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