According to the Ministry of Land Management, Urban Planning and Construction, investment into construction during the first five months of 2018 was valued at USD 1.78 billion, with 1,370 projects approved across the kingdom. 

Key statistics at a glance:

• Average high-end condominium price: $3,211/sqm
• Prime condominium rent: $14.3/sqm
• Prime office rent: $25.5/sqm
• Prime retail mall rent: $40/sqm

The report shows that investment was significantly cooler than the corresponding period last year when USD 4.4 billion was approved. Whilst the last reduction is substantial on paper, the difference is largely due to a single project launched last year with an investment value of over USD 2.2 billion. 

Weaker market sentiment as a result of uncertainty surrounding the upcoming general elections is considered to be the most prominent factor in the remaining shortfall in new investment. 

The second quarter of 2018 continued to witness a rise in the wave of condo units completed with supply on-track to exceed 20,000 units by the end of 2018. 

Market highlights:

• An approximate 2,000 condominium units were completed in Q2, with five new projects launching off-plan sales and adding a total of 2,256 units to the supply pipeline.
• Quoting sales prices for affordable and mid-range condominiums remained stable, while high-end units appreciated by 2% QOQ.
• Whilst total supply fell by 3.3%, overall office occupancy grew 5 percentage points to 87.7% over Q2 2018.
• Quoting rents for offices in CBD locations grew by 6% and 3.4% for Grade-B and Grade-C, respectively.
• Over Q2 2018, total retail supply grew by 43% compared to the previous quarter. 

Growth in new supply is placing growing downward pressure on condo rents. By the end of Q2, asking rents in the mid-range segment witnessed a steep decline of 12% QOQ, whilst in the high-end segment rent fell 5% QOQ. 

The office market remained robust during the second quarter of 2018, with occupancy reaching a new peak of 87.7%. Quoting rents for Grade-B offices in the CBD increased by 6% QOQ, while Grade-C rents saw a growth of 3.4% QOQ. Quoting rents for office space in non-CBD locations remained stable over the course of Q2 2018. 

As the office market continues to modernize, some ageing buildings are starting to close or undergo renovation in order to provide a higher level of specification and service required to compete for tenants. The report indicates that over Q2, total supply dropped by 3.3% compared to the previous quarter due to this trend. 

During this quarter, three retail complexes were completed and retail supply grew by a remarkable 43% QOQ. Japanese developer AEON led the pack, delivering approximately 85,000 sqm of retail space based on gross lettable area. Vacancy in the retail sector dropped sharply to below 10% as of Q2 2018, helped by strong pre-leasing activity by AEON, whilst quoting rents for retail complexes witnessed no significant change over the second quarter.

Click here to view CBRE Cambodia MarketView Phnom Penh Condominium Q2 2018 report.

For more information or to discuss the report, phone or email James Hodge, Associate Director of CBRE Cambodia via the contact details listed below.

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