On February 8 2023, “The Great Real Estate Debate” was held in Phnom Penh and organised by AmCham, with a selected panel of high-profile guests discussing Cambodia's Real Estate & Construction Sector in 2023 and its future.
The success of the debate held at The Factory Phnom Penh saw more than 150 people attend, meaning this will likely become an annual event rounding up some of the key industry leaders, and allowing members of the audience to ask them about the changing trends and expectations of the real estate industry in the Kingdom.
Property and the associated sector remain one of the core pillars of the Cambodian economy and the panel had a chance to address the uncertainties in the market as the country emerged into a post-pandemic world. So what did we find out and what are the main takeaways from the panellists?
Great Real Estate Debate - Cambodia
The inaugural Cambodian Great Real Estate Debate resulted in an informative and engaging discussion which offered different perspectives and refreshingly honest viewpoints from members of the private sector and the government.
Among the guests on the two panels were:
Panel Discussion: The Cambodian Real Estate Market Today
- Anthony Galliano - President AmCham Cambodia (Moderator)
- Ranarith Iv - CEO - RMB Cambodia
- Ms Kinkesa Kim - Associate Director “Research & Consulting” - CBRE Cambodia
- Ben Li - Founder & Chairman - Urban Village & Factory Phnom Penh
Panel Discussion: The Cambodian Real Estate Market in the Next 5-10 Years
- Tom O’Sullivan - CEO realestate.com.kh (Moderator)
- Long Dimanche - Deputy Governor Preah Sihanoukville Province
- Catherine Chan - Founder & Chairman - Urban Village & Factory Phnom Penh
- Arnaud Darc - Founder & CEO Thailas
What Is The State Of The Cambodian Property And Real Estate Market In 2023?
Anthony Galliano opened the Great Debate by highlighting some of the pessimism in the market to get a reaction from the panellists. These negative viewpoints included the declining prices of off-plan properties over the last few years (as much as 15% across the prime office and retail properties) as well as the triple threat of financial headwinds which include the rising interest rates, inflation, and increase in non-performing loans in the Cambodian market.
Ben Li as Founder & Chairman of the Urban Village & Factory Phnom Penh (the venue for the debate) re-affirmed that the first part of 2023 had thus far been strong compared to 2022. He confirmed there had been increased interest from Cambodians as well as international investors from Hong Kong, Japan, and Singapore.
Ranarith Iv, the CEO of RMB Cambodia added that banks would continue to lend, but due diligence is very important and noted that Chinese visitors and investors returning would be important to the Cambodian economy and the property sector.
Ms Kinkesa Kim as Associate Director CBRE Cambodia and working in the Research & Consulting department, said that buying real estate remains a great investment in Cambodia, however, she encouraged potential buyers to focus on developers that have a good and reliable track record, and to invest in completed properties, as rental returns remained healthy in the Cambodian market.
Buy From Trusted Developers in Cambodia
Tom O’Sullivan also questioned the number of projects that will be actually completed over the next 5-10 years and agreed with Ms Kinkesa Kim, that buyers should be investing in properties from trusted developers and buying completed properties. This was a message that was reiterated throughout the discussion.
With 41,000 condominiums completed in Cambodia, it is estimated as many as 34,000 will be completed over the next five years.
Arnaud Darc was very positive about Cambodia’s recent and future growth and said Thailas was looking to expand into multiple markets in Cambodia. He confirmed there were some concerns over rental rates when it came to commercial rental properties which was a challenge when securing new sites for restaurants, for example.
Catherine Chan added that the continued urbanisation in the Kingdom and the use of the Chinese currency will further help with ongoing investment into property. She also feels that the market is ideally suited for local buyers and that the market fundamentals remain strong after the downturn.
The Potential of Sihanoukville
The Deputy Governor of Preah Sihanoukville Province said that the Sihanoukville population will increase to nearly one million people, up from the current 300,000 with the implementation of a new master plan.
The new masterplan is already starting to take shape and he has confidence in the coastal region in the future. The Sihanoukville master plan is being prepared with the support of China’s Urban Planning Design Institute of Shenzhen (UPDIS).
Long Dimanche highlighted the draft laws which are under review for Sihanoukville to be a multi-purpose Special Economic Zone which would result in heavily reduced taxes for companies based in the city and will further attract investment and buyers.
Darc also questioned the trending negativity around Sihanoukville and said the government has a very clear road map for the coastal region.
Long Dimanche also provided further details of the government's step-by-step approach to the issue of uncompleted buildings in Sihanoukville which was one of the main concerns.
This process would involve:
- A survey of the market.
- Identifying buildings and correct ownership (as many as 1,000 are believed to be incomplete).
- Understand the legalities behind each case.
- Incentivise investors/developers who are looking to enter the market. Incentives could include tax breaks for example.
On A Sustainable Future
O’Sullivan asked the panel about the challenges of sustainability and Catherine Chan addressed the question saying that property developers should start to consider this issue, confirming it was all of our responsibility.
She added that consumers will shift towards this sustainable mindset affirming that these considerations will become increasingly a core part of buyers’ decision-making.
Takeaways From The Great Debate
Overall, all of the panellists (and attendees) seemed to leave the Inaugural Cambodian Great Real Estate Debate session optimistic about the market in Cambodia and its potential.
Robert Eloy an attendee and Partner at AI Consulting Asia said: “As a newcomer to the market in Phnom Penh, we are a market observer for our European investors. We focus on the upper end of the market and have noticed a natural trend of slightly lower economic conditions and oversupply in condos. Prices are still down a little, and good opportunities can be realised, provided that pre-downturn prices have not been overestimated in some areas.
Obviously, the reopening of China's borders will bring their investors back into the Cambodian market... the trend is towards recovery and the “big four” (the four largest international accounting and professional services firms - Deloitte, EY, KPMG and PwC) have confirmed this. So for us, it's absolutely time to catch the good opportunities!
What the Great Debate taught us, are the possibilities in Sihanoukville and the Deputy Governor's desire to revitalise the region, I remember his phrase ‘the beach of Sihanoukville is only 90 minutes from the capital’ which is appealing (referring to the new expressway connecting Phnom Penh with Sihanoukville)”.
The key takeaways included:
- Current property prices are much more realistic.
- Tourism is increasing again and is set to continue in an upward trend.
- The urban population is expected to increase in Phnom Penh and new housing will meet this demand over the coming years.
- Buying from reputable developers and finished properties was the key advice for property buyers in Cambodia.
- Sihanoukville has a much more positive outlook compared to recent years.
Tom O’Sullivan concluded “All of the pessimistic sentiments were laid bare at the start of each panel. I myself am optimistic, but maybe I have to be. The main feeling of the evening from both pessimists and optimists was that Sihnaoukville has a bright future after years of doom and gloom.
There are many great opportunities at the moment to purchase property at great prices but buyers need to make sure they do their research and take the advice from the panel members”.
Top tips for choosing a trusted developer in Cambodia:
- Research to see if the developer has previously completed any projects.
- Visit completed projects (if the developer has completed any) to understand the quality of the construction.
- Try and obtain an understanding of the occupancy rate of the completed projects.
- Ask to see the construction and sales license.
- Check the company background.
- Visit the company website for legitimacy.
- Check to see if there are any reviews online.
- Connect with a property consultant from Realestate.com.kh (who work with every developer in Cambodia) to obtain an unbiased opinion.
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