For many years, Phnom Penh’s villas have represented the most attractive and obvious options for both commercial and residential use in the city, but experts say the number of villas available is on the decline.
The stock of villas is decreasing, due to the demolition and redevelopment of plots to make way for new real estate projects that offer higher yields. While romantics may mourn the changing face and skyline of the city, property professionals say it represents a move towards modernity that is good for the long-term future of the city.
A new report from international property company CBRE says the capital is “showing signs of regeneration, with single or double-storey properties being replaced with multi-storey buildings.”
The report says that a large amount of villas have been sold off to developers, and landlords who have kept their villas are increasingly turning towards commercial tenants.
While organizations like Microsoft, Coca-Cola, Unilever, the UN, the World Bank and a number of embassies still occupy villas, the report says that they are likely to move into the high-quality purpose-built office buildings that are springing up around the city, prompting further development of the land they currently occupy.
David Murphy of agents Independent Property Services agrees with the CBRE report. “We, here at IPS, have witnessed a definite decline in centrally located villa availability over the past three years. This is a result of the continued development of Phnom Penh’s central areas into commercial and residential apartment buildings, including the huge growth in the number of boutique hotels, particularly in BKK1, Tonle Bassac and Daun Penh areas.”
The report says the new supply of villas in the market is dominated by developments on the outskirts of the city, and that these projects are locally developed and driven by owner-occupiers.
“The supply in these suburbs on the outskirts has remained stable due to the lower land prices. Toul Kork in particular has a large supply of villas on the rental market.”
Murphy agrees. “This demand has resulted in expat families moving to places such as Toul Kork, Chroy Chongva, Psar Douem Thkov and even Boung Tompun. The availability in central areas is just not there anymore.”
David George, Cambodia country manager for CBRE, says “If we look at the market for villas regionally, we can see that over time those properties located in central locations will be developed for large commercial or residential schemes. In Bangkok there are now very few villas in the centre of the city. In Phnom Penh we will see the gradual shift from people living in villas to apartments and condos.”
However CBRE’s report says that villas will remain desirable. “Even with more economically viable rental options available in the market, demand for villas will remain strong. Some large international organizations have set requirements of being located in standalone properties due to security.” This will mean that, due to the high demand and the decrease in the existing supply, villa rents are likely to continue to increase in central Phnom Penh.
Serviced apartments, currently springing up across the city, offer a more economically viable option for residential use, CBRE says, due to the costs involved in the upkeep of villas Murphy of IPS is sanguine about the decline of central Phnom Penh’s villas. “It’s progress, and while it brings great opportunity for many, you just hope Phnom Penh remains the Charming City.”