Sale prices of Phnom Penh landed property (borey) units showed no sign of slowing down in the past six months. Driven by strong local demand, the average quoted prices accelerated across all unit types, according to the first quarter report from CBRE, a commercial real estate services and investment firm.
Compared with the third quarter of 2019, the average sale prices of flat houses and twin villas during Q1 saw moderate increases of 2.1 percent and 2.2 percent respectively, while link houses saw quoted prices rise 2.9 percent. More notable increases were seen in shop houses and villas, where price growth was recorded at 3.9 percent and 4.3 percent, respectively.
The prices ranged from $100,000 up to nearly $900,000 from the third quarter of 2019 to the first quaretr of 2020. The report noted that the borey sale prices will remain robust during the next six months, driven by their local status as a safe place for capital.
In a less positive scenario, the market could start seeing price corrections fuelled by household cash-flow distress and likely to be contained to the secondary market, at least initially. In the first quarter of 2020, there were three projects completed and work began on five projects. The three completed projects are in Mean Chey and Chbar Ampov districts, while Sen Sok district remains the leading district for landed property supply.
CBRE’s manager of research and consulting Kinkesa Kim said that, for this sector, local buyers dominate demand and prices could fall if buyers’ income is cut because of the outbreak of COVID-19.
“There is more competition between developers in the secondary market. A lot of owners who own several landed properties have started putting those units up for sale,” Kim said.
Grace Rachny Fong, executive director of Century 21 Cambodia, told Khmer Times that the recent government measure to exempt the 4 percent stamp tax on all residential properties valued at less than $70,000 until January would help buyers and sellers to support sales growth. Therefore the property market is strong.
“The majority of buyers purchased their home to live in,” Fong said. She said that to align with the National Bank of Cambodia’s loan easing measures, some banks have come to deals with customers on repayments and they [banks] can find loyal customers during the COVID-19 crisis.
“Although the real estate market has been quiet recently, orders for and purchases of borey are still there. Moreover, affordable condominiums saw a rise in prices as well over the past eight months,” Fong said.
According to the Ministry of Land Management, Urban Planning and Construction, the first two months of 2020 maintained strong growth in approved investments for construction, with the total value of approvals reaching almost $2 billion across 728 public and private projects, indicating a growth of 47 percent compared with the same period in 2019. This is likely to have slowed considerably in March 2020 as international investors are stymied by the ongoing issues caused by the virus, as well as its fallout on the finance and banking industries, as well as the global, regional and local economies.