Prices up for shophouses as buyers hope to resell

Sum Manet / Khmer Times No Comments Share:
Cambodian shophouses. Supplied

Prices for shophouses in the capital went up last year, with demand growing as buyers eye opportunities to make a profit in the secondary market.

Meanwhile, the market for linked houses, also known as terraced houses, saw a decline in prices.

Hoem Seiha, research director at VTrust Appraisal, told Khmer Times that shophouse prices in the primary market increased on average 57 percent last year, due mostly to the fact that the majority of new developments were located in prime areas, such as central Phnom Penh.

“People start to realise that buying shophouses is a good investment for the secondary market. They can resell them at much higher prices than any other type of house,” he said.

“For example, at a project of New World in La Sen Sok, units in the primary market were valued at $180,000.”

The primary market refers to newly built properties that are handed over directly from the developer to the first purchaser. The secondary market includes those units that are sold to a third purchaser by the original buyer.

“With supermarket Macro already in operation and the second Aeon Mall approaching completion, shophouse units put on sale in the area are reaching prices of $300,000 to $350,000 per unit. We can see that there has been a big increase, somewhere in between 60 and 95 percent.

“With buyers noticeably more interested in shophouses, developers have started to hike up prices,” he added.

By contrast, linked houses’ prices in the primary market went down in 2017, by 38 percent on average.

Mr Seiha explained that this is because new terraced house projects are being built in peri-urban areas, where real estate prices are significantly lower.

“For example, New World in Chhouk Va offers thousands of units with prices ranging from $45,000 to $60,000, which is considered to be very low for this type of property,” he said.

“Not many luxury developers entered the market for residential linked houses last year. Only small and mid-range developers did, which kept prices low.

“Only New World, with 5,800 units, and a handful of other developers entered the market, selling units under $100,000,” he added.

“Because supply is bigger for linked houses than for shophouses, demand in the secondary market for linked houses is not that high, which makes them less attractive for speculative buyers. This slows down price growth in the market.”

According to a report from the Ministry of Land Management, Cambodia will need 800,000 new homes in urban areas by 2030 to meet population growth.

“With the rapid growth of the economy and urbanisation, the ministry found that the population of urban areas in 2014 was 4.5 million, equaling 27.1 percent of total population. Urban population will reach 7.92 million by 2030, or 44 percent of the total population of Cambodia,” it said.

“In the next 15 years, from 2015 to 2030, residential demand for the capital city and urban areas will reach 800,000 homes, which averages out to about 50,000 homes per year,” the report found.

The combined value of approved construction projects reached $6.42 billion in 2017, an increase of 22.31 percent. Across the country, 3,052 new construction projects, equaling 10.74 million square metres, broke ground.

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