Feb. 16, 2017, 11:33 a.m.
Many westerners who move to Phnom Penh for work, long-term holidays or retirement often arrive with expectations that don’t add up to reality of the 2016 Cambodian real estate market situation.
For example, many have dreams of living in an opulent french-style villa at a rental or sale price that is just a fraction of what they might expect for a similar property in their home market.
Others think that their money will go a long way in Cambodia in terms of budget rentals, even in the big city’s hottest corridors.
However, Phnom Penh, and in particular the expat-friendly suburbs, is a beast that is changing beyond the recognition of expats that settled here for work, pleasure or retirement 5-10 years ago. Some commonly-held expectations are becoming unrealistic in the 2016 Cambodian real estate market, and especially in Phnom Penh.
In fact, the city is no longer full of the inexpensive, charming villas that many expats blithely assume will be readily available.
So too is it beginning to see a shortage of affordable options for renters in central locations, as demand rises and landlord understand the underlying value of their locales.
Desmond Yap, general manager of Yong Yap Properties in Phnom Penh, notes that this is only a natural result of supply and demand trends in the capital.
“As wealthy property developers continue to find prime land for their developments in the central city districts, villas are getting snapped up due to the size of their surrounding land. The villas are then knocked down and the land is developed in a condo complex, hotel or commercial venture. Over time, this has limited the supply of villas and therefore prices have increased dramatically,” says Yap.
The reality is that Phnom Penh has grown dramatically in the past ten years. Like any high growth city, this has caused two things to happen: 1) Housing prices have gone up dramatically and 2) no matter how much gets built, it is rapidly filled by buyers and renters, leaving a scarcity of supply for the most desirable kinds of developments.
Yap also notes that as the standard of living rises in Phnom Penh, the cost of living also increases: “You can give example of how workers salary in Phnom Penh is rising – it’s a lot tougher now to find a waiter working for $100/month compared to 5 years ago.”
Many expats coming to Cambodia are misinformed as to the true affordability of property, suggests Yap.
Yap gives the example of The Lonely Planet guide. This highly popular travelers resource says that expats can get small flats for around $200 with internet and wifi in central Phnom Penh, “yet they need to take this into context; are they referring to inner city Phnom Penh? How long ago did they write it? etc. We actually have had people that come into the Yong Yap office quoting lonely planet and how we should be able to find them a western place for $200 inclusive of x,y,z… If they expect western qualities in their new apartment, this proves a very hard ask!”
More realistically, western style luxury apartments with all the amenities, and also serviced apartments — such as a pool, gym and security — can be had for $500-$3000 per month. Check out properties available NOW!
Alternately, more authentically Cambodian digs can be rented for around $300 per month.
As the city has grown, the city has done what so many cities do: Converted housing on busy streets to businesses and demolished low density housing to replace it with high-rise apartments or commercial skyscrapers. When high-rise buildings go up, the villas next door to them are negatively impacted by the noise and dust of construction. They often never really recover.
For the villas that remain, the demand is not only from residential property seekers but also F&B operators. This means home buyers and renters are having to compete with commercial enterprises who place a high value on the architecture, parking space and also the prime locations.
The reality is that, at this point, there is a fairly small pool of highly desirable, Western-style homes in good locations. And unsurprisingly, these homes are rarely up for grabs. Either the owner knows they have a sweet deal and is not going anywhere any time soon, or these prime locations get sold to people who have connections of some sort, such friends of the family or coworkers.
There are a lucky few expats who do enjoy this situation because they locked low rental prices some time ago with a 5-10 year lease. But for new signees, prices remain consistently high. For those new comers looking for a villa for rent in BKK1 - you might be on a waiting list...
Some areas popular with expats include BKK1, Tonle Bassac and Southern Daun Penh. They do have a limited supply of villas, but not as many as they once had.
Toul Kork remains a relatively good choice for an expat seeking a villa, however. But this may mean a longer commute for workers. Tuol Kork
is a neighborhood about 30 minutes out of the center of the city that is increasingly attracting ex-pats. As with other large cities, commuting to a suburb outside the densely developed downtown area is a good way to find places renting for much less money.
Additionally, it is important to keep in mind that Cambodia is not a Western country. Although the West has had a substantial influence upon the architecture of developed cities the world over, like any Eastern country, Cambodia has its own history and culture, including its own architectural tastes.
Even for homes that are built in a largely Western style, it is common for some details to just seem odd to the Western eye. The colors may seem not quite right. They may seem bolder than you expected. The trim may also seem in some way unusual. The finishing quality too may differ from western expectations.
Yap notes that “western products/services generally will cost more as many products need to be imported. Quality window frames, light fittings etc. all need to be imported, and this naturally raises expected costs for renters and buyers.”
Therefore, advice for those moving to Phnom Penh is that you will be well served by arriving with more realistic expectations concerning the style, price and availability of housing in the city where you plan to live out your expat experience. You may need to go with an apartment instead of a villa. You may need to have a longer commute. You may need to adjust your tastes. But after all, the ability to adapt is a key part of the expat experience, in any country, and can come with unexpected pleasures...