Condo sector sees rise in supply composed mostly of affordable units

Chhut Bunthoeun / Khmer Times No Comments Share:
CBRE says the current trend in the local condo market is to target local buyers by focusing on affordable units. KT/Pann Rachana

Thirteen condominium projects joined the local supply during the first half of the year, according to the latest report from real estate services firm CBRE Cambodia.

In its report, CBRE said the newly launched projects mostly belonged to the affordable segment, accounting for 67 percent.

Sothida Ann, CBRE Cambodia director, told Khmer Times the trend in the local condo market now is to target local buyers by focusing on affordable units.

“The affordable condominium segment has performed well in terms of supply and sales as it enjoys strong support from local customers,” she said.

“You even see now some banks offering loans to help local buyers acquire properties in the affordable segment,” she explained.

In the second quarter of the year, there were 16,658 condo units in the local market. This figure is expected to rise by 31,000 units in the last quarter, according to the report.

It also notes that there was a nominal change in average prices within the mid-range and high-end, showing a shift of less than 1 percent in both segments, with prices averaging $3,254 and $2,568 per square metre, respectively.

The affordable market segment, on the other hand, experienced an upward adjustment of about 1.9 percent quarter-on-quarter, increasing the average price to approximately $1,501 per square metre.

The report further showed that condominium rents have seen a slight increase. The mid-range saw a 4.3 percent increase, with an average rate of $12 per square metre. Meanwhile, the high-end segment rose by just under 3 percent, bringing the average rental rate to $14.6 per square metre.

Kheang Puthy, president of the Real Estate Association, said the condo market has remained strong during the first half of the year due to the influx of Chinese investors.

“Even though a lot of projects have come online, I haven’t seen any sign that the market might slow down,” he said, arguing that foreign investors and businessmen, especially from China, are pushing up demand for the units.

The National Bank of Cambodia (NBC) projects that growth in the local real estate sector – particularly condominium, retail and office space – will slow down in upcoming months as supply increases.

In a report released in April, NBC pointed out delays in several construction projects within the condominium, retail, and office segments during 2018’s last quarter. This pending supply was expected to hit the market during the first half of 2019, along with the scheduled delivery of other projects.

“By the end of 2019, the supply of condominium units in all segments – retail space, and office space – is expected to surge,” NBC said.

According to the Central Bank, these developments have raised some concerns that perhaps incoming supply might outstrip demand. This is particularly the case if both external and domestic demand weakens going forward.

“As a result, sales, rental and occupancy rates across the market could be adversely affected in 2019,” NBC said.

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