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Office supply to see an increase: CBRE

Poovenraj Kanagaraj / Khmer Times Share:
The Bridge, a condominium building in Phnom Penh. CBRE’s report shows that the condominium segment is the most dynamic sector in real estate. KT/Valinda Aim

CBRE Cambodia unveiled their Office Market Update Q1 2019 yesterday to showcase the property trends involving the retail, commerce, landed and the residential sector.

After a slump in the fourth quarter of 2018, the period between January and February of 2019 saw $1.56 billion invested in the construction sector. CBRE estimates the amount increased to $1.8 billion by the end of Q1, indicating a healthy start to the year.

In the commerce sector, 81,500 square metres of new Grade B supply is forecast for this year. However, over the long term, projects targeting Grade A properties are expected to dominate the market.

“Grade A properties are expected to enter the market in early 2020 and significant focus is placed on Koh Pich for large scale strata-title projects,” said James Hewson, manager of CBRE Research and Consulting.

In terms of office occupancy, the average market occupancy rate is currently at 85.96 percent while Grade C properties continue to be the star performer.

As for rentals, the influx of Grade B properties is expected to place downward pressure on rents this year, with other markets predicted to follow recent trends.

Around 30 projects – 22 Grade B and 8 Grade A offices – are expected to be supplied from the second quarter of 2019 until 2023.

New launches in the first quarter of the year include Chief Tower and Maritime Tower, expected to be completed by the year 2022 and 2023, respectively.

The report also shows that the residential, particularly condominiums, is the most dynamic sector. The sector saw an increase of 7.7 percent with the recent addition of three finished condominium projects.

“We believe the international community will continue to drive the uptake of condominiums in the future,” Mr Hewson said.

“While there are certain worries of oversaturation among the mid-range to high-range sector, we do see an increase in the low range affordable units in the next couple years,” he added.

He said that flats and link houses appear to be popular choices.

“We tend to find that in the landed property sector, there is a high portion of demand coming from the local community and coming from mid-to-affordable purchasing power of the local community.

“In the future, we are expecting a rise of demands for affordable condominiums from the same community while the mid-range to the higher affordable condominiums will continue to be driven by the international community,” Mr Hewson said.

In the retail sector, the vacancy rate remains at a 10-year low. Due to the launch of Sen Sok city’s Aeon Mall, a lack of retail in the market and delays in other projects, the vacancy rate has stayed below 10 percent.

However, with new projects expected to be delivered in the year to come, the vacancy rate is expected to increase.

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