Real estate prices in Cambodia are starting to take a hit due to COVID-19, according to a report from CBRE Cambodia. The outbreak, which began in Wuhan, China, back in January 2020, has infected more than 1.2 million people internationally by early April 2020. As the pandemic escalates, the socio-economic effects of COVID-19 are starting to affect the real estate prices in Cambodia.
Condominium prices face downward trend
By the end of Q1 2020, condominium prices per sqm, especially in the High-end 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% while the high-end market slipped by 0.5%. The affordable segment of the market, however, increased in price by 0.3%, according to CBRE.
Condominium rentals are also seeing prices go down. Rentals in the high-end and mid-range have slid by 0.4% and 0.6% respectively. The drop in prices is attributed to fears surrounding COVID-19 and new supplies of condominium units coming online in Q1 2020.
The CBRE Cambodia report indicates that the effects of COVID-19 on real estate prices, especially in condominiums, are still in its early stages.
Office space market become more competitive
According to CBRE, the competition has somewhat intensified for landlords, some even offering short-term discounts to attract new tenants – a market that has been severely limited due to the uncertainty surrounding COVID-19.
It is expected that the spread between quotes and actual rentals will widen through Q3 2020 as the pandemic continues to escalate. The incoming influx of office spaces is reportedly expected to apply downward pressure on rental prices in Q2 and Q3 2020.
Retail spaces most exposed to COVID-19 pressures
The cancellation of major public events and segments of the Cambodian population observing self-quarantines have resulted in lower foot traffic in commercial centres.
According to CBRE’s report, the foot traffic in Phnom Penh’s retail centres saw a sharp drop due to the spread of COVID-19. Low retail sales have translated to quoted rentals rates being slashed by as much as 10.5%, the sharpest reduction in 4 years.
Retailers are advised to explore omni-channel presence to keep afloat amid the pandemic.CBRE expects retail and consumer confidence to pick up later in 2020.
Landed property remains resilient
According to CBRE, Borey developers’ confidence remains strong despite economic headwinds such as the EBA 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% in linked house properties during the same period – with villas reporting price growths of up to 4.3%.
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, a.k.a resales.
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