The latest ‘Phnom Penh Market Insights Q3 2024 Report’ from CBRE Cambodia reveals a complex landscape in the capital's real estate market, showing signs of stability and potential growth in various key segments despite a broader slowdown in construction and muted rent and sales price increases.

Key findings from the report indicate that while new launches have declined, this may ultimately benefit investors by enhancing occupancy rates and returns. The report analyses trends across hospitality, residential, retail, and commercial real estate, alongside macroeconomic factors influencing property demand as 2024 draws to a close.

Retail Sector Highlights:

• A significant influx of retail podium supply is expected, with 769,000 square meters anticipated to be online by the end of 2024. Of this, 83% is already completed as of Q3 2024.
• Despite this growth, retail occupancy has dipped slightly, dropping from 58.7% in Q2 to 58.3% in Q3 2024, reflecting a more than 20% decrease from the peak occupancy of over 80% in 2019.
• Retail rental rates remain subdued, with an overall decline of nearly 30% from 2019 levels, although prime rates have seen a slight increase.

Commercial Sector Insights:

• The commercial office supply is projected to reach 1.12 million square meters by the end of 2024, growing to 1.34 million square meters by 2025.
• Office occupancy rose from 61.8% to 65.8% in Q3 2024, yet rental rates generally declined, particularly for Grade A spaces, which fell over 5% to an average of $25 per square meter.
• Landlords are responding with more flexible leasing arrangements and incentives to retain tenants amidst a cooling market.

Hospitality Sector Developments:

• A modest increase in 4-star and 5-star hotel room supply is expected, with 9,800 and 4,200 rooms, respectively, marking a 2% rise since 2023.

Residential Market Trends:

• The residential sector has experienced a dramatic decline in new launches, with only five new landed property projects in 2024, contrasting sharply with nearly 90 launches per year between 2019 and 2022.
• The condominium market remains slightly more active, yet new supply continues to lag behind previous peaks.

Kinkesa Kim, Managing Director of CBRE Cambodia, emphasised the significance of these trends, stating, “The reduction in residential property supply indicates an ongoing market correction. This shift, coupled with the previous oversupply, suggests that we could see increased occupancy and demand for rentals and resale properties in the near future.”

Download Phnom Penh Market Insights Q3 2024 Report here.

For further information, please contact Kinkesa Kim, Managing Director and Channdara Latt, Manager of CBRE Cambodia as the details below.