Cambodia faces oversupply on condominium market

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Rose Condominium_Phnom PenhCambodia’s cities, particularly Phnom Penh and to some extent Siem Reap and Sihanoukville, are currently experiencing a boom in new condominium buildings, but risk an oversupply in the market if construction activity continues at the same pace.

According to a new report by the Cambodian branch of real estate agent Century 21, supply of condominiums in the Cambodian market has boomed in the first half of this year, but the demand is weakening.

“The year 2016 marked a year of condominium market boom in terms of off-plan launch, bringing about 13,730 of new unit supply into the market just in the first six months, up 52 per cent over the same period last year,” said the report.

“The largest-ever volume of new launches of condominium units in 2016 posed a hard time for primary demand to absorb the supply where only 13 per cent of the total units launched were transacted,” it said.

Kuy Vat, chairman and CEO of Century 21 in Cambodia, said that a low transaction-to-stock ratio was due to strong supply currently outstripping the demand.

“Nevertheless, the decrease in transaction volume during the first half of 2016 was caused by not only the recent market sentiment echoed following the external economic impacts, but also uncertainty over the property market in the following years,” he said.

To date, there are 110 condo projects with a total of 36,742 units in Phnom Penh, the report said, adding that some 24 projects with 5,014 units had been completed and delivered to buyers, as the other projects are under construction.

The report said that some 70 per cent of condo buyers are foreigners, particularly from China, Japan and Singapore.

In Phnom Penh, a one-bedroom unit with the size of about 50 square meters is averagely sold at $89,720, a two-bedroom condo with the size of 85 square meters costs $153,000, and a three-bedroom condo with the size of 129 square meters costs $270,890 in average, the report said.

While prices are relatively low in regional comparison, yields can be impressive. As many young executives are starting to change their lifestyles and moving away from their family homes to live in condominiums, and the number of expatriates is rising, asking prices for one-bedrooms in new, upscale condo buildings can reach around $900 per month.

Government data shows that last year the construction sector showed a growth rate of 19 per cent, and forecasts say it should reach 15 per cent this year, but decline slightly in the following years.

 

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Reading Time: 2 minutes

Cambodia’s cities, particularly Phnom Penh and to some extent Siem Reap and Sihanoukville, are currently experiencing a boom in new condominium buildings, but risk an oversupply in the market if construction activity continues at the same pace.

Reading Time: 2 minutes

Rose Condominium_Phnom PenhCambodia’s cities, particularly Phnom Penh and to some extent Siem Reap and Sihanoukville, are currently experiencing a boom in new condominium buildings, but risk an oversupply in the market if construction activity continues at the same pace.

According to a new report by the Cambodian branch of real estate agent Century 21, supply of condominiums in the Cambodian market has boomed in the first half of this year, but the demand is weakening.

“The year 2016 marked a year of condominium market boom in terms of off-plan launch, bringing about 13,730 of new unit supply into the market just in the first six months, up 52 per cent over the same period last year,” said the report.

“The largest-ever volume of new launches of condominium units in 2016 posed a hard time for primary demand to absorb the supply where only 13 per cent of the total units launched were transacted,” it said.

Kuy Vat, chairman and CEO of Century 21 in Cambodia, said that a low transaction-to-stock ratio was due to strong supply currently outstripping the demand.

“Nevertheless, the decrease in transaction volume during the first half of 2016 was caused by not only the recent market sentiment echoed following the external economic impacts, but also uncertainty over the property market in the following years,” he said.

To date, there are 110 condo projects with a total of 36,742 units in Phnom Penh, the report said, adding that some 24 projects with 5,014 units had been completed and delivered to buyers, as the other projects are under construction.

The report said that some 70 per cent of condo buyers are foreigners, particularly from China, Japan and Singapore.

In Phnom Penh, a one-bedroom unit with the size of about 50 square meters is averagely sold at $89,720, a two-bedroom condo with the size of 85 square meters costs $153,000, and a three-bedroom condo with the size of 129 square meters costs $270,890 in average, the report said.

While prices are relatively low in regional comparison, yields can be impressive. As many young executives are starting to change their lifestyles and moving away from their family homes to live in condominiums, and the number of expatriates is rising, asking prices for one-bedrooms in new, upscale condo buildings can reach around $900 per month.

Government data shows that last year the construction sector showed a growth rate of 19 per cent, and forecasts say it should reach 15 per cent this year, but decline slightly in the following years.

 

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