CBRE Commentary – Residential Market
The residential market in Cambodia is dominated by three main categories of housing; apartments/ condominiums, shop houses / townhouse / and villas. The residential market involves us all and we therefore all have our own opinions about it. The residential market can be very challenging for developers and investors. At the same time, the residential market in Phnom Penh is a healthy market with average house prices steadily increasing.
Villas are marketed for sale with two components, firstly land and secondly the built component of the dwelling itself. Almost all of the villa developers sell land plots with the option to build houses either at cost or at a small margin. Purchasers are able to buy the land and then hold off on construction until they are ready.
As with all property, location is key to a building’s value and villas located in popular parts of Phnom Penh are very valuable. In Boeung Keng Kang there is a diminishing supply of villas because properties are being converted into commercial units. CBRE Cambodia has recently had some real success with linking up national and international purchasers with good quality villas.
A condominium, also referred to as an apartment, is a single floor or duplex unit within a multi-storey building. There is a shared roof, common facilities and a common access. The market for condominiums is still relatively small and in an early stage. This is set to grow in the future and it is likely to follow the markets in Singapore and Ho Chi Minh City in time.
The market for renting apartments is somewhat larger and this can sometimes lead owners and developers to the thought that anything they bring to the market will be a success. This is not true and developing and apartment building is a complex undertaking and it is vital that the design, size, type, facilities and specification are in line with their target market and importantly, priced correctly. The optimal mixture of one, two and three beds along with penthouses to suit the market is also vital in larger developments. The style and design of the apartment also needs to reflect the needs of the intended market, for example, should a western style kitchen be planned for and installed, or is a more traditional Khmer kitchen more appropriate. Phnom Penh accommodates a diverse range of expatriate nationalities, a developer should be acutely aware off their target audience. One size does not fit all and is a pit-fall some developers fall into.
An area where CBRE Cambodia is frequently consulted on is the marketing of apartments. It is here that we are able to build on the knowledge base of over 300 offices worldwide. It is essential to create the right marketing plan for a specific building and this may include launch parties, press events, brochures, website, web-based and e-mail advertising campaigns, advertisement boards and additional bespoke marketing materials and activities.
A shophouse or townhouse is a dwelling attached on a minimum of one side but could be two or three sides. It is usually multi-storey and has no private external areas. It’s typical dimensions are 4.2m wide by 16m or 20m deep. These are very popular with Cambodian nationals as they allow people to have a small commercial space on the ground floor and residential accommodation above with can be used as a residence or rented out.
Shophouses are flexible and relatively cheap to rent, which is why they are so sought after. The unit price of a shophouse/townhouse is equal to or cheaper than the average condominium, which makes it more affordable. Some units are being sold for as little as US$40,000, although often the interior is basic without a fitted kitchen or bathroom and sometimes with screed floors and only a concertina door.
The residential property market is a fascinating part of the property market but it should be treated with caution.
David George, Country Manager CBRE Cambodia and a member of the Royal Institute of Chartered Surveyors. [email protected]