Phnom Penh Marketview Q4_2016

Highlights

– Cambodia’s FDI totaled US$2.15 billion in 2016, representing a 25% increase from 2015. The top three recipient sectors for FDI are banking, manufacturing and real estate.

– Nationwide, investment into approved construction projects reached $8.5 billion across 2,636 projects by the end of 2016, an increase of 143% on 2015, which saw $3.5 billion invested in 2,305 projects

– Grade-B office’s average quoted rents appreciated by 2.2% q-o-q and 11.2% y-o-y. Average quoted rents of Grade-C offices slightly depreciated by 0.4% q-o-q and ended the year down 1.2%.

– 616 condominium units were launched across two off-plan projects during Q4; representing the lowest level of new launches seen during the last two years.

Please click here to download a copy of the Marketview.

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CBRE Cambodia Fearless Forecast 2017

Phnom Penh, 20 January 2017 – Mr Marc Townsend, Managing Director of CBRE Cambodia and Vietnam, delivered a presentation outlining some of the keys trends witnessed in the Cambodian real estate market during 2016. In addition, the presentation also highlights what to expect to happen over the course of the coming year.

Please click here to download a copy of the presentation.

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Phnom Penh Marketview Q3_2016

 Highlights

–  GDP growth is anticipated to reach 7% for the year, and continue to expand by 6.9% across 2017 and 2018, according to the World Bank.

–  By the end of Q3 2016, the value of projects granted construction permits was reported as being 76% higher than the corresponding period last year. A total of 2,009 projects have so far been granted permission, with a collective value of US$7.56 billion.

–  The number of condominium project launches is showing signs of slowing, with 3 projects having launched over Q3, totaling 1,022 units.

–  Prime office rents appreciated over Q3. Grade B rents were up 3.8%, whilst supply also increased by 13,400 sqm, equating to an increase in total supply of 4.7%.

Please click here to download a copy of the Marketview.

 

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Is Cambodia’s Residential Market a Target for Investment?

Phnom Penh, 08 November, 2016 – Mr Marc Townsend, Managing Director of CBRE Cambodia and Vietnam,  presented on the topic: “Is Cambodia’s Residential Market a Target for Investment?”

The presentation provided a summary of information and key trends regarding the Phnom Penh residential market in addition to the Camodia second-home markets.

To download a copy of our presentation, please click here

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Phnom Penh MarketView – Q2 2016 – CBRE Cambodia

Highlights:

cambodia_phnom-penh_marketview_2016_q2_final_page_1–   The World Bank officially elevated Cambodia to the status of a ‘lower-middle income’ economy at the close of Q2.

–   Hongkong Land’s mixed-use development, Exchange Square, held its topping-out ceremony over Q2, with overall completion set for Q4 2016.

–   Prime sales and rental prices broadly appreciated over Q2, with the exception of serviced apartment rents, which remained stagnant over the quarter.

–   Average quoting rents across Grade B buildings grew by 4.5% q-o-q, while average quoting rents across Grade C stock decreased by 3.9% q-o-q.

–   2,796 condominium units, across 8 projects, launched over Q2, with Russey Keo district welcoming its first off-plan sales launch.

Please click here to download the MarketView.

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Cambodia: Asia’s New Tiger Economy?

Phnom Penh, 01 September, 2016 – Mr Marc Townsend, Managing Director of CBRE Cambodia and Vietnam,  presented on the topic: “Cambodia: Asia’s New Tiger Economy?”.

The event provided a review of the Phnom Penh property market, principally covering residential, office and retail sectors. In addition, it provided an update of secondary cities – Siem Reap and Sihanoukville.

Please click here to download the presentation: 20160901 – Cambodia Asia’s New Tiger Economy

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Phnom Penh Marketview Q1_2016 (Chinese Version) – CBRE Cambodia

重点摘要
今年第一季度建设投资资金达16.5亿美元,同比2015年第一季度建设投资资金的4.48亿美元,整年度漲幅速度十分显著,漲幅率高达267%。
置地公司的“Exchange Square” 商业综合体开发项目将于第二季度完成上层建筑,并于2016年第四季度全面完成。
平均售价和租赁价格在第一季度有具体提升,但由于日益老化的零售物业在即将面临新增供应的挑战,致使零售物业市场租金除外。
苏利亚购物中心——金边最早期的购物商场之一,宣布对商场进行翻修并将其更名为“苏利亚中心点”(SoryaCenter Point)。
第一季度公布的八个公寓项目,总计4158套公寓单元。

Cambodia_Phnom Penh_Marketview_Q1_2016_Chinese

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Phnom Penh MarketView – Q1 2016 – CBRE Cambodia

Highlights

US$1.65bn invested in construction over Q1, compared to US$448m in Q1 2015, representing a significant Y-o-Y increase of 267%.

Hongkong Land’s mixed-use development, Exchange Square, due to top out by Q2, with overall completion set for Q4 2016.

Average sales and rental prices broadly appreciated over Q1, with the exception of shopping mall rents, due to challenges faced by ageing retail stock in the context of upcoming supply.

Sorya Shopping Center, one of Phnom Penh’s first purpose built shopping malls, announces renovation and rebrand as ‘Sorya Center Point’.

4,158 condominium units, across 8 buildings,  announced over Q1.

Cambodia_Phnom Penh_Marketview_2016_Q1

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“DOING BUSINESS IN CAMBODIA” – WHAT YOU NEED TO KNOW

On Thursday, 21st April, 2016, Hongkong Land, DFDL and CBRE Vietnam were organizing a special event about “Doing business in Cambodia” at Park Hyatt Hotel, Saigon (Ho Chi Minh City).

CBRE honored to present about Cambodia Market Outlook and the overview of the Retail Real Estate Market in Q1/2016. DFDL will also share the legal update for investing and doing business in Cambodia.

Cambodia – Retail Market View

 

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Phnom Penh MarketView, Q4 2015 – CBRE Cambodia

Central Phnom Penh enjoys broad rise in values

Highlights

Strong take-up across new mid-rise office developments continued over Q4, 2015.

Hongkong Land’s mixed-use development, Exchange Square, comprising approximately 18,000 sq.m of office and 8,000 sq.m of retail space, continues construction, with completion on track for Q4, 2016.

Total of 689 condominium units, across 5 projects, announced during Q4, bringing the total number of off-plan condominiums launched over the course of 2015 to 7,014 across 26 buildings.

Total of 5 developments, comprising strata-title office space for sale off-plan, announced over the course of 2015.

Strata-title office space to account for approximately 25% of total office stock by 2020.

For more detail, please click here to download.

CBRE Cambodia MarketView – Phnom Penh Q4 2015

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CBRE Launches Blueprint

At CBRE, we believe real estate sits at the heart of how people work, live and thrive. Blueprint is an online magazine where the intellectual capital and institutional knowledge that lives within CBRE is shared with the global business community through an array of engaging, thought-provoking and illuminating content.

On Blueprint, you’ll find stories informed by urbanists, academics and big thinkers around the world. Our stories are unified by business ideas that transcend commercial real estate and examine the built environment’s potential and power to impact businesses, cities and people—told through the lens of commercial real estate.

Whether you’re an industry professional, an urban enthusiast, a member of the general business community or even just a curious reader, we believe our stories will inspire you to look at the world of real estate from a new perspective.

To find out more about Blueprint, please follow the link below:

Blueprint-INT-EMEA_CBRE-Footer_Banner_624X124(1)

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Phnom Penh Condominium Market , CBRE Cambodia Market View in December 2014

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PHNOM PENH CONDOMINIUM SECTOR SEES RISE IN RESALE VALUES

                                                                                

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Introduction

 The condominium market in Phnom Penh  continues to expand, with early investors in centrally located developments enjoying capital gains of up to 30% from early off-plan purchases.

Development activity of high-end condominiums looks set to continue in prime residential locations, with developers also looking to offer luxury projects outside of core residential districts.

CBRE has continued to witness strong interest from the wider Asia Pacific region, with increasing investment from Singaporean, Japanese, Hong Kong and Chinese residents. Although the comparatively high yield guaranteed by a number of leading developers is appealing to oversees purchasers, the main driver remains anticipated capital growth.

Currently, there are 35 Condominium projects in Phnom Penh, including both finished projects and developments currently under construction.

Q1, 2015 will see the sales launch and groundbreaking of Sovann Condominium, a 104 unit luxury development on Mao Tse Tong Boulevard,  BKK1. Sky Villa Tower, comprising 254 units across two towers, is due to start construction by Olympic Stadium on Sihanouk Boulevard, with completion set for 2017.

Supply

Phnom Penh is experiencing a significant increase in supply, with De Castle Royal delivering 414 condominium units in Q3, 2014 and with Galaxy Residence having delivered a further 44 units in Q4, 2014.

Overall supply in Phnom Penh is due to increase by 533.75% by the end of 2018, driven by large-scale new projects such as D.I. Riviera and Olympia City, both currently under development by OCIC.

Sales

Sales of condominiums in Phnom Penh have traditionally been heavily marred by publicised failures of developments that have been sold off-plan and then subsequently ceased construction. Due to the successful completion of key new projects, such as De Castle Royal, this trend has clearly come to an end as confidence grows amongst domestic and international purchasers.

Early purchasers of off-plan condominiums, in successful schemes, have achieved healthy capital appreciation over the past year, with those who purchased in 2008 being in a position to resell for a premium of up to 30% over the course of 2014.

Achieved prices for high-quality  condominium units range from $1,500 – $3,000 USD per sq.m in central areas of Phnom Penh. The Bridge, which is due to deliver a 762 condominium units, accounts for the upper figure.

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Demand

Demand for condominiums is anticipated to increase and be met by supply over the course of 2015 through to 2016. The introduction of high quality projects in central locations will offer prospective investors an opportunity to acquire products that focus on the needs of a heavily expatriate driven area of the Phnom Penh residential market, as foreign nationals continue to require exclusive and up market accommodation in prime locations. Demand is also increasing from an ever more affluent domestic population, which is due to account for a notable proportion of purchasers over the coming years. Domestic demand is a key element of a successful condominium project, due to foreign ownership of an individual building being restricted by law at 70%.

Overview

Q1 2015 will see the launch of Sovann Condominium, a 104 unit luxury development located on Mao Tse Tong Blvd, BKK1, in addition to that of Sky Villa Tower, set to launch a further 254 units by Olympic Stadium.

The Q4, 2014 launch of Bhumi Emerald Condominium is set to deliver 47 luxury units located in the Toul Tompong area. The development will be set over 24 floors and is due to come on-stream in 2017.

Q3, 2014 saw the successful completion of De Castle Royal, which has set a new benchmark for quality in the market, further adding strength to the ever-growing sector. Comprising a total of 414 units, the project has been key in rebuilding confidence in the  off-plan sales market.

CBRE note that a number of individuals, in addition to established developers, are making considerations towards the construction of further condominium developments. Whilst the majority remain focused on prime, central residential locations, it is likely that development activity will increase in secondary locations over the course of 2015.

 

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CBRE Cambodia have been registered by SECC as valuers for the Securities Sector

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Residential villa & shop house market, CBRE Cambodia MarketView in November 2014

November 2014

STRONG OFF-PLAN SALES CONTINUE TO DRIVE RESIDENTIAL DEVELOPMENT ACTIVITY ON OUTSKIRTS OF PHNOM PENH

November 2014 - 1Introduction

The villa and shop house market has continued to expand over the course of 2014, with healthy off-plan sales levels prompting further development activity.

New high quality supply continues to enter the market, with development activity focusing around secondary locations on the outskirts of Phnom Penh.

Supply

The supply of new ‘borey’ developments has continued to increase over the course of 2014, with predominantly local developers launching sales of projects located in the north of Phnom Penh.

The standalone villa market remains active, both in terms of sales and residential leasing. Villas with land plots in excess of 500 sq.m remain a sought-after asset, with investors looking to acquire sites for mid to high-rise developments, due to the shortage of reasonably priced, centrally located vacant land plots.

The resale market for existing individual villas remains buoyant, with a steady flow of villas offered for sale in central areas of Phnom Penh.

2014 has seen iconic colonial villas offered for sale, such as The Mansion, an early 20th century residence located behind the FCC overlooking the Royal Museum, currently on the market and ‘No Problem Villa’, located on Street 178, which successfully transacted in Q2, 2014.

Demand

Demand for villas and shop houses within ‘borey’ developments remains strong, driven principally by Cambodian nationals able to take advantage of staggered payment options and in-house finance schemes.

Shop houses, comprising upper floor residential accommodation and ground floor retail space continue to be a popular option for Cambodian nationals, due to their relative affordability and the option of using the unit for business purposes in addition to residential accommodation.

Sales and Rents

Off-plan sales rates remain encouraging, with prices ranging from in the region of US$400   to US$1,800 per sq.m, based on Gross Internal Area (GIA) for residential villas and shop houses within ‘borey’ developments.. Achieved rental rates for villas in prime residential areas, such as BKK1, have risen over the past 12, with rent payable ranging from US$3,000 to US$4,500 Per Calendar Month (PCM) for standard sized villas.

November 2014 - 2

Overview

Overall the demand for villa and shop houses in Phnom Penh remains high, stemming principally from increasing urbanization and rising standards of living. The successful sales rates of recently completed schemes, in addition to projects currently under construction, gives testament to the strength in demand for quality villa and shop house residences.

The vast majority of current development activity takes place in secondary locations outside of central Phnom Penh. This is principally due to the scarcity of centrally available land and the high cost per square metre in primary locations. Whilst the healthy rates of sales are positive endorsement of the market, increased development and activity on the outskirts of the city will continue to place greater strain on Phnom Penh’s underdeveloped road and wider transport infrastructure.

Whilst off-plan sales are the principal means of disposal, both resale and rental markets, particularly within prime residential areas, remain strong. Over the past 12 months BKK1 has seen the most significant increase in both achieved rental rates and capital values, driven by demand for villa accommodation for both commercial and residential uses and the acquisition of villas for the purpose of redevelopment.

Given the location and quality of current pipeline developments, it is likely that strong off-plan sales rates and absorption of developed stock will continue over the course of 2015, with the fundamental drivers of demand, in the form of urbanization and rising standards of living, likely to continue to support both sales rates and the development of new projects in the short to mid-term. Whilst with the volume of future planned projects, due to the increasing popularity of allocating domestic capital into residential development, in addition to the lack of development controls, oversupply remains a risk, it is likely that rising demand will continue support increasing supply through to 2016.

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Resort Market Cambodia, CBRE Cambodia MarketView in October 2014

October 2014 - 1

DEVELOPER INTEREST IN CAMBODIAN COASTLINE AS ANNUAL TOURISM GROWTH SET TO CONTINUE

October 2014Tourism OVERVIEW

Tourist arrivals have grown strongly in Cambodia with an average annual increase of 19% over the past decade.

According to the Ministry of Tourism, arrivals between January and August 2014 have risen by 4.2%, when compared with the same period in 2013. The drop in growth rate can be principally attributed to a fall in arrivals by land from neighboring countries, Vietnam and Thailand.

The main port of entry for air traffic is Siem Reap International Airport, which has seen an increase of 16.2%, as of August this year, compared to same point in 2013. The significant increase in arrivals by air, attributed principally to tourists visiting sites of cultural interest, bodes well for coastal resort locations, such as Sihanoukville, which could be well placed to capitalize on tourists seeking to visit a coastal destination following visiting Siem Reap.

SIEM REAP

Siem Reap is currently the most popular tourist destination In Cambodia, with the attraction of Angkor Wat supported by a significant variety and quality of available hotel accommodation.

COAST & ISLAND RESORTS

Alila Villas Koh Russey, a luxury island development, comprising a total of 227 units, located off the coast of Sihanoukville, broke ground in Q3, 2014. The project is set to deliver a new standard of resort property to the emerging Cambodian market. The project is well placed to further expand on the success of Song Saa Private Island, a scheme of 27 villas that completed in 2013.
The scheme launched off-plan sales of the new duplex apartments, which consist of 47 two-bedroom units, in September of this year.
Ta Tai Resort completed the first phase of development earlier this year, comprising a hotel, apartments and villas on the banks of the Ta Tai River in Koh Kong.
Several prominent developers have plans for large resort schemes, both on the coastline and islands, presenting a range of opportunities for investors seeking to enter the market. With some smaller boutique resorts, such as Akaryn Retreat, delivering 35 pool villas on Koh Krabeay, due to come on-stream over the next 12 months.

October 2014 - 2

FOREIGN OWNERSHIP AND INVESTMENT IN THE RESORT MARKET

Under the 2010 Law on Foreign Ownership foreigners can own units in condominiums or co-owned buildings, excluding ground or underground floors, and providing total foreign ownership does not exceed 70%.
Islands in Cambodia are not available on a freehold basis and developers have acquired them on a concession from the Cambodian Government, allowing them to develop the island and hold title by way of a long-lease.
The majority of coastal and island resort properties are offered on a leasehold basis, as sub-lease of the principal lease. This allows foreign individuals and companies to invest in resort property offerings without the need to establish a land holding company, requiring 51% domestic ownership, as would be necessary to purchase freehold property.
There are a number of attractive investment incentives seen on the market, including guaranteed yields for a fixed period, generous periods of annual use for the investor and special discount rates on resort facilities and services.
There has been a wide investor interest in Cambodia, with enquiries coming from principally Asian countries, as well as Europe and Australia. Regionally Cambodia is an attractive destination for residents of countries where gambling is prohibited, such as China, Vietnam and Thailand. A number of large scale resort developers have gaming as part of their development strategy and see it as a key future component to attract Asian tourists.

October 2014 - 3

 

 

 

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Retail Market Phnom Penh, CBRE Cambodia MarketView in September 2014

September 2014

ECONOMIC INDICATORS BODE WELL FOR FUTURE RETAIL AS NEW SUPPLY IS MET BY DEMAND

September 2014 - 1Introduction

June of this year saw the opening of Aeon Mall adding 66,000 Sq.m of space and 173 units to Phnom Penh’s retail sector. Foreign brands and franchises dominate in each category and the mall has Cambodia’s largest food court with 1,200 seats. Opening with a reported zero vacancy rate has been a great success story for Aeon when compared to the market average rate of approximately 22%. This can be attributed to factors such as new market entrants, expansion of existing operators and a lack of quality leasehold management at existing centers constraining returns for owners and occupiers.

Parkson is set to open a retail center in Q4 2015 adding retail space of 36,000 Sq.m mall anchored by department store as part of the 70,000 Sq.m Phnom Penh City Centre development also incorporating a supermarket, multiscreen cinema and IT/Electronics mall. This will continue the transition of Phnom Penh’s retail sector from existing traditional markets towards International quality, purpose built retail centers that in turn will draw more International brands to this developing market.

Supply

2014 has seen some of the city’s biggest developments come to fruition with Vattanac Capital and Aeon mall completing in the first half of the year adding a combined 71,000 Sq.m of prime retail space to Phnom Penh’s retail sector. 2015 will see Parkson mall and department store open adding a further 70,000 Sq.m. This will see total retail supply more than double from 105,000 Sq.m in 2012 to more than 300,000 Sq.m by 2016. Q2 2014 also saw the soft launch of Vattanac Capital’s retail offering including international brands such as Hugo Boss, Longchamp, TWG and Rimowa.

Demand

Speaking at the opening launch of Aeon mall, Managing Director, Shinobu Washizawa said the mall target customer group was aged 20 – 30 years old; a sign of Cambodia’s young demographic and fledgling middle class with increasing disposable income. Economic indicators are encouraging with GDP growth at 7.2%; one of the fastest rates in the world. With purpose built, International quality retail space now available many foreign brands, including 43 Japanese retailers have opened outlets in Cambodia for the first time. Aeon has seen a much lower vacancy rate than the market average with demand coming from local and international players.

Rent

Average rent* across the shopping centers stands at $27.30 per Sq.M ranging from $20 to $32 per Sq.M, the arrival of International operators such as Aeon and Parkson has seen the introduction of modern rental practices such as turnover rents.*(Average market rents calculated on Ground floor & 1st floor basis)

Brands

A range of new brands have entered the market for the 1st time including:
F&B: Breadtalk, Kenny Rodgers Roasters, Beard Papa’s, S&P, Pepper Lunch and Lotteria.
Fashion: Giordano, Clarks, H.E. by Mango, Penshoppe, Lowrys Farm, Bonia, Carlo Rino, Flaxus Tokyo and Wacoal.
Other: Toni & Guy, L’Occitane, Rimowa, Daiso Major Cineplex and Future World (Apple).
A number of key car bands are set to establish stand-alone units in Phnom Penh, with BMW arriving last year and Audi and Land Rover set to open units.

over the course of 2014. The Lucky Department Store closed on Monireth, Levi’s relocated to City Mall on the other side of the street, Campore Group opened multibrand Central Mall at Central Market.

Future Supply

Phnom Penh will see major increases in supply of retail space over the next two years with gross floor area for purpose built multi-tenanted retail set to increase by more than150% by the end of 2014 with an additional supply in the pipeline through to 2017 with developments Olympia by OCIC and The Bridge by Oxley under construction with a second Aeon mall now in early stages of discussion. Parkson confirmed 2 additional projects, Lion City and above mentioned The Bridge by Oxley where they will manage the retail component. With established retail developers Aeon, Parkson and Hongkong Land responsible for this new supply the quality of space and management is set to increase prompting an uplift in average rents; competition from these established shopping center operators is likely to weigh further on performance of older centers already witnessing lower occupancy and customer footfall in their centers.

Overview

Cambodia has a young population with over 30% under the age of 15 and a further 21% aged 15-24. GDP per capita growth was last recorded at 6.6% and although largely a rural population there is an urbanization rate of 3.25% per annum. This is a demographic picture that bodes well for future retail demand with a youthful workforce, and growing urban population. Incomes are rising fast; albeit from a low base but discretionary income is becoming achievable for many families for the first time. A recent report calculated the Cambodia GNI at $950 per capita; fast approaching the World Bank definition of a middle income-economy at $1,045.

Retail supply is set to grow in coming years but CBRE feel this will be met by demand due to improved quality of retail space, international management and the sectors growth potential. 2014 has seen a number of International brands enter Cambodia for the first time and this is a trend set to continue as the country enjoys improved political stability and, increased local demand.

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Phnom Penh Office Market, CBRE Cambodia MarketView in August 2014

August 2014

FLAGSHIP DEVELOPMENT VATTANAC CAPITAL SEES FIRST TENANTS ARRIVE

August 2014 - 1Demand across Phnom Penh’s office market is principally being driven by multinationals from the international financial services sectors. Supply in 2014 has increased after seeing limited space come onto the market in 2013, with a notable increase in quality recently delivered by Vattanac Capital. Phnom Penh can now boast office segmentation, with a range of quality-grade options offering available space.

Supply

2014 should see approximately 52,000 sq.m of new office supply delivered, with 17% of total supply now attributed to the recently launched office component of Vattanac Capital.

The highly anticipated development launched 23 storeys of grade A accommodation in Q2 2014, delivering a new level of space to Phnom Penh’s expanding office sector. A number of smaller developments are also due to come on-stream over the course of 2014. A further 15,000 sq.m of grade B/C space is set to arrive by Q1, 2015.

The Bridge, a joint venture between Singapore’s Oxley Holdings and Cambodia’s World Bridge Land, scheduled for completion by 2018, recently launched the off-plan sales of their Small Office Home Office (SoHo) concept, located within the mixed-use development.

Occupancy rates remain broadly positive, with the majority of Grade B/C multi-tenanted office buildings enjoying occupancy rates in excess of 90%. Overall occupancy rates decreased in Q2 as new supply arrived onto the market.

The majority of office space in Phnom Penh is still low grade by international standards, with Grade A and B+ properties equating to 33% of current stock.

Demand

The majority of new demand can be attributed to multinational corporations, in sectors such as banking, finance and securities, moving towards larger floor plates, with requirements typically in excess of 250 sq.m.

Parking provisions remain a key requirement of the majority of tenants, with various measures being taken by office buildings, such as Phnom Penh Tower, to provide further parking facilities, principally as a result of high occupancy levels.

Rents

The prime-rent index across Phnom Penh shows an annual growth rate of 10%, with further prime rental growth expected by the end of 2014.

A lack of new supply in 2013 saw landlords increase rents in accordance with the performance of their buildings. Rents across all grades increased, as lower grade properties capitalised on the lack of available space within Grade-B or above buildings.

Increased occupancy in Grade B+ properties drove rents to in excess of $20/sq.m, with Vattanac Capital achieving rents in excess of $30/sq.m, highlighting the increased requirements of tenants to establish themselves within quality commercial developments.

The growth in achieved rents across the market can be attributed to steady international demand. Across all international office grades, the current market average rent per sq.m stands at $20.

Business Attraction

Cambodia is likely to remain favourable to international business, throughout 2014 and into 2015, as integration with the Association of Southeast Asian Countries (ASEAN) comes into force next year. This is anticipated to further stimulate demand for office accommodation from regional occupiers.

Renewed interest in Phnom Penh has been observed following the recent ending of the political deadlock between the ruling Cambodian People’s Party (CPP) and the Cambodia National Rescue Party (CNRP).

An agreement reached at the end of July led to CNRP legislators resuming their seats in the National Assembly .

Phnom Penh’s Standard Office Leasing Terms

The following terms and conditions usually apply to office leases in Cambodia, but should be used as a guide only. Professional legal and surveying advice should be sought before entering into any binding contract.

Lease Length: Generally, leases for commercial office space in Phnom Penh are for two years or longer. It is possible to have a lease term for less than two years, but landlords usually request a higher rent for the increased flexibility.

Service Charge/Management fee: This usually pays for all costs incurred running the building such as routine maintenance of all major plant & equipment, security, cleaning etc. Most older office buildings in Cambodia do not charge separate management fees, but for newer buildings the management fees are between $2-5 psqm. In more mature markets, audited accounts of the expenditure are provided to the tenant at the end of the year, but this does not happen yet in Cambodia.

Deposit: Dependent upon lease term, but generally 3 months’ gross rental, non-interest bearing, refundable upon expiry of the ease subject to performance of rent and repairing covenants.

Rent-free fitting out period: The amount of office space leased, the cost psqm and length of term determine the amount of rent free period. Presently, it ranges from 1 week to 3 months.

Fitting-out costs: The capital costs of fitting out, including loose furniture but excluding office equipment, the price can range dramatically from $80 to $400 per square meter.

Renewal provisions: There are no statutory rights of renewal in Cambodia and the landlord and tenant negotiate new terms close to lease expiry. However, the lease renewal procedure can be incorporated into the contract including maximum rent increases on renewal to protect the occupier.

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Phnom Penh Condominium Market, CBRE Cambodia MarketView in July 2014

July 2014

PHNOM PENH CONDOMINIUM MARKET CONTINUES TO EXPAND FOLLOWING SUCCESSFUL OFF-PLAN SALES

July 2014 - 1INTRODUCTION
The condominium market in Phnom Penh is continuing to expand, driven by successful off-plan sales of high profile projects, such as Nuri D&C’s De Castle Royal and Oxley Holdings’ ‘The Bridge’.
CBRE has seen a significant increase in investment from Singaporean, Japanese, Hong Kong and Chinese residents. Although the comparatively high yield guaranteed by a number of leading developers is appealing to oversees purchasers, the main driver remains anticipated capital growth.
Currently, there are 24 Condominium projects in Phnom Penh, including both finished projects and developments currently under construction.
The growing confidence in Phnom Penh’s condominium market continues to drive further development activity with a significant pipeline of planned projects due to come online through until 2018.
SUPPLY
Phnom Penh is set to experience a significant increase in supply, with De Castle Royal imminently set to deliver 414 condominium units and with Galaxy Residences set to deliver further 44 condominium units in Q4, 2014.
Overall supply in Phnom Penh is due to increase by 191% by 2018, driven by large-scale new projects such as D.I. Riviera and Olympia City, both currently under development by OCIC.
SALES
Sales of condominiums in Phnom Penh have traditionally been heavily marred by publicised failures of developments that have been sold off-plan and then subsequently ceased construction. Due to the successful completion of key new projects, such as De Castle Royal, this trend has clearly come to an end as confidence grows amongst domestic and international purchasers.
Impressive off-plan sales rates have been reported by a number of leading developments, with The Bridge’, located in Tonle Bassac, having successfully achieved a sales rate of 85% for the condominium units, within 4 months of launching their sales campaign at an exhibition in Singapore.
Achieved prices for high-quality condominium units range from $1,500 – $3,000 USD per sq.m in central areas of Phnom Penh. The Bridge, which is due to deliver a 762 condominium units, in addition to 963 ‘SoHo’ units and further retail space, accounts for the upper figure.

July 2014 - 2

DEMAND
Demand for condominiums is anticipated to increase and be met by supply in 2014 through to 2015. The introduction of high quality products in downtown locations will offer prospective investors an opportunity to acquire products that focus on the needs of a heavily expatriate driven area of the Phnom Penh residential market, as foreign nationals continue to require exclusive and up market accommodation in popular locations. Demand is also increasing from an ever more affluent domestic population, which is due to account for a notable proportion of purchasers over the coming years. Domestic demand is a key element of a successful condominium project, due to foreign ownership of an individual building being restricted by law at 70%.
OVERVIEW
Q2 2014 witnessed the sales launch of Oxley Holdings’ ‘The Bridge’ mixed-use development, which comprises a total of 762 residential units. The high off-plan sales rate, which currently stands at 85% , with only one-bedroom units remaining, highlights the strength and appeal of the market to international purchasers, with the majority originating from Singapore. It is important to note, however, that there has been significant domestic interesting in the project.
The successful launch of De Castle Royal, which will set a new benchmark for quality in the market, will further add strength to the ever-growing sector. Comprising a total of 414 units, the project has been key in rebuilding confidence off-plan sales market.
CBRE note that a number of individuals, in addition to established developers, are making considerations towards the construction of further condominium developments, reinforcing their focus on the market, and furthermore their confidence in it.

Condominium Definition – A condominium (or condo) – also know in some countries as an apartment or flat – is a building where individuals have freehold strata title of their own residential unit and where the common areas such as lifts, swimming pools and gyms are jointly owned by all the co-owners. In Cambodia, foreigners are allowed to own up to 70% of the total area of a condo building with the exception of the ground floor.

 

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Land and Investment, CBRE Cambodia MarketView in June 2014

June 2014 - 1

 

June 2014LAND AND INVESTMENT OVERVIEW

During the Khmer Rouge period from 1975-1979 the land title system was completely abolished and all records of previous land titles were destroyed. The land titles system was not re-introduced until 1992 when the land law was passed, enabling people who have lived on the same piece of land for 5 years to qualify for titles. Currently, land in Cambodia is either owned privately or by the state but not all land is registered as the land system remains underdeveloped. Investors are advised to check whether a proper land title exists.

Land titles are represented in two forms soft and hard title. Soft title refers to a title where a property is registered at the local municipal level but which cannot be used as collateral for bank loans while hard title refers to a title issued at the national government level which can be used a collateral for bank loans. Hard title is the most secure form of ownership. However, the majority of transactions still occur for land with soft title to avoid high transaction costs which include property registration taxes and ownership transfer fees. Private freehold ownership is permissible for all types of land but the full ownership is restricted to Cambodian citizens or companies with the majority of shares being owned by Cambodian citizens.

Foreign investors are not allowed to acquire freehold land unless a land holding company is established with at least a 51% share controlled by a Cambodian citizen or company. Foreign investors can also use land in Cambodia under a long term lease. The maximum lease term is restricted to 50 years determined by the civil code established in December 2011. The lease structure system allows foreign investors to lease property if the property is properly registered with a land title certificate.

TAXES

Property Tax is levied on all property worth over KHR 100 million (US$24,000) in Cambodia. The tax is payable annually by the owner of the property at a rate of 0.1% of the government assessed value.

Unused Land Tax is payable for all unused land. The tax is calculated at a rate of 2% of the market value of the land per square meter as determined by the Unused Land Valuation Commission of the Ministry of Economy and Finance. The unused land tax is paid annually by the landowner.

Property Transfer Tax is levied on a sale of land with Hard Title, at 4% of the assessed property value determined by the tax department, by the purchaser.

INVESTMENT ANNOUNCEMENTS

A number of significant developments / transactions were announced or launched in 2014, as follows:

HLH Group announced that D’Lotus Development Ltd, of which it holds a 49% stake, entered into a Sale and Purchase Agreement with Shukaku Inc. to acquire 13,541 square metres of freehold land in Boueng Kak, Daun Penh, for US$14,895,000 (app. 1,100 USD per sq.m). The land is to be acquired for the purpose of a developing a mixed use scheme comprising office, residential and retail accommodation.

Plans to develop a new ‘Grade A’ office tower were announced by a group of investors, operating provisionally under the name of  ‘Kingdom Luxury Development Co.’ to develop a 25-storey office tower on Norodom Boulevard.

Oxley Holdings, with their partners World Bridge Land, commenced off-plan sales of the both the condominiums and the ‘SoHo’ units for their mixed-use development, The Bridge, located by the Australian Embassy in Tonle Bassac Commune.

City Star announced an extended minimum guaranteed yield of 6%, for a five year period, on all one-bedroom villas on Alila Villas Koh Russey. The decision was made due to strong projected revenue forecasts for the luxury-island resort.

Times Centre is shorty due to commence sales of the condominiums units within the mixed-use development located by Olympic Stadium.

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Hotel and Tourism, Cambodia – CBRE Cambodia MarketView in May 2014

CAMBODIA’S TOURISM SECTOR CONTINUES TO EXPAND WITH INCREASE IN INTERNATIONAL ARRIVALS

May 2014

OVERVIEW

The Cambodian tourism sector continued to enjoy steady growth over the course of 2013, with the number of international arrivals increasing by 17.5%, to a total of 4,210,165, up from 3,584,037 in 2012. The average length of stay also increased to, 6.75 days, up from 6.5.

Average hotel occupancy rates in 2013 rose to 69.53%, up from 68.49% the previous year.

The current REVPAR (Revenue per Available Room) in the four and five star hotel market in Phnom Penh ranges from US$25 up to US$100.

Siem Reap remains the most popular destination for tourists entering Cambodia, with arrivals into Siem Reap International Airport accounting for 28.1% of all arrivals, compared to Phnom Penh at 19.9%.

Tourism to Sihanoukville is expected to increase over the coming years, with frequent flights available from Siem Reap and with the delivery of new luxury hotel accommodation off the Sihanoukville coast.

HOTELS

Future supply is set to increase, with the completion of the Sohka Hotel and Naga 2 in Phnom Penh.

Sohka is set to launch approximately  450 rooms onto the market and Naga 2 is set to deliver in excess of 1000, increasing Phnom Penh luxury hotel supply by 70%.

Alila Villas Koh Russey is set to deliver Cambodia’s first internationally branded Island resort, located off the western Cambodian coast, in close proximity to Sihanoukville. This will build on the success of Song Saa Private Island, launched in 2012.

TOURISM

The planned expansion of both Phnom Penh and Sihanoukville International Airports will support the growing number of international arrivals, with the capacity of at both airports set to approximately double over the coming years. Both airports will be able to accommodate up to 5 million travellers respectively, per annum, up from their current capacities of 2.5 million.

Tourism statistics

Tourism accounted directly for 10.4% of Cambodia’s GDP in 2013, a rise of 6.9% from 2012 and significantly higher than the Asia Pacific average of 2.3%. Tourism in Cambodia currently contributes a greater relative proportion of GDP than any other ASEAN economy. Total foreign arrivals increased by 17.5%  Y-o-Y, with arrivals from Loas and China (PRC) growing significantly, by 63.2% and 38.7%, respectively.

Tourism is anticipated to account for an increasingly large proportion of Cambodia’s overall GDP between 2014-2024.

Compared to the figures from 2012, the share of arrivals via land and air remains consistent, with land arrivals accounting for 50.3%. This can be attributed to visitors entering from neighbouring countries Laos, Vietnam and Thailand.

As in previous years, Siem Reap International Airport has the highest share of arrivals at 28.1%, with 19.9% of arrivals attributed to Phnom Penh.  According to the Cambodian Government, approximately US$80 million will be invested to expand the international terminal in Phnom Penh and US$100 million will be used to upgrade Siem Reap International Airport.

 

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