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Local property market best described as ‘flat’

Chhut Bunthoeun / Khmer Times Share:
Under construction: A borey project in Chroy Changva commune. KT/Pann Rachana

Cambodia’s local property sector has been described as “flat” while condominiums and boreys are tagged to be the hardest hit during the COVID-19 pandemic because the listings will eventually need to be put up for sale under current market prices in the coming months, according to an industry insider.

Grant Fitzgerald, country manager of Independent Property Services, told Khmer Times the current situation in the local property market is best described right now as “flat”.

“This is understandable given that countries around the world have essentially shut down in order to curb the spread of COVID-19. This shutdown will impact certain sectors of the estate market more than others, with the segments most exposed to debt to be hit hardest; this means condominiums and boreys,” he said.

He explained that a lot of these properties are purchased through loans and with the entire economy slowing down, people being laid off and salaries cut, there will likely see a sharp rise in loan defaults.

“Keep an eye out for under market-priced condos and boreys coming onto the market in the coming months. For now, cash is king. If you have it, keep it ready to snap up a bargain. Interestingly, our Siem Reap office is extremely busy at the moment.

Over the last few years, we have seen a boom in property investment up there. Now that people are needing cash, we have a lot of motivated sellers looking for fast sales in Siem Reap,” he noted.

According to the country manager, who has spent the past eight years working in Cambodia and China, the sooner things return to normal the better for the entire economy. As a general rule, Fitzgerald said, economies function much better when there is an element of certainty underpinning the market.

“When schools reopen, borders reopen and people get back to their normal lives, this is when market certainty and confidence will return and we will see the economy start to pick up again,” he said.

Credit Bureau Cambodia (CBC) has reported that total outstanding loans in the first quarter of the year reached about $28.4 billion, up to 26 percent compared with the same period last year. The loan portfolio mixture remains largely the same with business loans accounting for the largest share of disbursements followed by personal loans and mortgages.

Total outstanding mortgage loans amounted to $4.23 billion which represents a 31 percent growth compared with Q1 2019, according to the report. According to a recent CBRE report, Borey developers’ confidence remains strong despite economic headwinds such as the EBA (everything but arms 20 percent free-trade withdrawal and COVID-19.

Quoted prices on these properties also showed no signs of slowing down by the end of Q1 2020. In fact, prices saw increases of up to 2.9 percent in linked house properties during the same period – with villas reporting price growths of up to 4.3 percent.

CBRE’s report anticipates that borey sale prices will remain robust throughout the year. If there are any market corrections, household cash-flow distress is expected to be contained by the secondary market.

However, by the end of Q1 2020, condominium prices per square metre, especially in the high- and mid-range sectors, have begun showing signs of a downward trend. The mid-range market’s price per square metre decreased by 1.5 per cent while the high-end market slipped by 0.5 percent.

The affordable segment of the market, however, increased in price by 0.3 percent, according to CBRE’s report. Condominium rentals are also seeing prices go down. Rentals in the high-end and mid-range have slid by 0.4 percent and 0.6 percent respectively.

The drop in prices is attributed to fears surrounding COVID-19 and new supplies of condominium units coming online in Q1 2020.

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