Cambodia’s condominium market has been falling by rates of up to 50 percent because a lack of foreign investment has forced many developers to seek a new target market.
Since the first quarter of this year, Cambodia’s economic growth has been severely hampered by the outbreak of COVID-19.
The real estate market, in particular, felt its effects as both international and local buyers’ priorities shifted with the onset of the pandemic.
As the pandemic continued to affect Cambodia’s real estate industry, the economic fall-out from the second quarter’s disruption was not fully understood.
Over the course of the second quarter, the market witnessed three new launches of condominium projects across three districts and these projects along with current projects have already seen a decrease in the original sale prices.
Cambodia has seen a fall in the inflow of foreign direct investment (FDI) in real estate.
According to the semi-annual report of the National Bank of Cambodia (NBC), FDI inflow into real estate fell 24 percent, of which construction dropped 8 percent.
The high-end condominiums in the capital, which include gyms, rooftop infinity pools, five-star restaurants, movie theatres, kindergartens and mini-marts, have seen a recent drop in price by up to 50 percent. The lack of foreign investment has opened up the door for more domestic investment at much better rates so properties can be unloaded quickly and investments recouped.
Sales consultant Chan Viokha from Royal SkyLand development, a project set to have 1,440 condominiums based in Toul Tompung, said: “Our development will be ready in December 2022. There are not a lot of foreigners in Cambodia because of COVID-19. The original price of a studio was around $129,000 but now if you buy upfront with a onetime payment you will save nearly 50 percent and can buy a studio for around $59,000. We are aiming to sell to people who are already living here in Cambodia. This offer is for the first 100 condos sold.”
One major impact on discounts being offered to customers is the Guaranteed Rental Return (GRR). In layman’s terms, GRR is a future rental income that is guaranteed by the developer or management company to the property purchaser for a contracted period of time after the purchase agreement is signed.
A sales agent for realestatekh.com said: “When buying a condo here a lot of the discount does also depend on how much of a down payment a customer will make and if they choose to make use of the GRR. But COVID-19 and borders being closed have had an impact on the market here.”
While there has been a negative correction across almost all of the condominium market, the COVID-19 pandemic is still at large. It is likely the market will remain under pressure until travel restrictions ease and foreign investment returns.