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CBRE Cambodia Fearless Forecast 2020 Presentation

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Highlight

Cambodia Overview

  • Cambodia GDP growth rate remains robust at 7.1% in 2019.
  • Urban car ownership ratio saw a significant increase caused more traffic stress to the capital.
  • 2019 FDI at USD 3.9bn, equivalent to a 12% increase compared to 2018.
  • The number of the approved project reached 4,446, up from 2,867 in 2018.

Infrastructure

  • Update on Airport development across the country.
  • Sihanoukville-Phnom Penh expressway construction progress and update on Phnom Penh – Bavet expressway.
  • Update on Phnom Penh mass  transit progress.
  • Ring Road three construction progress.
  • Sharing-economy & infrastructure.

Land

  • Regional land value comparison between Phnom Penh, Ho Chi Minh, and Bangkok. Phnom Penh land value remains favourable for real-estate development.
  • Phnom Penh land prices saw a sharp increase cross 7 different districts in response to demographic expansion and new infrastructure developments.

Residential

  • 2019 saw over 16,500 units of condominium launches and over 3,800 units of completion.
  • Condominium sale prices remain robust across affordable and Mid-range sub-sector. Affordable and Mid-range condominium sale prices saw 5.32 per cent and 1.28 per cent increase y-o-y. High-end condominium sale prices witnessed a downward adjustment of 2.33 per cent y-o-y.
  • Condominium rents saw small uplift y-o-y. Highend condominium rents witnessed a 0.56 per cent upward adjustment. However, Mid-range condominium rents saw a 3.65 per cent upward adjustment.
  • Affordable condominium market saw big growth at 13 projects in 2019, up from 9 in 2018.
  • More Cambodian millennials will be moving to condos due to the location, amenities, affordability, and independence.
  • 2020 to see 16 new project completions, equivalent to some 10,000 units.

      2020 Condominium Sector Trends

  • Cambodian millennials to drive affordable condominium sales.
  • Buyers shifting towards developments that offer a sense of community, livability, and walkability.
  • Developers to face challenges in condominium development as the market become more competitive
  • The interconnection between developments and projects becomes critical to success.
  • The affordable segment to see upward adjustment due to healthy demand from local buyers.
  • Stable sale prices in mid-range and high-end.
  • With the increasing supply, rents are expected to face some downward pressure across all segments.

Retail

  • Retail supply stands at over 314,000sqm of net leasable area in 2019.
  • 2020 expects up to reach 575,700 sqm, an 83 per cent increase.
  • 3 community malls completed in 2019.
  • Retail brand expansion slows while new entries remain robust.
  • Brand entries saw 55% in the F&B sector.
  • The vacancy rate reached 10.6 per cent in 2019. It is expected to reach 18.8% in 2020 due to the high influx of supply.
  • 11 community malls, 5 retail podiums, and 4 shopping malls are expecting to complete in 2020. This will add over 261,000 sqm of the net leasable area to the overall supply.
  • renovation and repurposing is a trend.

      2020 Retail Sector Trends

  • More construction delays expected.
  • Professionalisation through internationalisation of operators, asset managers, owners and developers
  • Lifestyle, wellness and leisure lead the way as malls seek to diversify.
  • Redevelopment of non-retail buildings and renovation of older retail projects.

Office

  • 2019 supply saw a 534 per cent increase compared to 2009.
  • Office supply reached over 370,000 sqm of the net area by 2019.
  • Grade B office sees robust upcoming stock.
  • Phnom Penh current supply is 25 times smaller compared to Bangkok at 9 million sqm.
  • Strata title office saw 303 per cent increase in 12 months.
  • The first grade A strata title office to join the market in 2020.
  • 2020 is expecting a 177 per cent increase in strata title office supply.
  • Centrally owned office rents are estimated to soften in 2020 on the back of rapid supply increases. However, grade A rents is estimated to increase in response to the lack of supply.
  •  Despite increasing deal sizes and net absorption rates, average occupancy is expected to fall back due to supply increase.
  • Tenants increasingly seek quality stock, using office space as a tool to attract top talent.
  • Flexible space gaining traction of opportunity.
  • International and home-grown operators are joining.
  • Corporates & conglomerates become tenants.

     2020 Office Sector Trends

  • Banking and insurance take the most space, followed closely by flexible workspace operators.
  • Fit-out contractors start using AI to design workspaces.
  • Head leasing becomes a major outlet for developer risk.
  • Strata title office developments see a wave of regulations and a lack of new launches.

Tourism & Hospitality

  • Chinese tourist saw 1,480 per cent increase in 2019 compared to 2009.
  • Robust number in the number of tourist arrival across Phnom Penh international airport and Siemreap International airport.
  • Chinese remains at a peak in international tourist arrivals as of October 2019.
  • Hotel project number reached 301 projects across 3 to 5-star ratings. Over 20,000 keys by 2019, compared to over 1,000 key in 2009.
  • Recognizable names are joining the market.
  •  4 and 5-star hotel projects to come in 2020.
  • New entries such as Hilton, Novotel, Aurea, Hyatt, Fairfield, and Yoo are joining the market.

Industrial

  • The number of special economic zone reached over 40 zones, up from 21 in 2009.
  • Industrial land sale rates remain between $50 and $80 in 2019, between $30 and 60$ in 2009.
  • BTS-rents increased by $1 in 10 years.
  • RBF-rents increase by $0.5 in 10 years.

2020 Industrial Sector Trends

  • High land prices & increasing labour costs in neighbouring countries drive demand for Cambodia.
  • Continued electricity supply issue disrupt interest in industrial development.
  • Major international industrial developers seek Cambodia.
  • International tenants demand higher quality industrial space.
  • Investment in infrastructure to support the industrial sector