Realestate.com.kh recently held a free and live webinar to discuss their “Investment & Market Analysis - Cambodia Condominium Report," in which CEO Tom O’Sulliand and GM Vaty Mom provided their unique insights on the report and fielded a lovely Q&A.
They said, “We received some excellent questions during the Q&A, and we hope the answers provided valuable clarity.”
Mr O'Sullivan guided the audience through the condominium report with exclusive insights from over 1,000 actual transactions. He said, “We do thousands of transactions every year. The report itself in terms of sales is based on just over 1,000 transactions…. probably do at least double that in terms of rental deals as well, which gives us a great understanding of the residential condominium market on both the sales side and the rental side.”
Here we look at some of the key takeaways from the session.
Cambodia Needs More And Better Promotion for the International Market - Opportunities Are Here
O’Sullivan explained, “I think there needs to be a lot of work done around promoting Cambodia because a lot of people don't know multinational brands that are here, and the opportunities in Cambodia.”
He also said that one of their goals and passions as a business is to continue to professionalise the market in Cambodia and “make sure that we're playing our role in educating the market to make sure people make smart real estate decisions.”
He addressed probably one of the most commonly asked questions from expats living in Phnom Penh in particular, where you can not glance in any direction without seeing ongoing property developments.
“Expats locally look up into the sky and think, who's buying these condominiums, and where's the market? With the dataset that we have, with all the transactions we've done, we're able to make sense and provide reports like this to the market.”
In terms of the opportunities, he added, “As much as there are huge opportunities in markets like this and similar emerging markets, there also come probably more pitfalls than established markets.”
If someone's looking in Southeast Asia and does come across Cambodia, they will see that the Cambodian market is very competitive and probably an easier entry point in terms of price than other markets. The country we see now is extremely focused on the long-term. We see a lot of investment into infrastructure, new roads and new bridges and new airports.”
Cambodia continues to stand out as an investor-friendly market compared to the balance of the region and, in many ways, presents a great opportunity and in many ways has a greater upside than some of the other Southeast Asian markets. And the entry level in terms of price is very competitive compared to similar markets, added the CEO.
Read more about where and what buyers & renters are interested in.
Market Property Cycles in Cambodia - In the Long-Run, There is Typically an Upside in Value
The Cambodian property sector has gone through its transitions, and like anywhere, the market is cyclical.
“Pre-COVID, we saw a lot of opportunistic developers,” said the CEO. “You could say that there were unprofessional and unproven developers and very speculative developers in the Cambodian market.”
He explained, “This is not to say every developer, every condo developer was like that. Of course, there were very reputable and trusted developers launching and building projects at the same time. But a lot of these unprofessional developers were really selling off great marketing campaigns, beautiful luxurious showrooms, but in reality, the handover quality was very poor and frankly, the properties were overpriced.”
The pricing pre-pandemic was hitting record peaks in the Kingdom.
“In terms of condo sales, it really started to heat up from 2016 to 2019. So, although the condo law was passed in 2010, the early buyers in the market were uneducated about the market, maybe uninformed. This is not just local buyers, this is also international investors, where really there was a lot of hype in the market, and international investors didn't want to miss out on the next hot market in Southeast Asia.”
That enthusiasm for the market impacted local buyers too, who followed the hype. Off-plan purchases were common, and the process of buying is easy.
“In terms of going into the showroom and being able to sort of visualise your investment (for a condo) was easy to do. A lot of poor quality projects launched pre-COVID, selling at inflated prices, but not to say there weren't quality developers building projects and some of them have proven to be great investments.”
So, what have we seen in the market post-pandemic? There have been fewer project launches, and a lot of the “unprofessional opportunistic developers” were pushed out of the market. O’Sullivan agrees this is “ultimately a good thing for the market.”
Construction and launches now are led by experienced developers. “They are focusing on real demand, and this is resulting in a healthy mix of local Cambodian buyers, local expat buyers and international investors. Really, what's happened is developers post-COVID have started to meet the market in terms of affordability and quality.”
He acknowledges that every market is cyclical and has its peaks and troughs in the short term, but over the long term, typically there is always going to be an increase in value.
- We saw steady growth in pricing pre-pandemic, we saw high peaks in pricing, with some properties selling for over USD $3,500 per square metre - arguably an inflated market.
- Developers who had launched pre-pandemic and still have stock to sell are reducing prices to match real demand.
- New developments that are launching now in the market are coming in at the best prices we've seen in a decade.
- The positive post-pandemic is that a lot of unprofessional developers have left the market, resulting in great property launches and great sales rates
Buyer Trends & Demands Are Changing, and so Have The Developers
Pre-COVID, many of the property buyers in the Kingdom of Cambodia were dominated by Chinese buyers. Currently, there is a shift, and the biggest growing buyer market has been local Cambodians.
O’Sullivan said, “I think it is a huge and positive sign for the market. Developers are now focusing on real demand. We're seeing that the younger generation of Cambodians is really driving this demand and buying for living.”
This has been driven by the growing middle class and expendable income, improved property education and the young Cambodians who live and work in the capital at least want more of that convenience and to be close to amenities. There is also an evolution of the culture.
“They're starting to become or want more independence. The price of condominiums has come down so more people can actually afford to buy closer to the city now as well. So, experienced developers are focused on these areas.”
There remains strong regional interest and strong demand, and the increased investment in the country is also another factor.
“It's a surprise to many people that from outside the Kingdom, there are brands in Cambodia like BYD and Ford assembly plants, the big four accounting firms are in Cambodia, well-known brands like H&M, Adidas, Nike, and Starbucks are established here and we have many malls.”
He said on the webinar that once investors look into Cambodia properly, they start to think there is actually great investment potential, which is reflected by the diversity of expats living in Cambodia.
- There is confidence from Singaporean investors and regional Asia investors, but there are buyers from Western markets like the US and the UK.
- Buyers from the US, the UK, France, etc. are often Cambodians living overseas, looking to invest in their home country.
- The fastest growth after Cambodian buyers are from Eastern Europe; Russia, Poland, and other countries in the region.
- There is a flight to quality, where only trusted quality developers have the ability to launch projects in Cambodia now because they truly understand the market.
Find out more about where the buyers and renters in the condo market come from.
O’Sullivan added, “We look forward to bringing different reports to you in the future. We do believe we've got the biggest data set for condominiums based on real transactions in Cambodia. And often when I speak to people overseas who don't know much about Cambodia, or even some people here.”
You can watch the full webinar for more information on where and what renters and buyers are looking for in Phnom Penh, the rental returns and case studies of investments in the condo market and much more, including a lively Q&A from potential buyers and investors.
You can now access the full resources from the webinar.
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