A wave of slumping real estate prices has swept across Asia. But apparently, Cambodia didn’t get the memo.
The Kingdom seems to be running in a different direction than the rest of the world. Half a dozen news outlets have named Cambodia one of the best places in Asia to invest money in the past month.
Slump or price correction?
Prices in Hong Kong, normally one of Asia’s top performers, have been sliding down over the past six months. That comes after an unprecedented period of growth.
The story looks similar in Australia. Value of homes in Sydney, for instance, are experiencing their worst slump in decades.
However, this comes after almost a decade of prosperity.
Michael Care, a director at Barry Plant real estate, which has offices around Australia, said the downturn was being felt in both Sydney and Melbourne.
“The government has placed tighter controls on foreign investment over the last couple of years and more recently lending has also tightened … There’s also a general affordability issue whereby price growth has become out of line with wage growth,” Care said.
Caution in Southeast Asia
The Asean region is currently experiencing an unprecedented influx of foreign investment, especially from China.
Many speculate that investors from abroad could become more cautious in 2019.
“Despite being relatively isolated in the region, Laos has been feeling some minor effects from the current slump across Asia,” said James Whitehead, CEO and director of Laorealestate.la and classified website Yula.la.
Nonetheless, spirits are still high in the country, especially amid clear progress of the One Belt One Road rail network, directly connecting Yunan (China) and Vientiane (Lao capital). Whitehead noted that his company’s upcoming real estate expo would serve to jumpstart activity in the sector for 2019.
However, international outlets have been quite vocal about the Kingdom’s prospects over the past few months. InvestAsia, Property Investor Today and the Global Times have all published stories recently about Cambodia’s potential as an investment hotspot.
China’s Hurun Report released a ranking this week that named Cambodia as the number one location in the world as far as home price increases.
Whether the hype matches real-world demand, however, remains to be seen.
Some inside Cambodia have speculated about having an oversupply of property in the top half of the market, particularly condos.
James Hewson, manager of research and consulting at CBRE Cambodia, said he expected there could be a price correction in the condo market in 2019. Supply of high-range units, he said, was set to grow by 243 percent.
“This substantial influx may catalyze market adjustments in the coming quarters.”
Khorn Kungkea, CEO of ERA Cambodia, on the other hand, was optimistic that first-time buyers and international investors would come in to boost demand for condos. He pointed to the fact that Cambodian prices are still far lower than condos in other parts of Asia.
“Price per square metre here is still significantly lower than condos in China, Korea, Japan and Singapore.”
For a more in-depth look at the issue of oversupply in the real estate market, go to Realestate.com.kh’s news blog.
Tyler Lebens is a Content [email protected]