, and as Mr Kim also alluded to, the undeniable trend of the capital’s rapid expansion towards the north.
Interested in investing in plot land? Search our current plot land for sale on Realestate.com.kh.
Vat Vin is an editor @ Realestate.com.kh