CAMBODIA REAL ESTATE HIGHLIGHTS - RESEARCH - 1ST HALF 2018 - Knight Frank
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RESEARCH CAMBODIA REAL ESTATE HIGHLIGHTS 1ST HALF 2018 ECONOMIC SNAPSHOT PHNOM PENH SIEM REAP SIHANOUKVILLE
ECONOMIC SNAPSHOT
In contrast to the previous election year in 2013,
when market activity slowed considerably, the
real estate sector continued to attract sizeable
investment during H1 2018
LY HAKIM
Analyst
Consultancy & Research
The main focal point for 2018 is of further trade sanctions being placed
certainly the General Election, to be on Cambodia by the US and EU.
“oil extraction is expected to
held in July. However, compared with
As the cost of labour in the region commence in 2019 which
the previous election year in 2013, the
run up to this year’s election has been
is on the rise, and with improving will have knock on effects
infrastructure and connectivity in across a number of real
somewhat more muted and, whilst
Cambodia, in addition to its strategic
FDI has moderated compared with estate sectors and provide
location, the Kingdom is becoming an
the first half of 2017, market activity
increasingly attractive alternative for
further diversification to
remained buoyant.
international manufacturing and logistics Cambodia’s economy”
According to the Ministry of Land companies to set up operation.
Management, Urban Planning and
Furthermore, with the recent rebound
Construction, a total of US$2.15 billion
in the price of oil and Kris Energy
was invested in Cambodia’s construction
reaching a ‘final investment decision’
sector during the first six months of In line with previous GDP growth
to proceed with the first phase of
2018, with construction licenses granted forecasts for Cambodia, the World
development for the Apsara oil field
for 1,643 projects. Bank and the Asian Development
in the Gulf of Thailand, oil extraction
Bank maintained their projections for
The key source countries for is expected to commence in 2019
2018, ranging between 6.9% to 7.0%
investment into the Kingdom were which will have knock on effects
(figure 1). This will be underpinned by
China, South Korea and Japan, across a number of real estate sectors
export diversification, the continued
however, we are starting to see and provide further diversification
expansion of the construction sector,
growing interest from European and to Cambodia’s economy over the
increasing consumer spending and the
American companies despite the risk medium and long-term
growing number of tourist arrivals to
the Kingdom.
FIGURE 1
CAMBODIA GDP GROWTH FORECASTS 2018
%
7
6
5
4
3
NBC ADB WB IMF
Source: National Bank of Cambodia, Asian Development Bank,
World Bank, International Monetary Fund
2
KEY FINDINGS
PHNOM PENH
OFFICE SECTOR
The recent completions of The looming Cambodia election is the current trending
Oval Office Tower, Vanguard,
Vanda Tower and The
topic but the Phnom Penh office sector remains
Link Office contributed an buoyant. Supply and demand are noted to be moving
aggregate of 30,185 sq m to
in tandem showing a continuous upward trend in
total office supply in
Phnom Penh. Phnom Penh during the first half of 2018.
Supply and Demand
By 2020, Phnom Penh will have
Kong Centre and the removal of Alpha
a cumulative office supply of
Tower, which has ceased operation as
approximately 552,391 sq m,
The influx of Foreign Direct an office building.
an increase in the existing
supply of 46%.
Investment (FDI) and MNCs An additional 175,202 sq m of office space
looking to expand operation is due for completion between H2 2018
in Cambodia has seen the and 2020; an increase in the existing
With rising demand and greater
flexibility of landlords, the
need for additional Grade stock of 46%, bringing the total NLA up to
average occupancy rate of A and B office buildings in 552,391 sq m if completed on schedule.
prime office space increased Phnom Penh. Four newly proposed projects planned for
completion, WTC Phnom Penh (WTCPP),
to 73%.
The existing office stock in Phnom Penh Sino Plaza, Olympia City and Chief Tower,
was recorded at 377,189 sq m of net will contribute a further 165,683 sq m of
A slow down in sales of lettable area (NLA) as at H1 2018 as office space to the supply post 2020.
high-end condominiums in compared with 330,085 sq m during
During H1 2018, four office buildings,
Phnom Penh is encouraging the same period in 2017, equating to an
namely; The Vanguard, Vanda Tower,
developers to construct more increment of 14% Y-o-Y.
The Link Office and Oval Office Tower,
prime grade office space. The adjusted NLA has taken into added 30,185 sq m to the existing stock.
consideration the removal of 9,075 sq m
The Vanguard, developed, wholly owned
stemming from the demolition of Hong
and occupied by Shukaku Inc, is located
within the award winning Phnom Penh
City Centre mixed use development, while
FIGURE 2 Oval Office Tower, The Link Office and
EXISTING SUPPLY BY DISTRICT Vanda Tower are small-scale projects
constructed by local developers.
By location, the majority of office buildings
are still concentrated in Daun Penh District
representing 39% of existing supply.
This is followed by Chamkarmon (31%),
7 Makara (20%), Toul Kork (4%), Sen
Sok (4%), Mean Chey (1%) and Chroy
Chongvar (1%).
Despite the demolition of Hong Kong
Centre and the closure of Alpha tower,
the majority of existing office supply is still
dominated by Grade C space representing
51% of the overall supply. This is followed
by Grade B buildings at 35% and Grade A
Daun Penh 39% Chroy Changva 1%
buildings at 14%.
7 Makara 20% Sen Sok 4%
Chamkarmon 31% Meanchey 1%
Toul Kork 4%
Oval Office
Source: Knight Frank Cambodia
3
CAMBODIA REAL ESTATE HIGHLIGHTS PHNOM PENH
Developers to provide A slight increment in the overall monthly In line with the global trend, the
additional Grade A asking rent was recorded for Grade A serviced office industry has also started
office space. offices, ranging between US$28 and to swell. Regus, the global serviced
US$40 per sq m per month (excluding office operator, recently opened their
Grade A space forms the majority (72%) service charges and tax). second co-working space in Casa
of future office supply, of which 31% is Meridian and are now eying their
Grade B and C asking rentals remained
stratified office space. The remaining third location, in addition to several
unchanged ranging between US$18 to
28% of total supply is Grade B newcomers to the market including
US$25 per sq m per month and US$8 to
office space. The Factory Phnom Penh located to the
US$15 per sq m, respectively.
south of the city centre.
61,440 sq m (18%) is scheduled to come Prices of stratified office units remained
online in H2 2018, with a further 75,986 Additional facilities and parking
flat, ranging from US$2,000 for Grade B
sq m (22%) to completed by 2019. spaces are vital in a prospective
units to as high as US$4,500 per sq m
tenant’s consideration for office
37,776 sq m (11%) and 165,683 sq m for Grade A units.
space. Hence, the outlook for existing
(49%) will be completed in 2020 and Grade C office buildings is not as
Office Sector
post 2020, respectively. optimistic, and we expect to see
Outlook
more landlords plan for refurbishment
to keep pace with the market or
A gradual increment redevelop into alternative uses.
recorded in existing Grade A and B offices
office space occupancy remain the preferred choice Occupancy rates are expected to
in H1 2018. as more MNC’s are looking remain stable at 80% and 90% for
Grade A and Grade B buildings
to expand operation in respectively over the short-term whilst
The overall occupancy rate was
Cambodia. rentals are likely to remain flat despite
recorded at 88.5% during H1 2018, a
Y-o-Y increase of one percentage point, the increasing demand, due to the
The increasing FDI and an influx of
despite an additional 30,185 sq m of large incoming supply.
MNC’s looking to expand operation
incoming supply to the existing stock. in Cambodia has led to an increase Landlords are also likely to provide
The occupancy rates for Grade B and C in demand for Grade A and B office additional incentives such as rent free
offices were recorded at 96.0% and buildings in Phnom Penh. periods, stepped rents and free totems
87.4% as at H1 2018, a slight increase or signages in order to maintain or
In view of the above, coupled with the
from 94.8% and 86.6%, respectively, increase occupancy.
high occupancy rate (average of 88.5%
over the same period in 2017. as at H1 2018), developers are starting
However, the occupancy rate for Grade A to tap into the commercial market, and
office rose significantly from 59.8% more specifically the office sector.
during H1 2017 to 73.4% as at H1 2018,
an increase of 13.6 percentage points YoY.
Currently, there are only two Grade FIGURE 3
A offices in Phnom Penh, Exchange CUMULATIVE PHNOM PENH OFFICE SUPPLY
Square and Vattanac Capital. Both
located in the CBD area of Phnom Penh,
Exchange Square commands a higher Sq m
occupancy rate largely due to the strong 800,000
regional reputation of the developer,
700,000
Hongkong Land.
600,000
Prices and Rental
500,000
400,000
Prices and rentals of Grade 300,000
A offices are likely to remain 200,000
flat due to increasing supply.
100,000
Despite the surge in occupancy rates 0 2
008 200 201 201 201 201 201 201 201 201 201 201 Pos
9 0 1 2 3 4 5 6 7 8f 9f 202
recorded during the first half of 2018, 0f t 20
21
rentals for office space across all grades GRADE A GRADE B GRADE C TOTAL
and locations are expected to remain
flat over the short to medium-term, as
supply will almost double by 2020. Source: Knight Frank Research
4
KEY FINDINGS
PHNOM PENH
RETAIL SECTOR
Cambodia’s second AEON Mall AEON Mall Sek Sok City, Cambodia’s largest
was officially inaugurated in H1 shopping centre, officially opened its doors in June
2018, adding further supply to
the Kingdom’s retail sector.
2018. However, the retail outlook will be of cautious
optimism due to significant incoming supply albeit
An estimated 392,476 sq m supported by a growing population, rising consumer
of retail NLA is due to come spending and Cambodia’s emerging middle class.
online post 2020, bringing the
total retail supply to 643,718 sq m,
an increase of 156%.
Supply and Demand bringing the total cumulative supply
to 251,305 sq m as at H1 2018. The
Following the completion of The Phnom Penh retail additional retail space equated to a YoY
AEON Mall Sen Sok City, 70,500 sector is set to expand by growth of 39% in the existing supply.
sq m was added to the existing an estimated 296,213 sq m In 2018, five on-going projects are
supply, increasing to 251,305 within the next 2 years. scheduled for completion, contributing
sq m as at H1 2018. a further 115,013 sq m to the retail stock;
As the retail industry in Phnom Penh these include Downtown 93 (6,994 sq m),
continues to thrive, AEON Mall Sen Parkson Phnom Penh City Centre (70,200
The average occupancy rate Sok City opened its doors in Q2 2018. sq m), The Lane (9,000 sq m) and The Park
reached new heights as at H1 As Cambodia’s second stand alone Community Mall (10,000 sq m).
2018 at 92.1%, a YoY increase of international mall, AEON Mall Sen Sok
4.7 percentage points over the Downtown 93, Parkson Phnom Penh City
City is currently the largest shopping
Centre and The Lane are all located within
same period. centre in Phnom Penh boasting a
the city centre whilst the others are located
NLA of 70,500 sq m, equipped with
in suburban areas. Should all the projects
Cambodia’s first IMAX cinema, an
CapitaLand, Asia’s largest complete as scheduled, 2018 will see the
indoor theme park and a water park,
mall operator, has inked an largest incoming retail space supply on
agreement to manage an on- AEON Mall Sen Sok City is a standout record; a total increase in supply of 113%
going shopping centre slated amongst its competitors in Phnom (including AEON Mall Sen Sok City).
for completion post 2020, Penh, achieving an occupancy rate of
An estimated 392,476 sq m of retail NLA
which forms part of The Peak. approximately 95% upon opening, and
will come online post 2020, accumulating
is following the global trend of malls
a total retail space of 643,781 sq m
becoming an entertainment and leisure hub
There has been a noticeable post 2020; an increase of 156%. With a
rather than purely a shopping destination.
shift toward the development significant incoming supply in the pipeline,
of Community Malls as local AEON Mall Sen Sok City added 70,500 rental rates over the medium to long term
developers seek to enter the sq m to the existing stock of retail space are likely to face downwards pressure.
market.
FIGURE 4
PHNOM PENH SUPPLY AND DEMAND OF RETAIL SPACE
Sq m %
700,000 35
600,000 30
500,000 25
400,000 20
300,000 15
200,000 10
100,000 5
0 20 20 20 20 20 20 20 20 20 20 20 Po 0
10 11 12 13 14 15 16 17 18 19 20 st
f f f 20
AEON 2 20
SUPPLY (LHS) VACANCY RATE (RHS)
Source: Knight Frank Research
5
CAMBODIA REAL ESTATE HIGHLIGHTS PHNOM PENH
The overall occupancy rate reached new During H2 2018, there will be an retailers. The latest in the pipeline slated
heights during H1 2018 at 92.1%, a YoY additional 115,013 sq m of NLA coming for completion this year is The Park,
increase of 4.7 percentage points over online and this will likely impact rents located in Chbar Ampov, south-east of
the same period. Prime shopping malls as mall operators seek to retain both Phnom Penh city centre.
recorded an occupancy close to 97% existing tenants and anchor tenants as
Also in the pipeline for completion in 2018
whilst Secondary retail malls recorded well as attracting new tenants.
is the Parkson City Centre and The Bridge
an occupancy of 85%. Vattanac retail
retail podium. Parkson is a major mall
Retail Sector Outlook
podium, one of the prime shopping
operator originating from Malaysia with
malls, is now 96% occupied with the
extensive mall networks spanning across
new arrivals of upscale international
Much of 2018’s anticipation was focused the South East Asia region and will be the
brands such as L’Occitanne, Stefano
on the opening of AEON Mall Sen Sok first international competition for AEON.
Ricci, Santomi and Jimmy Choo.
City. Equipped with the country’s
As Cambodia’s rapid growth
With the significant supply of retail space first IMAX cinema, this shopping mall
continues unabated, along with rising
coming online post 2020, the overall has brought Cambodia’s cinematic
disposable incomes, we anticipate
vacancy is forecast to increase to 20%. experience to a new level.
to see more European and American
However, with Cambodia’s emerging
H1 2018 also saw the opening of Circle brands gradually entering the market
middle class driving consumption
K, a new US-based convenience store. increasing the retail offer.
growth, more international Asian brands
Originating from the US and now Canadian-
are entering the market, leading to However, due to a potential oversupply
owned, Circle K is a 24-hour convenience
robust demand for international standard situation by 2020, the retail sector outlook
store. With a planned expansion of an
shopping centres and higher occupancy is one of cautious optimism. The future
additional 300 stores nationwide, it will
rates in prime shopping malls. incoming supply will likely place downwards
be interesting to see how Circle K will
pressure on rental and occupancy rates.
CapitaLand, one of Asia’s largest mall differentiate itself to compete with current
Mall operators in Cambodia will be required
operators, recently inked an agreement to offerings such as Kiwi Mart, Smile, AEON
to develop more creative marketing
manage a luxury retail mall in The Peak. Max Value and other local stores.
strategies and promotional events to
Currently an on-going project, it is a joint
We anticipate the food & beverage increase traffic to the retail malls.
venture project undertaken by Singapore-
segment to continue to witness an upward
based Oxley Group and local developer, Notwithstanding the above, with limited
trend due to Cambodia’s emerging middle
Worldbridge Land. Upon completion, it will good quality and well-managed shopping
glass and increasing popularity amongst
comprise a five-storey retail podium (24,154 centres in the capital city, coupled with
younger generation consumers.
sq m NLA) with high-rise condominiums, improvements in the standard of living and
office space and the Shangri-La Hotel atop The buoyant trend for community malls public infrastructure, as well as growing
of the retail podium are favoured by the younger generation purchasing power amongst its population,
whom are more “brand conscious” as they there is potential for the development of
Notwithstanding the data indicators,
feature mainly food & beverage, fashion more international standard shopping
which bode well in the near future for the
and entertainment retailers. Community centres in Phnom Penh, however, new
retail market, it is anticipated to become
malls generally command a lower rental malls will need to differentiate from
increasingly challenging for mall operators
due to them being located in a more the existing offering in order to ensure
as the retail space per capita in Phnom
decentralised area, which is beneficial for sustainable foot traffic to attract retailers.
Penh is set to almost triple by 2020.
Community malls in Cambodia are
currently trending with food & beverage FIGURE 5
and entertainment retailers being AEON SEN SOK VS OVERALL PHNOM PENH TENANT MIX
the major driver. The most recent
inauguration in 2018 is Eden Garden
which is fully occupied.
Prices and Rental OVERALL
PHNOM
AEON
SEN SOK
PENH
Average rents for retail units (below
100 sq m) in prime shopping centres
remained flat between H1 2017 and H1
2018. However, a slight increment was
noted with the completion of Hongkong F&B (33%, 38%) Automobile (6%, 1%) Banking (1%, 1%) Travel (1%, 0%)
Wholesale FMCG (0%, 1%) Health (1%, 0%) Books/Stationery/Toys/Misc. (0%, 1%) Sportswear (2%, 3%)
Land’s Exchange Square.
Entertainment (5%, 6%) Beauty/Cosmetics (11%, 3%) Electronics (2%, 1%) Education (2%, 2%)
Fashion (30%, 41%) Children's 2%, 0%) Homeware (3%, 3%)
Secondary mall asking rentals remained
unchanged at an average rent of US$18 Note: percentage based on number of units and not net floor area.
per sq m per month as at H1 2018. Source: Knight Frank Research
6
KEY FINDINGS
PHNOM PENH
HOTEL SECTOR
The existing supply of hotels Since our last report on Phnom Penh’s hotel sector
with 50 rooms and above was
recorded at 10,347 rooms
in 2015, the tourism and hospitality landscape has
across 80 hotels as at H1 2018. evolved rapidly, in line with Cambodia’s strong GDP
growth, and will be a key driver of the economy in the
The most notable completion
years to come.
during H1 2018 was the opening
of the much anticipated Luxury
Rosewood Phnom Penh, adding
175 keys to the existing supply.
Supply Upper Upscale segment, followed by
Upscale and Upper Midscale hotels
Average Daily Rates and The much anticipated (37%) and Midscale & Economy hotels
(25%), providing a clear indication of the
RevPar for Luxury & Upper opening of the Luxury evolution of the market, shifting away
Upscale hotels in Cambodia Rosewood Phnom Penh, as from the traditional ‘backpacker’ image
recorded nominal YoY well as the Upper Midscale of Cambodia to one of an up and coming
growth of 1.8% and 1.9% Le Castle River Hotel, tourism destination attracting more high-
respectively between 2016
added 263 rooms to the value tourists looking for a wider range
and 2017.
existing stock. of accommodation options.
Occupancy rates
The average occupancy rate The total supply of hotel rooms was
during the same period and recorded at 10,347 as at the end of
within the Luxury & Upper H1 2018, reflecting an increase of
21% compared with the same period
and room rates
Upscale category remained flat
at 52% for Cambodia. in 2017, largely attributable to the Despite the optimistic
completion of Naga 2, providing and outlook for Phnom Penh’s
additional 902 keys. hotel sector, room rates
263 keys were completed during H1 have remained relatively
2018, all of which were located within the flat since 2011 whilst the
city centre District of Daun Penh. The average occupancy rate has
majority (67%) of the newly completed
faired a little better
keys were categorised within the Luxury
& Upper Upscale segment, with the Tourist arrivals to Cambodia recorded
remaining keys within the Upscale & an average annual growth rate of 10.8%
Upper Midscale category. between 2007 and 2017, and a YoY
Whilst Midscale & Economy hotels growth of 11.7% to 5.6 million in 2017
continue to dominate supply (49%), (figure 7). However, whilst Cambodia
developers have seized the opportunity has continued to record strong growth
to fill the gap that once existed in the in tourist arrivals and expenditure, and
market for internationally branded despite a relatively modest increase in
hotels within the Upscale & Upper the supply of hotel rooms between 2016
Midscale segment, as well as the and 2017, the average occupancy rate
Midscale & Economy segment, with remained flat YoY at 52%.
several local developers teaming up Analysing the performance of the sector
with international brands including over a longer timeframe goes some
Courtyard Marriott, Novotel, Fairfield way to understanding why the average
Marriott and Ibis Styles. daily rates and RevPar have remained
Between H2 2018 and Post 2020, relatively flat since 2011 (figure 8), with
an additional 2,452 hotel rooms are the supply of hotel rooms increasing by
scheduled for completion, the majority more than 145%, equating to a supply of
of which (38%) are within the Luxury & just over 1,000 rooms per annum.
ROSEWOOD HOTEL, VATTANAC CAPITAL
7
CAMBODIA REAL ESTATE HIGHLIGHTS PHNOM PENH
FIGURE 6
EXISTING & FUTURE INTERNATIONAL OPERATORS BY ORIGIN AND MARKET SEGMENTATION
EXISTING & FUTURE INTERNATIONAL OPERATORS BY ORIGIN
EXISTING (%): FUTURE OPERATORS (%):
EXISTING (%): FUTURE OPERATORS (%):
37% 32% 17% 14% 50% 20% 16% 14%
37% 32% 17% 14% 50% 20% 16% 14%
FRENCH JAPANESE CHINESE MALAYSIAN AMERICAN CHINESE JAPANESE FRENCH
Accor Toyoko inn Rosewood Sunway Marriott Shangri-la Starts Accor
FRENCH JAPANESE CHINESE MALAYSIAN AMERICAN CHINESE JAPANESE FRENCH
Sofitel, Raffles Courtyard, Fairfield Emion Novotel
Accor Toyoko inn Rosewood Sunway Marriott
Hyatt Shangri-la Starts Accor
Total beds:
Sofitel, 376
Raffles Total beds: 328 Total beds: 175 Total beds: 138 Courtyard, Fairfield Total beds: 300 Total beds: 240
Emion Total beds: 200
Novotel
Hyatt Regency
Total beds: 376 Total beds: 328 Total beds: 175 Total beds: 138
Hyatt Total beds: 300 Total beds: 240 Total beds: 200
Total
Hyattbeds: 739
Regency
Total beds: 739
EXISTING & FUTURE MARKET SEGMENTATION
EXISTING (%): FUTURE OPERATORS (%):
EXISTING (%): FUTURE OPERATORS (%):
20%
32% 37% 20%
32% 37%
54%
54%
14% 43%
14% 43%
Luxury & Upper Upscale
Luxury
Upscale&&Upper
UpperUpscale
Midscale
Upscale
Midscale&&Upper Midscale
Economy
Midscale & Economy
8
Furthermore, within the Luxury &
FIGURE 8
Upper Upscale segment, foreign
ANNUAL ADR, REVPAR & OCCUPANCY RATE
tourists make up more than 95% of
(LUXURY + UPPER UPSCALE)
hotel guests, with limited historical
demand from domestic tourists for the
more luxury accommodation options in US$ %
the capital, adding further pressure to 200 54
occupancy and room rates.
52
150
Hotel sector outlook
50
48
The recent acquisition of 100
46
the two Raffles hotels in
Phnom Penh and Siem 50
44
Reap, the increasing 42
number of international 0
20 20 20 20 20 20 20
40
operators entering the 11 12 13 14 15 16 17
market and the improving
connectivity to Cambodia
ADR REVPAR OCCUPANCY
are all pointing in one
direction Source: STR / Knight Frank Research
The pace of development in Cambodia strong economic growth, booming has led to an increasing need for more
since its recovery from the global construction industry and idyllic leisure suitable accommodation options for a
financial crisis has been mind-blowing; destinations have placed Cambodia on more diverse market segmentation.
having once been a ‘sleepy backwater’ the world map.
The recent acquisition of the Raffles
attracting predominantly low value
Whilst Angkor Wat in Siem Reap has hotels by Lodgis Hospitality Holdings, a
backpacker and thrill-seeking tourists,
long been consistently ranked as one joint venture between VinaCapital and
the shackles have been well and truly
of the world’s top tourist destinations, Warburg Pincus, as well as the slew of
broken.
the improving regional and global internationally operated hotels either
The misconception that people connectivity, as well as domestic under construction or in the development
once had toward Cambodia is infrastructure, is opening up the rest of pipeline, gives a clear indication that
slowly changing as Cambodia’s Cambodia for tourists to enjoy which the hospitality sector in Cambodia has
tremendous growth potential over the
short, medium and long-term.
None more so than Phnom Penh,
FIGURE 7
the capital city and economic hub
INTERNATIONAL TOURIST ARRIVALS (2007 - 2017)
of Cambodia. Whilst historically the
performance of the sector has deterred
international operators from entering
6,000,000 4,000 into the market, the tremendous
growth prospects in both domestic
3,500
5,000,000 and international tourism, across the
3,000 leisure, business and MICE segments,
4,000,000 has led to intense competition among
2,500
operators vying for developers’
3,000,000 2,000
attention and eager to sign hotel
1,500 management agreements across a
2,000,000
1,000 range of brands and segments.
1,000,000
500 With Six Senses, Alila, Courtyard
0 0
Marriott Phnom Penh and Shinta Mani
20 20 20 20 20 20 20 20 20 20 20
07 08 09 10 11 12 13 14 15 16 17 Wild, owned and designed by world
renowned resort designer, Bill Bensley,
INTERNATIONAL TOURIST ARRIVALS (LHS) TOURIST RECEIPTS (US$ MIL) (RHS) all set to open in H2 2018, the future
looks bright for Cambodia’s tourism
Source: Ministry of Tourism industry.
9
CAMBODIA REAL ESTATE HIGHLIGHTS PHNOM PENH
KEY FINDINGS
PHNOM PENH SERVICED
APARTMENT SECTOR
The cumulative supply of An abundant supply of incoming condominiums is
serviced apartments in Phnom
Penh was recorded at 5,050
likely to weigh down on the historically well-performed
units as at H1 2018. serviced apartment sector which is being impacted by
increasing competition.
Approximately 54% of the
existing supply is concentrated
in Chamkarmon District,
followed by Daun Penh (13%)
Supply The View Residence is slated for
completion during H2 2018. The majority
and Toul Kork (12%). Notable launches in H1 of units within The View Residence will
2018 in the serviced be operated as serviced apartments,
An additional 990 serviced apartment sector included managed by the developer, Grand
apartments are due to The View Residence, a Richfortune Company Ltd. Located in
BKK 1, The View Residence will be a
complete by the end of 2018, high-end luxury hotel-style high-end luxury hotel-style serviced
of which 82% are located in level of serviced residence residence.
Chamkarmon, 15% in Daun
in BKK 1, Phnom Penh
Penh and 3% in Toul Kork. As at H1 2018, Chamkarmon continued
The cumulative supply of serviced to dominate more than half of the market
apartments in Phnom Penh was share with 54% of serviced apartments,
Chamkarmon remains the top
recorded at 5,050 units as at H1 2018; followed by Daun Penh at 13% and
location and most sought after,
an increase of approximately 11% Toul Kork (12%). The remaining units are
particularly amongst foreigners,
compared with the same period in 2017. distributed around Sen Sok, 7 Makara,
due to its close proximity to
Chroy Chongvar and Meanchey.
eateries, entertainment outlets, Newcomer, Queen Mansion, providing
retail and tourist attractions. an additional 24 mid-tier units, Of the total 5,050 units, 2,940 units
completed during the first half of 2018. (58%) are mid-tier, 938 units (19%) are
Located in the most desirable residential high-end whilst 1,172 units (23%) are
In view of the incoming supply mass market. In the foreseeable future,
neighbourhood in Chamkarmon District,
and a glut in the condominium we expect growth in the supply trend of
Toul Tom Pong area, it comprises only
sector, we anticipate downwards 1-bedroom units. serviced apartments to moderate due
pressure on asking rentals as to the significant incoming supply of
well as occupancy rates. During H2 2018, an additional 990
condominiums.
serviced apartments are expected to
complete and be ready to move in to,
reflecting an increase of 20%.
FIGURE 9
CUMULATIVE SUPPLY OF SERVICED APARTMENTS (2009 - 2019F)
No. UNITS
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0 20 20 20 20 20 20 20 20 20 20 20
09 10 11 12 13 14 15 16 17 18 19
f f
EXISTING SUPPLY NEW/ADDED SUPPLY
ROSEWOOD HOTEL, VATTANAC CAPITAL
Source: Knight Frank Research
10Rental
Location wise, 7 Makara has overtaken rates dropped by 12%, whilst the mid-
Chamkarmon at 86% in terms of tier and mass-market remained flat.
occupancy rate, due to its centralised We anticipate to see further downward
As at H1 2018, the average location compared with other districts pressure as serviced apartment
rental rate for high-end and lower rental rates. Following closely operators compete to maintain
units was recorded at behind is Chamkarmon district at 84% occupancy rates.
US$22 per sq m, a 12% and Daun Penh at 81%.
drop from US$25 per sq m Demand for serviced apartments relies
heavily on expatriates and will continue
in H2 2017.
Serviced Apartment to be sustained by such demographic
Sector Outlook
We started seeing a gradual decrease over the short-term. With growth in the
in rental rates for high-end serviced expatriate population expected to be
moderate, operators will need to target
apartments during 2017 and we Occupancy rates have other market segments
expect this trend to continue. With the
shown an increase
increasing competition of serviced
apartments, and further incoming supply
despite growing supply. However, This sector is increasing
of condominiums, rental rates will However, the serviced supported by Cambodia’s tourism
continue to face downwards pressure. apartment sector may industry, and as tourist arrivals continue
to record positive growth, we will see
become saturated due to the entry of more international serviced
The above not withstanding, the
the abundant supply of apartment operators.
average rental rates for mid-tier and
mass-market segments remained flat condominiums coming
from H1 2017, recorded at US$13 per online in H2 2018. Landlords and serviced apartment
operators of older buildings will need
sq m and US$7 per sq m, respectively.
Despite condominium supply swelling, to undertake refurbishment, works and
the average occupancy rate across conduct regular maintenance of their
Occupancy the serviced apartment sector was not properties as competition intensifies
adversely affected during H1 2018. It with upcoming new condominiums and
Despite the increase does, however, come at a cost, where service apartments.
in supply of both serviced apartment operators need to be
Traditionally, landlords and service
more flexible when negotiating tenancy
condominiums and serviced terms and rents.
apartment operators have been able
apartments, the average to command high rental rates based
occupancy rate across With increasing competition and supply, on the lack of supply. However, we
are already seeing a shift towards
all segments for serviced rental rates are expected to face
a tenant’s market due to incoming
further downwards pressure. During
apartment increased to H1 2018, the high-end segment rental condominium supply.
75% as at H1 2018.
In contrast to the high end segment which
recorded an average of 54% occupancy, FIGURE 10 FIGURE 11
the mid-tier and mass-market segments EXISTING SUPPLY BY DISTRICT QUARTERLY MONTHLY ASKING
recorded average occupancies of 80% RENTS FOR HIGH-END UNITS
and 84%, respectively.
4,000
The high-end segment average occupancy
rate dropped from 61% recorded in H2 3,500
2017, whilst the mid-tier and mass-market
3,000
increased marginally, despite the increase
of supply for these two segments.
2,500
The main market for serviced
1,500
apartments in Phnom Penh continues to
be expatriates and foreign workers from 1,000
neighbouring countries. To cope with
declining demand, serviced apartment 0
Chamkarmon 54% Daun Penh 13%
operators are increasingly flexible in 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18
Toul Kork 12% Chroy Changvar 8%
terms of stay duration, offering rentals Sen Sok 2% Mean Chey 1%
for short term tenants ranging from 1 BED 2 BED 3 BED
7 Makara 10%
monthly to daily stays.
Source: Knight Frank Research Source: Knight Frank Research
11CAMBODIA REAL ESTATE HIGHLIGHTS PHNOM PENH
KEY FINDINGS
PHNOM PENH
CONDOMINIUM SECTOR
Existing supply in Phnom Penh Despite a moderation in sales of high-end
currently stands at 44 projects
(11,675 units) following the
condominiums, developers remained optimistic with
completion of 10 new projects seven new launches in H1 2018
during H1 2018.
The sales rate of monitored Supply and Demand Despite the high number of on-going
projects coming online in 2018,
stock continued to moderate, As at H1 2018, following developers remained active with seven
recorded at 11% as at H1
the completion of 10 new new off-plan launches identified during
2018, a 1 percentage point
drop from H2 2017 as further
projects, the number of H1 2018 adding 7,823 units to the future
supplies accumulate to the existing projects stood at supply. They comprised Urban Village
(840 units), Residence Bel Air (82 units),
existing stock. 44 with an accumulated Residence L Bueng Tapon (600 units),
11,675 units; an increase R&F Properties (5,232 units), East
Due to the sluggish sales of 57% from H2 2017. Sen Sok (500 units) Yue Tai Garden
rate for high-end units, new (420 units) and L’Attrait BKK (149 units).
Of the 11,675 units, 4,569 units were mid-
launches in H1 2018 were tier whilst 7,106 were high-end. H1 2018 Post 2021, assuming all the identified
predominantly within the saw the completion of 10 new projects, projects are completed, the total number
mid-tier segment. namely Diamond One, The Bhumi Emerald, of units will stand at approximately 43,337;
Bellavita, Residence L BTB, J Tower resulting in an increase of 274%.
For mid-tier projects targeting Condominium, The Bridge, Prince Plaza,
Location wise, as at H1 2018, the
domestic purchasers, Appennines, Residence L Olympic and
existing condominiums were mostly
developers are providing Infinity 28. Also completed were parts
concentrated in Chamkarmon District
additional incentives to home of Olympia City, Block C3 and C4 which
(49%), a highly sought after location
contributed 500 and 300 units to the existing
buyers such as discounts, for both residential and commercial
stock, respectively.
flexibility in down payment properties. This is followed by 7 Makara
terms, longer tenure loans An additional 33 on-going projects are (16%), Chroy Changvar (15%) and
and increasingly competitive slated for completion by the end of 2018, Toul Kork (6%). The rest are distributed
interest rates. providing an additional 11,129 units, around Sen Sok, Daun Penh, Chbar
almost doubling the existing supply. Of Ampov, Russey Keo and Meanchey.
the 11,129 units, 3,340 units are mid-tier
It is worth noting that Sen Sok will
whilst 7,789 are high-end units.
comprise a larger share in the near
future, making up 31%, as its location
is near the recently inaugurated AEON
Mall Sen Sok City which has attracted
developers to the area.
FIGURE 12
SALES OF NEWLY LAUNCHED CONDOMINIUMS BY QUARTER In contrast to previous years, future
incoming supply is moving towards mid-tier
as opposed to high-end units. Assuming all
8,000 2,500
launched projects complete on schedule,
2,000 in 2019, mid-tier units comprise 3,556 units
6,000
(81%) and high-end units comprise 822
1,500 units (19%). In 2020, mid-tier units comprise
4,000
2,406 units (66%) whilst high-end units
1,000
comprise 1,239 units (34%).
2,000
500
Although the overall sales rate moderated
- - during H1 2018, the number of units
Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 sold increased by 9% to 2,020. This is
Units Launched Units Sold Average Price US$/psm primarily contributed by the sale of
mid-tier units.
Source: Knight Frank Research
12Prices and Rental to US$25 per sq m in prime locations
while outer areas commanded rents of
suburban areas because land prices in
Phnom Penh city are increasingly costly
Prices across all segments between US$8 to US$12 per sq m. and it is no longer viable for developers to
remained largely flat between provide mid-tier condominiums at afford-
H2 2017 and H1 2018, Condominium able pricing within the city centre.
whilst the high-end segment Sector Outlook As for high-end condominiums, we
recorded a slight decrease expect to see stagnation in terms
from an average of US$3,000 As supply outpaces of pricing as the supply outpaces
to US$2,944 per sq m during demand for high-end demand. However, the inflow of foreign
the same period. condominiums, affordable investments and increasing Chinese
mid-tier condominiums are investors has helped underpin property
Notable launches during H1 2018 still sought-after by domestic demand, some of whom are investing
included Urban Village, located in the purchasers due to the on en-bloc basis (whole block). Phnom
Penh Harbour, a large-scale development
suburban areas south of Phnom Penh city
centre, which is a combination of mid-tier
emerging middle class and undertaken by Yuetai Group, has started
condominiums, co-working space, retail rapid urbanisation rate. pre-sales for their riverside development
and an entertainment hub, with asking for sale on an en-bloc basis.
Developers are increasingly required to de-
prices starting from US$59,500 for one
vise creative marketing strategies to entice To conclude, despite the concerns of a
bedroom units.
domestic buyers. Attractive incentives such condominium glut, we do not foresee a
East Sen Sok, another mid-tier project as no down payment, special discounts, significant impact on the overall sector.
located in an up and coming suburban lucky draw, free electrical items,, competi- The rental market, however, will be
area close to AEON Mall Sen Sok City, tive interest rates and longer loan tenure are more competitive due to the significant
recorded asking prices of between provided to attract first time home buyers. increase in supply, hence landlords will
US$39,620 to US$47,540 for smaller units. be required to be more flexible in lease
To cater to the local market, we continue
terms and rental pricing.
The overall average asking price to see developers launching projects in
of mid-tier units as at H1 2018 was outside city districts, enabling them to Most foreign buyers of high-end
recorded at US$1,582 per sq m, a target the domestic market by offering condominiums are cash investors in
slight decrease from US$1,600 during more affordable units. Cambodia, therefore the short-term
H2 2017. High-end units also saw a oversupply is unlikely to have any significant
The condominium market in Phnom Penh is
slight decrease to US$2,944 per sq m, adverse effects on the wider market as
still in its infancy, largely due to limited local
both due to the swelling condominium investors are able to hold on to their units
demand. As with any developed market,
supply and stunted sales rate. until the market shows improvement, or
demand needs to be driven predominantly
until we see the gap between asking prices
As the supply has doubled since H2 by the domestic market to be sustainable
and domestic incomes narrow. It will be
2017, and with more units to come online over the medium and long-term.
interesting to see the robustness of the
by the end of 2018, we anticipate asking secondary sub-sale market as purchasers
The growth from domestic buyers for
rents to face downward pressure. The of off-plan units now look to sell the
affordable mid-tier units has prompted
asking rental currently stands at US$15 properties and realise their profits.
developers to shift new launches to
FIGURE 13 FIGURE 14
CUMULATIVE SUPPLY QUARTERLY SALES OF MONITORED AND AVAILABLE CONDOMINIUMS
(2009 - POST 2021) (3Q2015-2Q2018)
60,000 No. UNITS %
12000
22% 21% 25
18% 19%
10000 17%
20
40,000 15%
14%
8000 13%
11% 12% 15
6000 9%
10
20,000 4000
3%
5
2000
0 0 0
f Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
09 11 13 15 17 19 21 201
5
201
5
201
6
201
6
201
6
201
6
201
7
201
7
201
7
201
7
201
8
201
8
20 20 20 20 20 20 20
UNITS AVAILABLE AND MONITORED (LHS) UNITS SOLD (LHS) SALES RATE (RHS)
EXISTING SUPPLY INCOMING SUPPLY
Source: Knight Frank Research Source: Knight Frank Research
13CAMBODIA REAL ESTATE HIGHLIGHTS SIEM REAP
SIEM REAP H1 2018 REVIEW
Overview
Located approximately 231 kilometres However, there has been a noticeable With the announcement of a new airport
northeast of Phnom Penh, Siem increase in investment activity during – now under construction and due for
Reap is the capital city of Siem Reap the past two years, particularly within completion by 2023 – as well as the
Province and is Cambodia’s top tourist the retail sector to cater to the growing completed improvement works to National
destination. Covering an area of 10.3 number of tourist arrivals, as well the first Road 6, we anticipate significant growth in
square kilometres the population large-scale borey development, Borey investment into the province with numerous
is estimated to be in the region of The Angkor Royal Palace. projects already touted, including a water
1,000,000, whilst Siem Reap City park and theme park providing more varied
accounts for approximately 20% of the tourism offerings and opportunities across
total population at 200,000. a number of real estate sectors.
Often voted as one of the world’s top
tourist attractions, Siem Reap Province
is home to the Angkor Archaeological
Park, a UNESCO world heritage site
located in Angkor Thom District,
attracting millions of international and
domestic tourists annually (figure 16)
who flock to see the iconic Angkor Wat
and the surrounding ruins and remnants
of art, culture and architecture with well
preserved murals, stone carvings and
religious statues creating a depiction of
life in the Khmer Empire during the 9th to
15th century.
Just south of Siem Reap City is the
Tonle Sap lake, the largest fresh water
lake in Southeast Asia, which plays a
major role in the province’s ecosystem PROPOSED SIEM REAP AIRPORT (ARCHITECT RENDERING)
and biodiversity, as well as an abundant
supply of fresh water fish meeting more
than half of the country’s demand. FIGURE 16
NUMBER OF INTERNATIONAL TOURISTS TO ANGKOR WAT AND TOTAL
The above notwithstanding, Siem Reap
REVENUE (2010-2016)
has attracted nominal FDI as compared
with Phnom Penh and, more recently,
Sihanoukville. This is largely attributable US$ No. of Tourists
to three factors; firstly, development 80,000,000 2,500,000
within the Apsara Zone restricts the
height of building to 4 storeys – no 2,000,000
60,000,000
buildings should be higher than Angkor 1,500,000
Wat. This makes Siem Reap a less 40,000,000
attractive investment proposition as 1,000,000
developers are restricted in terms of 20,000,000
500,000
permissible projects. Secondly, Siem
Reap’s economy is largely driven by the 0 0
2010 2011 2012 2013 2014 2015 2016
tourism industry and lacks diversification.
Lastly, at 200,000, the population of Siem TOTAL INTL. VISITORS TOTAL REVENUE
Reap is relatively small.
Source: Knight Frank Research / Apsara Authority
14SIEM REAP’S APSARA ZONE
15CAMBODIA REAL ESTATE HIGHLIGHTS SIEM REAP
HOTEL SECTOR
With the Cambodian tourism industry Seeing great potential in the Siem Reap Between 2005 and 2010, the supply of
only opening back up after the 1991 tourism market, several global hotel hotel rooms in Siem Reap more than
Paris Peace Treaty, the tourism sector operators entered the market and the doubled (figure 18), with the hotel sector
in the Kingdom recorded nominal city now boasts more Luxury and Upper becoming increasingly competitive
growth during the early 1990s and early Upscale hotels than the country’s which has negatively impacted on
2000s, with Cambodian tourist arrivals capital, Phnom Penh. The most recent average daily rates and occupancy rates.
and receipts recorded at 786,235 and addition of international operators was
This is evident by the limited number
US$379 million respectively in 2002. the 233 key Courtyard Marriott Siem
of hotels scheduled for completion
Reap, which opened its doors during H1
Hampered by poor infrastructure between H2 2018 and 2020. As at the
2018 and marked Marriott International
and connectivity, as well as a lack of end of H1 2018, the existing supply
Inc’s first foray into Cambodia.
promotional campaigns undertaken of hotel rooms was record at 11,596.
by key stakeholders, Cambodia Other Luxury and Upper Upscale hotels The majority (63%) of which were
remained a predominantly low-value, include Raffles Grand d’Angkor, Park within the Upscale & Upper Midscale
backpacker destination with the majority Hyatt, Sofitel, Anantara and the luxury category, followed by the Luxury &
of hotel accommodation being hostels, Amansara Resort, part of the exclusive Upper Upscale category (24%) and the
guesthouses and boutique hotels. Aman Resorts group. Once a residence Midscale & Economy category (13%).
for guests of the king, the 1960s New
However, driven by the world heritage 541 rooms across four hotels have been
Khmer Architecture residence was
site of Angkor Wat, Siem Reap has identified within the future supply and
meticulously restored and opened as
developed into Cambodia’s premier due for completion by 2020, comprising
Amansara Resort in 2002. Now offering
tourist destination with Angkor Wat Luxury & Upper Upscale hotels (50%),
24 suites, the resort commands some of
often entering into ‘Top 10’ lists of the Upscale & Upper Midscale Hotels (29%)
the highest room rates in Cambodia.
world’s leading tourist attractions. and Midscale & Economy hotels (21%).
FIGURE 17 FIGURE 18
INTERNATIONAL TOURIST ARRIVALS TO SIEM REAP SIEM REAP HOTEL CUMULATIVE SUPPLY
No Arrivals % No. Rooms
2,600,000 15 14,000
10 12,000
2,400,000 10,000
5
8,000
2,200,000 0
6,000
-5
4,000
2,000,000
-10 2,000
1,800,000 -15 0 20 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
2012 2013 2014 2015 2016 2017 05 006 007 008 009 010 011 012 013 014 015 016 017 018f 019f 020f
INTERNATIONAL TOURIST ARRIVALS (LHS) ANNUAL GROWTH (RHS) CUMULATIVE SUPPLY NEW SUPPLY
Source: Ministry of Tourism Source: Knight Frank Research
OUTLOOK:
With increasing connectivity between the three main cities in Cambodia, the construction of the new Siem Reap airport and pending
entry of additional passenger airlines to Siem Reap, the medium and long-term outlook for the Siem Reap hotel sector is positive,
and the market continues to capture the interest of international luxury hotels catering to a rapidly evolving tourist market.
However, whilst the Angkor Archeological Park should be on everyone’s ‘bucket list’; there is a need for more tourism offerings in
the province to encourage tourists to stay longer and to also target repeat visitation; typically, a large percentage of international
tourists to Siem Reap never return once they have visited Angkor Wat.
There is also an excellent opportunity for Siem Reap to tap into the growing Meetings, Incentives, Conferencing, Exhibitions (MICE) market,
and there should be a concerted effort between key stakeholders to actively promote Cambodia and Siem Reap on the global stage.
16RETAIL SECTOR
Notwithstanding that Siem Reap
continues to retain its position as the
main tourist destination in Cambodia,
the local resident population is
comparatively small and there has
been limited development of purpose-
built shopping malls. Whilst tourists
contribute towards foot traffic at
shopping malls in major cities, they
alone cannot support a large-scale
shopping mall development.
Thus, the current retail offering in Siem
Reap is dominated by shop-houses
and local markets, particularly around
the area surrounding Pub Street,
providing boutique shops, a plethora KOULEN SHOPPING MALL (ARCHITECT RENDERING)
of restaurants, and souvenirs and
handicrafts at the local markets.
the existing retail supply is located Despite the small population size of
It is only within the past few years that
in the District of Siem Reap and the Siem Reap, there are several larger-scale
purpose-built retail malls have started to
malls are all below 10,000 sq m, which retail malls that are under construction
be developed, albeit on a relatively small
would classify them as Community or and due to open in 2018 and 2019,
scale, more akin to department stores as
Neighbourhood shopping malls. including The Heritage Walk which will
opposed to shopping malls.
provide a gross area of 40,000 square
Two out of the eight existing malls
These include Lucky Mall, Angkor Trade metres and has already secured several
are categorised as prime retail space,
Centre, Thai Hout supermarket, Angkor anchor tenants, many of which are food
being the Angkor Duty Free Store and
Fashion Plaza, King’s Road Angkor, the & beverage retailers.
T-Galleria, however, they are both duty
Angkor Duty Free, T-Galleria and the
free outlets and, technically, Cambodian With the official opening of The Heritage
recently opened Asia Plaza Supermarket.
residents cannot purchase goods Walk expected during H2 2018 and
As at the end of H1 2018, the total from these malls as you are required the scheduled completion of Koulen
cumulative supply of retail space in to provide travel documentation Shopping Mall by 2020, the total supply
Siem Reap was recorded at 28,125 confirming that you are visiting of retail space is Siem Reap will more
sq m of net lettable area (NLA). All of Cambodia on holiday. than double to approximately 73,000
square metres of NLA
FIGURE 19
CUMULATIVE SUPPLY OF RETAIL SPACE IN SIEM REAP OUTLOOK:
Although the trade area demographics in
Sqm Siem Reap are not as appealing to retailers
80,000 as compared with Phnom Penh, we are
beginning to see increasing investment in
60,000
the retail sector, underpinned by a growing
population, increasing consumer spending
and the projected growth in tourist arrivals
40,000
over the medium and long-term, with 2017
registering the highest number of arrivals
20,000
on record.
0 Whilst the retail sector will grow at a
201 201 201 201 201 201 201 201 201 201 202
0 1 2 3 4 5 6 7 8f 9f 0f slower pace compared with Phnom
CUMULATIVE SUPPLY NEWLY COMPLETED Penh, there is still room in the market
to sustain additional retail formats and
several large scale regional shopping
Source: Knight Frank Research malls are believed to be in the workings.
17CAMBODIA REAL ESTATE HIGHLIGHTS SIEM REAP
RESIDENTIAL SECTOR
Largely attributable to the height Kramaeuk, Siem Reap and Sronger development has also been launched,
restrictions in force within the Apsara communes, providing 263 serviced Borey Angkor Palace located, in close
Zone, the small size of Siem Reap city apartment units. proximity to one of Cambodia’s top golf
and the large availability of land on clubs, the Nick Faldo designed Angkor
The serviced apartments available within
the city outskirts, the development of Golf Resort.
the city have 4 levels or less due to the
condominiums has been non-existent;
strict height restrictions implemented Covering an area of approximately 13.5
low-rise development has generally been
as part of the Apsara Zone protection hectares, Borey Angkor Palace provides
in the form of shop houses, apartment
scheme. These buildings typically offer a combination of shop houses, link
blocks, small-scale, locally-owned
30 units or below. houses, twin houses and queen villas,
serviced apartments and private villas.
as well as leisure facilities. Due to the
The above notwithstanding, 2016
Furthermore, Siem Reap is mainly project’s success, the developer will
saw the announcement of a new
seen as a tourism hub and is not yet soon launch a second project in the
development proposed for Siem Reap,
on the radar of many holiday home province.
Les Bijoux D’Angkor, undertaken by
purchasers or retirees so the market
RGL Equity (Siem Reap). The project will As well as the larger scale projects,
for condominiums historically has
provide 84 apartments within a gated there are also a number of smaller scale
been limited.
community, comprising one bedroom projects, such as Phum Barang which
As at the end of H1 2018, there were no and three bedroom duplex units located won Best Residential Development
completed condominium developments along the Siem Reap River on the way to (Siem Reap) at the 2017 Cambodia
in Siem Reap. the Anchor Archeological Park. Property awards.
We have identified 14 purpose- To cater to growing demand for
built serviced apartment buildings residential accommodation in the
within Sla Kram, Svay Dangkum, Sla province, the first large scale borey
TWIN VILLA – BOREY ANGKOR PALACE (ARCHITECT RENDERING) LES BIJOUX D’ANGKOR (ARCHITECT RENDERING)
OUTLOOK:
Whilst condominium development has generally been confined to Phnom Penh, we see a gap in the residential market in Siem
Reap, which has the potential to attract both foreign and domestic investors looking to invest in the condominium market but are
wary of the oversupply situation in Phnom Penh’s residential sector. An increase in the number of investors taking interest in Siem
Reap can be expected due to recently completed infrastructure providing greater accessibility from overseas destinations and from
other major cities such as Phnom Penh and Sihanoukville.
At present, quality residential accommodation is lacking, predominantly due to limited historical demand. However, there is
growing demand from wealthy Cambodians in Siem Reap as well as those based in Phnom Penh and we anticipate more borey
developments to be launched in the coming years.
18SIHANOUKVILLE H1 2018 REVIEW
OVERVIEW
Sihanoukville, the capital of Sihanouk the on-going road widening of National expressway linking Phnom Penh to
Province, is situated in the south- Road 4 by the Japanese International Sihanoukville. This new expressway,
west coastal region of Cambodia, Corporation Agency (JICA). expected to begin construction in H2
approximately 230 kilometres from the 2018, will improve travelling time and
Additionally, the growth of Sihanoukville
City of Phnom Penh. Renowned for its facilitate goods transportation. The
will benefit from the new multi-purpose
coastal beaches and tropical islands, announcements of the abovementioned
terminal addition to the Sihanoukville
the province is becoming a major tourist infrastructure improvements has further
Autonomous Port (SAP). Launched in Q2
destination and a growing industrial hub. contributed to the rapid growth of the
2018, this new terminal can handle more
Sihanoukville is an emerging market in Sihanoukville real estate market, despite
than twice the current capacity.
Cambodia, currently experiencing a real the upcoming election.
estate boom fuelled and supported by SAP, Cambodia’s only operational deep-
Land pricing in central city and seafront
rising Foreign Direct Investment (FDI) sea port, is the main gateway by sea into
locations has increased two to three-
and diversified economic drivers. Cambodia and acts as the key economic
fold during the past two years due to the
path for import and export between
During 2017, Sihanoukville welcomed recent influx of Chinese investors. This
Cambodia and other countries.
approximately 2.5 million visitors, has prompted not only the development
of which 470,000 comprised foreign With support from JICA, a new Japanese of high-rise residential projects on
tourists. Sihanoukville’s sudden spike Official Development Assistance (ODA) the coast of Sihanoukville, but also
in tourist arrivals – by 120% since was executed last year for additional international hotel chains and casinos.
2016, has prompted investors’ interest, terminal extensions to cope with
with a particular focus on gaming and increasing logistics traffic in Cambodia.
hospitality.
As part of China’s One Belt, One
Supported by the government, Road initiative, a toll-road concession
Sihanoukville is set to benefit agreement was signed between
from numerous infrastructure and Cambodia and a Chinese state-owned
transportation improvements, including company to construct a new four-lane
What’s needed to sustain economic growth ?
Commitment to Reduction in the More
spending on cost of doing transparency
infrastructure business, and improved
projects particularly market
utility cost regulation
Investment in the A comprehensive
education system master plan and
to address land use zoning
the skill gap for the province
19CAMBODIA REAL ESTATE HIGHLIGHTS SIHANOUKVILLE
CONDOMINIUM SECTOR
Prior to the tourist industry boom, high- Meanwhile, Grand Lion Group Sales of newly launched projects
rise residential projects in Sihanoukville announced its first project in during H1 2018 was recorded at 50%,
were non-existant. The first high-rise Sihanoukville; Lyon D’Or, a mixed whilst the overall sales rate of all
residential project was launched in 2015 development comprising 888 residential monitored developments was recorded
and was a pioneer in the market. units, a Marriott branded hotel and at approximately 60% indicating
luxury retail podium. The project is healthy demand.
As at Q2 2018, there were no completed
expected to launch during 2019.
condominiums in Sihanoukville. The sudden influx of developers has seen
However, 2,866 units are expected to An additional 15 projects were identified some offering special incentives to buyers.
be delivered by the end of 2018 across providing an additional 8,383 units Phase 1 of Sunshine Bay was fully sold,
three projects, namely, Sunshine Bay, to the future condominium stock due largely due to developers providing a
D’Seaview and Blue Bay. for completion between 2018 and strong rental guarantee. Other incentives
post 2020, These condominiums will offered include loans for foreigners and
During H1 2018, two smaller scale
dramatically change the skyline of flexible repayment schemes.
projects were launched; The 28
Sihanoukville.
Mithona and The New Nordic, Pricing for the first two projects launched
contributing 350 units and 136 units All of the proposed and on-going in 2015 started from US$1,800 per sq m
respectively to the supply pipeline. developments are located in Mittapheap of net saleable area. As at H1 2018, newly
The first phase of a larger scale district. Most of the projects are focused launched projects recorded selling prices
project, Sihanouk City View in Sangkat Bei (76%, 6,399units), followed from US$1,100 per sq m to US$2,300 per
undertaken by BS Group, was also by Sangkat Boun (16%, 1,336 units) and sq m. The average selling price of mid-tier
launched adding 1,200 units to the Sangkat Pir (8%, 648 units). 51% of the units started from US$1,000 per sq m to
future supply. units are within the high-end segment US$1,800 per sq m whilst high-end units
whilst 49% are in the mid-tier segment. ranged between US$2,000 to US$3,000
per sq m as at H1 2018.
FIGURE 20 FIGURE 21
DISTRIBUTION OF CONDOMINIUM LAUNCHES IN SIHANOUKVILLE CONDOMINIUM CUMULATIVE
SIHANOUKVILLE (2015- 2Q2018) SUPPLY (2018F-POST 2020)
10,000
Sangkat 1
Koh Rong
5,000
Sangkat 2
Sangkat 4
0
Sangkat 3
2018f 2019f 2020f post 2020f
0 2,000 4,000 6,000 8,000 CUMULATIVE SUPPLY NEW SUPPLY
Source: Knight Frank Research Source: Knight Frank Research
OUTLOOK:
Foreign investors first started to acquire land in Sihanoukville back in the early 2000s, seeing its great potential and believing it
would be the next Phuket. However, with limited investment in infrastructure, as well as the onset of the global financial crisis,
the development of Sihanoukville ground to a halt and it is only since 2016 that the market has seen significant investment into
Sihanoukville’s real estate sector.
Unlike Siem Reap, Sihanoukville is more than just a tourist destination; it is an economic hub, home to Cambodia’s only operational
deep sea port as well a numerous industrial zones and agricultural opportunities, providing Sihanoukville with excellent long-term growth
potential. As the city continues to grow, so too will demand for residential accommodation and we see good medium to long-term
potential in this sector.
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