There is an ongoing discussion about the supply of condominiums in the country, and the same question gets asked over and over again – whether it’s true that the country's condominium supply is more than the demand, and how that will affect the condominium market in the future.
Realestate.com.khTV discussed this with Mr. Yin Leangkong – editor in chief of the magazine Property View, and presenter and editor of real estate and economics at BTV.
A recent Knight Frank Cambodia report stated that “the condominium sector is forecast to grow by 723.5 per cent” by 2020. And The 2016 Century 21 Condo report estimates that there will be over 37,000 units to be released into the market by 2020. What are your thoughts on this and the current talk of a looming oversupply? Do you agree? And how will this affect the market moving forward?
In my opinion, I both agree and disagree. If I talk about the negative side, we can just briefly look at the Cambodian lifestyle. It seems that the residential condominiums are not yet popular in the country. Although some people started buying condos gradually, some of them still worry about safety when living on high-rise buildings. For the moment, we cannot adapt. So, the projected surplus in the condominium market, it’s true.
The number of condominiums in the current market hasn’t reached 4,000 units yet. But the number of condos on the market could potentially reach a figure of around 40,000 in 2020. So, I’m optimistic that the people's mindset will change in the next 10 to 20 years before the population growth in the year 2025. People have more difficulties to deal with the traffic growth of our country's.
And since the economy is affected by these factors, the value of property is already at $40,000 to $50,000. At this price point, we can buy an old flat (second or third floor). If this is the case, the best option is to just buy a condo unit, a standardized housing that provides features such as safety, modern way of living, and other services. We saw it happen already in Thailand, Vietnam and Malaysia.
Are there condos worth $40,000 to $50,000?
Condominiums worth $40,000 to $50,000 are available in the market and have a strong potential for purchase among the young and middle-class local citizens. It is a response to market conditions. A number of local buyers who purchase luxury condominiums are foreigners or those who have higher living standards.
What is the impact of the condominium surplus for buyers?
It doesn’t affect the buyer too much. In fact, investors are the ones that will be affected. When the number of condominiums surplus, that means that there are no buyers. So, investors or condo owners are forced to give a discount.
If we talk about the price comparison to neighboring countries, the condominiums in Cambodia are cheaper. But if you talk about value for investment and construction, there’s a huge difference because those investments are much more profitable. So, they can afford to give discounts to people who are in the middle-class range who cannot afford to buy housing – a point that many experts have suggested as well. You can invest for profit, but you should also consider the social aspects. Investors should work with people not only for business profit, but also because of a common interest to help them.
Given the current market conditions, should investors invest in Cambodia or not?
One of the questions investors ask is if it’s the right time to invest in the country, given its current market conditions. Investors will continue to repeat that question. The current political situation in the country is heating up, and the issue of election season is worrisome for some investors. But other investors think that it’s just the same occurrence in almost every country. So, they don’t worry about anything.
In my opinion, should investors wish to make an investment in a community of the country, it should be based on the country's economic situation. Cambodia’s a tiger in Asia because of the country's stable economic growth of about 7 percent over the past five consecutive years. The macro-economic growth of the country has improved as well, according to a press release from the Ministry of Economy and Finance.