Over the years, the appeal of investing in condominiums has emerged as a popular way to generate income and grow wealth. Condominiums are investments with the advantages of property ownership without the complexities of managing a standalone house.
However, what is the best strategy when it comes to condo investment? An Off-plan development or a completed project? Capital appreciation or returns? In this article, Realestate.com.kh will share a guide on how to maximize your returns when considering buying a condo for investment.
Condo Investment: Secondary Market (Completed Projects) and Off-Plan Development
As you navigate the choices available in the market, you'll frequently encounter two primary options: second-market properties and off-plan development. Second-market properties are existing properties available for purchase, while off-plan properties involve buying a property before its construction, based on architectural plans, renderings, and promises of what the finished product will look like.
Secondary market properties have the advantage of immediate possession, allowing investors to start earning rental returns straight away, whilst an off-plan property may take years to complete.
Buying off-plan offers the advantage of potentially lower costs and more flexible payment terms due to its pre-construction status. It also provides greater flexibility in terms of customisation during the construction phase, as opposed to potentially renovating a completed property as a strategy to increase property value and rental income.
Additional reading: The Definitive Guide to Off Plan Property
Both secondary and off-plan condominiums in Cambodia generally increase in value over time. However, this is more evident in off-plan properties as the more recently finished and under construction projects offer all the modern amenities and services.
Market Trends
Real estate is a market where demand fluctuates depending on its dynamics. When a high number of buyers are in the market seeking property to live or invest in, the price tends to rise and be more competitive, whereas when the market sees fewer buyers, sellers will be more open to negotiation, resulting in an opportunity for good deals for investors.
Understanding current and future market trends helps investors forecast the best time to buy and sell their properties to maximise their returns. Want data-driven insights? Download the latest Cambodia Condominium Report from realestate.com.kh and stay ahead of the market!
Capital Appreciation & Rental Returns
In real estate, capital appreciation refers to the increase in the value of a property over time, driven by various factors such as location, demand, and economic conditions. Investors aim to profit from capital appreciation by purchasing properties at a lower price and selling them at a higher price in the future.
On the other hand, rental returns, also known as rental income or yield, represent the income generated by renting/leasing out a property to tenants. This income is typically a percentage of the property's value and can provide a steady stream of cash flow for real estate investors.
By choosing an effective strategy, investors can benefit from either depending on the market trend in a particular location.
Target Audience
Condominiums include a diverse range of unit types, with studios and one-bedroom units often appealing to single occupants or professionals, while larger families tend to favour two-bedroom units up to penthouses for greater space.
Once you've pinpointed the audience, it becomes essential to align their preferences with the property's features. For instance, families typically require more room, whereas studios and one-bedroom units suit single workers or those who don't spend much time at home. Nowadays, tenants might seek a single bedroom when looking for a property. Properties with amenities such as cafes, gym, convenience stores, or spa are a plus. The types of units might attract a higher range of buyers or renters.
Generally speaking, it is important to see the demographics of each country to see the trend in how people choose to live in a particular country. For instance, in Cambodia, condo living is preferred by expats working in the Kingdom due to its convenience and short-term commitments they offer.
Further Reading: Where Do Cambodia’s Condo Buyers Come From?
Location Matters
Regardless of which country you are living in, there exist some areas with preferences when it comes to living. Therefore, choosing the right location is the number one priority when considering a condo investment.
Proximity to shopping centres, schools, healthcare facilities, and transportation hubs significantly enhances the property's attractiveness to potential tenants and buyers. The condo's accessibility to job centres and business districts also contributes to its demand.
In Phnom Penh, BKK, Tonle Bassac, Dauh Penh, Chamkarmon, Sen Sok, and Toul Kork are popular, highly sought locations as they have established themselves as vibrant hubs with excellent connectivity, modern amenities, and a diverse range of dining, entertainment, and shopping options.
Further Reading: Cambodia Condominium Report - Where And In What Are Buyers & Renters Interested
Developer’s Reputation
Whether it is a secondary market or off-plan development, the developer behind the project provides insights into the property's historical context. It reveals their commitment to delivering not just projects but quality construction.
Given that residential buildings significantly impact one's quality of life, opting for a poorly constructed property could lead to a low property value and a tarnished developer reputation, therefore scepticism when seeking to rent or resale.
Reputable developers often introduce Guaranteed Rental Returns (GRR) and Guaranteed Buyback (GBB) programs to underscore the quality of their projects. In brief, a GRR signifies the developer's commitment to renting out the property on your behalf, ensuring a fixed rental income for a specified period following the property's acquisition.
Meanwhile, a GBB involves the developer agreeing to repurchase the property from the investor after a predetermined period, often at a set price. When purchasing a condo, both of these schemes are worth looking into to maximize your returns on investment.
Strategy For Rental Or Resell With Real Estate Platform
Now that you have bought your condo, it is time to put it to work. First, it is essential to establish if you wish to rent or resell the property.
Pricing too high may deter potential clients, while pricing it too low could result in missed income opportunities. To find a suitable price range, it is preferable to deal with a real estate agency or platform that helps provide an accurate market price depending on the property’s location, size, condition, and amenities.
In addition, the real estate platform will also market your property, which will be visible to a larger audience. In this way, your property, regardless of your goals to rent or sell, will attract enquiries from a potential buyer or tenant. So, choosing a reliable platform with a steady amount of visitors is essential when seeking to maximize your returns on investment.
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