There is no doubt Phnom Penh is going through a construction boom with new restaurants, offices, serviced apartments, shopping centers, hotels, hospitals and schools being built all over the city. However, one of the key sectors undergoing significant change is condominium development.
Bangkok experienced a condominium boom in the 1990s, which changed the skyline of the city and also changed the living habits of the city’s inhabitants. Is the same going to happen in Phnom Penh?
Phnom Penh is certainly a much smaller city and a long way behind Bangkok, but the signs are there that Phnom Penh is following the same trend.
Is the supply of condominiums growing? The short answer is: yes!
The supply of condominiums slowed almost to a halt during the global finan- cial crisis and with landmark develop- ments such as Gold Tower 42 and Camko City locked in court battles, confidence in the condominium market remained low throughout the crisis years. However, with signs of economic recovery, consumer confidence began to return and in 2012, the largest completed condominium development, Rose Garden Condo (or Rose Condo) opened its doors. Within 6 months, more than 90 percent of the units at the four towers had been sold.
This success story provided developers, investors and potential buyers with increased confidence and condominium developments are once again underway all around Phnom Penh.
The success of Rose Condo needs to be treated carefully though. Many of the sales were not to buyers who intended to occupy the property themselves (own- er-occupiers), but to local investors seeking opportunities to make investments at attractive rates. This type of buyer cannot sustain a growing condominium market in the long term and unless condominiums are purchased by owner-occupiers, effectively middle class Cambodians, the number of successful condo development will be limited to foreigners living in Cambodia, foreign investors and local investors.
With many new developments set to come online at the end of 2013, 2014 and on through to 2016, CBRE researched a total of 18 condominium projects (com- pleted as well as under construction) in Phnom Penh with the main developers currently being De Castle and Canadia Group.
In 2014 three new condominium projects will be completed and in the following two years a further four developments will be coming online.
High-Quality Condominiums – Missing Supply
Developers have now started to under- stand the different market segments existing in relation to the condomini- um market and the lack in supply of high-quality condominiums.
De Castle Royal is set to be the first high-quality, luxury condominium devel- opment completed in Phnom Penh and the new supply of high-quality condos will cater to local and foreign potential buyers who demand standards and quality which so far have not existed in Phnom Penh. This segment of the market is also likely to attract owner-occupiers as well as foreign owners, who are more accustomed to this style of living.
Other condominium developments around Phnom Penh include De Castle Royal, Galaxy Condos, Bali Resort, HK Condos, Olympia City D.I. Riviera, Rose Garden and I240.
Booyoung Town is not mentioned in the list above but is well worthy of note in any discussion about condominiums. The project on Russian Boulevard, which recently broke ground, has said that con- dos will make up 85 percent of the devel- opment. This would over time introduce a supply of thousands of condominiums onto the market that will likely be targeted at all market segments: luxury, mid and low range.
The success of the condominium market as a whole will be heavily dependent on the urban expansion of Phnom Penh, the accessibility of competitive financing and a cultural shift from living on the ground, towards owner-occupiers relocating to condominium developments within the city. Whether individual developments are successful or not, there is one thing we can be sure of, condominiums are here to stay and will have an ever-increasing presence in Phnom Penh in the years to come.