CBRE Cambodia Special Report on Sihanoukville

June 2, 2017, 9:30 a.m.

 

There have been many good things written about Sihanoukville in the past couple of months as both an “Alternative Condo Hub” and as “Cambodia’s Next Boom Town.” But beyond the surface, there are many underlying details that have not made major headlines yet, which make the humble province even more attractive for investment.

 

So, besides this mainstream information, what exactly has been happening to Sihanoukville and what does it have to offer? CBRE Cambodia answers those questions through their recently released “Special Report on Sihanoukville.” The report focuses on key aspects in the province such as location seasonality, accessibility, arrivals, hotel supply, condominium developments, industrial developments, land costs, construction costs, and operating costs.

 

Location and Seasonality

 

According to the report, “The driest periods are in January and February.” Meanwhile, “most rainfall falls from May till November.”  But the report also mentions that despite this, “on average, the temperatures can be considered high all year round.”

 

Sihanoukville is located at the tip of the hills on the peninsula, where it starts of 15 meters above sea level from the north, slowly brushing down into the beaches and marsh land as you head south. CBRE adds, “The sea is relatively calm, the water is warm, and of a low level.”

 

Accessibility

 

Now, because Sihanoukville is rapidly gaining interest, accessibility has also increased – especially with direct international flights already being offered from China, Vietnam, and direct flights from Kuala Lumpur commencing in August. The report states that as of February 2017, an increase of more than 168% year-on-year flight movements has been recorded.

 

In addition to increased flights, the seaports are also being utilized to bring in tourists as well as goods. Compared to 42 ships calling in from 2015 from the port, 2016 saw this increase to 49 cruise ships and foreign navy vessels. The January to March 2017 period saw 23 arrivals, demonstrating a significant increase for the year ahead.  Planes and ships are not the only means to reach the area. Travel by road is still the most popular method.

 

A new highway is currently being developed to make access to the province much easier. If you plan on traveling by road, the report states that “several bus companies run multiple air conditioned or local buses to and from Phnom Penh for as little as $3 to $4.” It adds that “buses also travel directly from Vietnam and Thailand to Sihanoukville.”

 

But if you don’t like taking public transportation, the report suggests hiring private cars that cost anywhere between $55 and $65, for a four-hour trip.

 

However, if you’re planning on taking the re-commissioned Royal Railway to get to or from Sihanoukville, this will take around 8 hours, but will only cost you $6 and a fantastic way to see the countryside.

 

 

Arrivals

 

It is important to note that because Sihanoukville is now more accessible, tourism has grown significantly as well. The report indicates that currently, year-on-year tourist arrivals have increased  by 37%, a representation of around 2.4 million visitors who visited the province in 2016 alone. This drove tourism receipts to an estimated total of around $3 million.

 

It also mentions that there was an increase of 12% of foreign visitors, on average, are staying  5 to 7 days in the area. The majority of these visitors are from China, Russia, and Vietnam.

 

The report also adds, “Cambodia and Sihanoukville were once an extension to the standard South East Asian Trip. They have now evolved as destinations in their own rights.”

 

Hotel Supply

 

There is  a wide variety of hotel accommodation in Sihanoukville. CBRE classifies them as low budget, midrange, high end, luxury, and super luxury. According to the report, the majority of this accommodation is  budget to mid-range hotels, hostels, and bungalows. These range from hotels on the beach, in the city and hotels on the islands.

 

Notwithstanding this, CBRE noted that the province’s “presence in the high end market has grown rapidly.”

 

The report also outlines the average daily rates per classification. Low budget hotels are around  $18 per night; mid-range hotels are at $38 a night; high end hotels cost $76 a night; luxury hotels will set you back $160 per night; and super luxury hotels are at $2,175 a night.

 

Condominium Development

 

The concept is relatively new to the province, with the first condominium project, Sunshine Bay, commencing sales in 2015. This has been quickly followed by D’Seaview. Both developments are set to complete in 2018, bringing in a total of 1,700 units all together.

 

As for construction costs, the report indicates that a resort hotel may cost around $1,303 per square meter to build. A 3-star budget hotel is slightly more expensive at $1,592, while a 5-star budget hotel costs $2,007 per square meter to build.

 

The report states that local investors are shifting their mindset in favor of condo living above traditional landed dwellings. Meanwhile, the majority of foreign condo investors include people from China, Russia, Taiwan, and Korea.

 

 

Industrial Development

 

At present, one of the biggest developments in the province is the Sihanoukville Special Economic Zone. According to the report, “The SSEZ will cover around 11 square kilometers when completed, with over five square kilometers earmarked for textile and clothing manufacture, machinery and electronics and light industry products.” The report continues, “To date over twenty plants and factories have been constructed with more in the planning. Among these are 16 Chinese investment enterprises, seven third country enterprises and a Sino- Cambodian joint venture, employing 6000 people.”

 

Once construction wraps up, the SSEZ will house 300 factories and around  80 to 100 thousand workers.  

Cost 

In terms of land cost, CBRE notes  that the cost for land along major roads range from $600 to $1,000 per square meter. Meanwhile, land on Ochheuteal Beach and other beaches range from $1,000  to $1500 per square meter.

On the other hand, the report states that smaller road parcels can go anywhere from $250 to $300 per square meter.

 

CBRE also states that lots being offered on lease terms can range $300 to $1,500 per month.

 

As for construction costs, the report indicates that a resort hotel may cost around $1,303 per square meter to build. A 3-star budget hotel is slightly more expensive at $1,592, while a 5-star budget hotel costs $2,007 per square meter to build.

 

Condominiums cost less to build at $748 per square meter for an average standard height high-rise building and $907 for a luxury high-rise condo.

 

For operating costs, CBRE advises that the “utility costs supplied to Sihanoukville are based on government charges.”

 

The base price for electricity is 820 Riel per kilowatt-hour. The water cost, on the other hand, can range anywhere from 1,500 to 2,000 Riel per cubic meter.

 

In terms of labor cost, wages depend highly on skillset. But just to get an idea, the report says that a general worker would normally receive $100, a mid-level engineer $360, and middle management would normally get $416.

Conclusion

 

The report concludesby saying that “the Cambodian Government is embracing investment in all sectors.” This comes with its fair share of trials such as the labor force lacking qualified employees. CBRE states however that with all investment strategies, research, sound financial and legal advice and extensive due diligence must form a major part of the investment strategy.”

 

All in all, the report indicates that “the future looks bright” for the province of Sihanoukville, especially with investment moves like the Bank of China expanding its operations in the province and the expansion of the SSEZ.

 

Read more report in our news section