Cambodia Real Estate Phnom Penh Siem Reap - Knight Frank
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Phnom Penh Siem Reap Sihanoukville
Cambodia
knightfrank.com/research
Real Estate
Highlights - 1st half 2020
E C O N O M I C S N A PS H OT
ECONOMIC SNAPSHOT
Cambodia’s GDP growth is expected to decline sharply during 2020 but
forecast to bounce back in 2021
At the beginning of 2020, no one could However, in contrast to developed
have predicted the turn of events countries, Cambodia’s economy is
ROSS WHEBLE
that unfolded during the first half of forecast to bounce back in 2021 (figure 2),
Country Head
2020. According to the World Health with GDP growth projections from the
Organisation (WHO), it was first made World Bank, Asian Development Bank
aware of the Covid-19 outbreak in Wuhan, and International Monetary Fund
China on 31 December 2019 and issued its ranging between 5.7% to 8.5% for 2021. “in contrast to developed countries,
first Disease Outbreak News report on 5 Cambodia’s economy is forecast
January 2020. This strong economic recovery will to bounce back in 2021 (figure 2),
be underpinned by the fiscal and with GDP growth projections from
Since that announcement, the number monetary responses implemented by the World Bank, Asian Development
of Covid-19 cases globally reached a the Cambodian Government, namely: 1) Bank and International Monetary
staggering 10.2 million as at the end of scaling up of existing social protection Fund ranging between 5.7% to 8.5%
June 2020 and was declared a global schemes through cash transfers to poor for 2021.”
pandemic by WHO on 11 March. and vulnerable households, 2) tax relief for
the tourism and manufacturing sectors,
In response to the outbreak, countries 3) retraining programmes for unemployed Whilst the short term outlook
around the world went into various levels workforce , 4) wage subsidies for remains unclear, with the full
of lockdown bringing the global economy suspended workers, 5) property ownership effects of Covid-19 yet to be felt
to a virtual halt. transfer tax exemption on properties in the global and local economy,
valued below US$70,000, 6) capital the medium term outlook for
This had a significant impact on injection for the Rural Development and Cambodia remains positive,
Cambodia’s economic performance Agriculture Bank, 7) establishment of a supported by Cambodia’s strategic
during H1 2020; according to the World new SME bank, 8) improving ease of location within ASEAN and
Bank, this was largely felt through three doing business. Southeast Asia, its open door
key channels: tourism, exports and policy on foreign investment and
foreign direct investment. The monetary policies introduced by growing domestic consumption.
the central bank included a reduction in
Cambodia has strong economic linkages banks’ reserve requirement, postponing
with Countries that have been severely the implementation of the Capital
impacted by Covid-19 (figure 1) which Conservation Buffer, cutting interest
has decimated demand for garment rates on negotiable certificates of
exports to the US and the EU and brought deposits and reducing the Liquidity
tourism to a standstill. Coverage Ratio.
Figure 1: Top 5 markets for exports, tourists & FDI origin
Figure 2: 2020 GDP Growth Forecasts
2020 2021
Exports Tourism FDI Inflows
%
10
US 26.80% China 32.60% China 40.00%
8
Hong Kong, 6
EU 25.00% Vietnam 12.90% 10.90%
PRC SAR 4
2
Japan 7.70% Lao PDR 6.90% Korea, Rep. 7.80%
0
Canada 6.20% Thailand 6.20% Singapore 7.10% -2
-4
UK 6.10% Korea, Rep. 4.90% Japan 6.20% IMF ADB WB
Source: International Monetary Fund,
ROW 38.20% ROW 36.50% ROW 28.00% Asian Development Bank, World Bank
Source: World Bank
2
P H N O M P E N H O F F I C E S E CTO R
PHNOM PENH
Key findings
OFFICE SECTOR
As at H1 2020, Phnom Penh’s
aggregate supply of office space Average occupancy rate for both centrally-owned and strata-title
stood at 588,710 sq m of net lettable offices across all grades declined to 77%, largely due to the unabated
area (NLA), a y-o-y increase of 27% supply of new office. Surprisingly, there was a minimal impact from
from H1 2019. the Covid-19 pandemic despite severely impacting the global financial
and real estate markets.
The first half of 2020 alone saw the
completion of 10 office buildings across Supply and Demand Four Grade C offices entered the supply
Grade B and C, contributing a total NLA during H1 2020 namely Rise Commercial
of 71,666 sq m for both centrally-owned The cumulative supply of office space (2,100 sq m), OSK Building (7,000 sq m),
and strata-title offices. stood at 588,710 sq m of NLA following the Royal K Plaza (7,950 sq m) and The Link
completion of 10 office buildings during Office III (1,440 sq m), all of which are
Conversely to the global office the first half of 2020, eight of which are centrally-owned. There was no new stock for
trend, Phnom Penh’s office sector centrally-owned buildings and two strata- Grade A office completed during this period.
appeared shielded from the full title buildings.
adverse effects of the Covid-19 The continuous additions further
pandemic as witnessed in other The cumulative supply of office space reinforced Grade B’s domination with
major cities. increased by 71,666 sq m to 588,710 sq 51% of the overall supply, followed by
m of NLA, an increase of 13.8% since Grade C with 40% and Grade A with 9%.
Although leasing activities reduced the end of 2019 and a y-o-y increase of
with weakened occupier sentiment, 27% from 2019. The supply is expected Two strata titled office buildings
rentals for Phnom Penh’s centrally- to more than double over next two years completed, namely The Legacy and
owned offices remained resilient and with an additional 211,372 sq m NLA of KVBC Business Centre, contributing
stable across all grades, with no mass centrally-owned offices and 447,798 sq m an NLA of 20,099 sq m whilst centrally
foreclosures or rent reliefs evident NLA of strata-title offices, assuming all owned office building contributed 51,567
whilst average occupancy rates projects complete as scheduled. sq m of NLA.
recessed to 77% largely due to the
incoming office supply. Of the new stock, 55,276 sq m NLA were An additional 124,997 sq m NLA of office
of Grade B offices whilst the remaining space is expected to come online by the
With the increasing number of office 16,390 sq m were Grade C offices. Notable end of 2020.
completions, it is anticipated that Grade B entries were TK Central (14,366
owners of strata-title offices will sq m), The Helix Office (2,000 sq m) and By the end of 2020, most of the supply coming
likely be more flexible, especially in The Legacy Tower (14,742 sq m). Other online will be strata-title offices comprising
terms of rental rates and minimum additions were AMASS Central Tower 87,689 sq m NLA whilst the remaining 337,308
tenure to secure a tenant for their (7,511 sq m), The Point (9,200 sq m) and sq m will be centrally-retained offices, all
unit, thus creating a more competitive KVBC Business Centre (5,357 sq m). TK of which are Grade A and B.
landscape against landlords of Central (Toul Kork) and The Helix Office
centrally retained offices. (7 Makara) are both centrally-owned Taking into account the 659,170 sq m NLA
whilst The Legacy Tower and KVBC in the pipeline for future completion, the
Business Centre are strata-title and cumulative office supply will snowball to
located in Chroy Changva. 1,247,880 sq m post 2020. The current split
of centrally-owned and strata-title offices
Figure 3: Existing supply by District
was 83% and 17%, respectively, however
this is set to equalise post 2022, once all
Daun Penh 26%
7 Makara 19% monitored projects complete as scheduled.
Chamkarmon 21%
Beung Keng Kong 16%
The ratio of centrally-owned and strata-title
Toul Kork 7%
offices, upon completion of all monitored
Chroy Changva 4%
Sen Sok 6% projects will be 56% and 44%, respectively.
Mean Chey 1%
89% of the future incoming supply is Grade
The Helix Office, Phnom Penh Source: Knight Frank Research
A whilst the remaining 11% is Grade B.
3
P H N O M P E N H O F F I C E S E CTO R
With the sizeable incoming supply, the reduce overheads to alleviate cash flow for offices remained resilient and
office market is anticipated to self- difficulties. Expansion and relocation relatively flat since the end of 2019.
correct as it finds its equilibrium in plans of corporates were generally placed Grade A, B and C offices command
terms of demand and rental. on hold until the situation improves. rentals ranging between US$30 to US$39
per sq m per month, US$21 to US$23 and
The wise, city centre location remained However, unlike the global office market, US$14 to US$15, respectively (exclusive
the most densely populated location where compassionate reliefs and tenants of service charges and tax).
with offices, accounting for 89% of the foreclosures were widespread, Phnom
overall stock whilst the remaining 11% Penh’s office sector appeared isolated The newly completed centrally-retained
is in suburban. Distribution within the from the full brunt of this pandemic Grade B and C offices are available for rent
city centre comprised Daun Penh (26%), other than reduced leasing activities. ranging between US$16 to US$24 per sq m
Chamkarmon (21%), 7 Makara (19%), Boeung The above notwithstanding, the office per month (exclusive of service charges
Keng Kang (16%) and Toul Kork (7%). sector outlook over the short to medium and tax) whilst the strata-title offices are
term is still generally one of oversupply. available for sale starting from US$2,500
Chamkarmon to overtake Daun Penh with Average occupancy rates for both per sq m of the NLA.
majority office concentration in the future. centrally-owned and strata title offices
was recorded at 77%, a decline of 4.2 Office Sector Outlook
Although the CBD is located in Daun percentage points since the end of 2019.
Penh, Chamkarmon is set to replace Grade A and C centrally retained offices Co-working space and serviced offices
its dominant spot post 2022, upon commanded an occupancy rate of 80%, were the main components impacted
completion of all monitored projects whilst Grade B declined to 75%, largely by the pandemic. Challenged to stay
as scheduled, comprising 26% of the due to the sizeable new office supply and open, some operators temporarily closed
overall office location distribution. weakened absorption rate. as many people tried to avoid group
meetings and to practice social distancing.
The existing geographic office Owners of strata-title offices expected to However, operators are still optimistic on
distribution of suburban comprised increase flexibility to entice tenants. the future outlook of the co-working and
Chroy Changva (4%), Sen Sok (6%) and serviced office market once the pandemic
Mean Chey (1%). Most MNCs halted expansion and improves within the region.
relocation plans in H1 2020 leading
The only new launch noted during the to a standstill in transactional Despite Cambodia having successfully
first half of 2020 was Central Capital activity. Furthermore, with a sizable avoided any major fallout from the
Tower, which is a Grade B strata-title development pipeline, owners of COVID-19 outbreak – no evident
office, contributing about 24,800 sq m of strata-title offices will be pressured lockdowns and cases remained low,
NLA to our monitored basket. to increase flexibility with rental its economy was still impacted by the
and tenure, in order to compete with economic fallout its neighbours and
Occupancy rates of centrally-owned centrally-owned offices. the region. This has resulted in firms
offices continued to face downward holding off decision making and re-
pressure whilst strata-title offices Prices and Rental strategising their corporate real estate
recorded an uptick. needs. This softer sentiment will put
Despite the oversupply situation pressure on rents, further compounding
Centrally-owned offices recorded an which is further exacerbated by the the impending supply hitting the market
average occupancy rate of 80.8%, a 5.3 unprecedented Covid-19 crisis, rentals in the coming years.
percentage points drop whilst strata-title
offices recorded an average occupancy
Figure 4: Cumulative Supply by Year and classification
rate of 59.3%, a 5.4 percentage points Grade A Grade B Grade C Total
increase, since H2 2019. 1,400,000
1,200,000
1,000,000
The unprecedented Covid-19 pandemic
800,000
severely hampered leasing activity
600,000
during the first half of 2020. The 400,000
pandemic, which caused lockdowns 400,000
-
and restricted movements globally has
20 st
09
08
f
10
14
16
19
18
13
12
15
7
f
11
20
f
21
Po
1
22
disrupted the global economy leaving
20
20
20
20
20
20
20
20
20
20
20
20
20
20
Source: Knight Frank Research
many corporates no choice but to
4
P H N O M P E N H R E TA I L S E C T O R
PHNOM PENH
Key findings
RETAIL SECTOR
The cumulative retail space was
recorded at 351,046 sq m NLA as at Following the announcement of Covid-19 pandemic by World Health
H1 2020, a y-o-y increase of 4% over Organisation (WHO) as a “Global Pandemic” , consumer spending
the same period of 2019. and business sentiment weakened significantly. Many workers chose
to return and stay home until the situation improved, leading to a
Three new community malls officially significant footfall decline during March and April of 2020.
opened their doors contributing a
total 11,792 sq m NLA to the overall Supply and Demand by a number of well populated Boreys.
retail supply; namely Samai Square, Extending to a NLA of 2,342 sq m,
TL Sky Mall and Khalandale Mall. Supply in Phnom Penh increased by this community mall is the first in the
11,792 sq metres NLA. The cumulative district to offer a modern retail format
During H2 2020, an additional 107,946 supply space stood at 351,046 sq m NLA and comprises food & beverage retail,
sq m NLA will enter the supply stream as at H1 2020. hypermarket and a cinema under the
of retail space, spread across seven operator of Prime Cineplex.
projects. Three additional community malls were
opened during the first half of 2020 During H2 2020, an additional 107,946
To contain the spread of the Covid-19 namely; Samai Square, TL Sky Mall and sq m of NLA of retail supply spread
outbreak, the Cambodian government Khalandale Mall. over eight projects is scheduled to come
has relentlessly advised the public online in Phnom Penh, if all monitored
against unnecessary travel and to Samai Square opened during the first projects launched or under construction
apply social distancing measures. quarter of 2020 and contributed 1,650 are completed on schedule. Between 2021
Mall operators stepped up on sq m to the monitored retail supply. and 2022, the cumulative supply will
hygiene measures which includes This new community mall provides double with an additional 370,000 sq m
temperature screening and hand additional diversified venues to the Toul NLA coming online.
sanitation at entrances. Kork district populace. Khalandale Mall
opened during the second quarter of Although the current ratio of retail space
Non-essential retailers in prime 2020, contributing 7,800 sq m NLA to the between the city centre and suburban
shopping malls were instructed by overall supply. Khalandale Mall is directly stood at 65:35, this distribution is set to
operators to temporarily reduce opposite the existing Eden Garden transform as 68% of the new supply in
operating hours whilst some food & community mall, providing additional the pipeline will be focused in suburban
beverage retailers have taken their diversified venues in Daun Penh. districts whilst the remaining 32% is in
own initiative to cease operation or the city centre.
observe social distancing measures TL Sky Mall is located in Porsenchey
by serving only take-away / delivery District and is strategically surrounded
services.
Figure 5: Phnom Penh Supply and Demand of Retail Space
Supply (LHS) Vacancy Rate (RHS)
Sq. m. %
1,00,000 35
30
800,000
25
600,000 20
15
400,000
10
200,000
5
0 0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020f 2021f 2022f
Source: Knight Frank Research
Khalandale Mall, Phnom Penh
5
P H N O M P E N H R E TA I L S E C T O R
Sen Sok and 7 Makara districts still between US$27.00 to US$30.00 per sq m began restructuring to strengthen their
comprise the most retail space in Phnom of NLA (excluding service charges and online presence.
Penh with 26% and 24% of the overall tax). However, rentals for secondary
share, respectively. This is followed by grade malls remained unchanged at Moving forward, shopping mall
Chamkarmon and Daun Penh representing US$21.00 to US$29.00 per sq m of NLA. operators are expected to step up
21% and 15%, respectively. The remaining on hygiene measures and sanitation
14% of retail space is spread over Boeung The Covid-19 outbreak caused retail practice with mall entrances guarded
Keng Kang, Toul Kork, Mean Chey, footfall to suffer as the majority of for body temperature scan and hand
Porsenchey and Chbar Ampov. shoppers avoided crowded areas sanitisation for incoming shoppers.
and stayed home to conform to the Additionally, technological innovations
The retail trading environment globally government and WHO’s social distancing with a focus on reducing contact
has transformed subsequent to the advice. The situation was further between people will be a top priority.
Covid-19 pandemic, Cambodia included. exacerbated when travel restrictions were
Since the announcement by the WHO, implemented globally which reduced The pandemic led to a ‘new norm’ for
the Cambodian government has taken tourist arrivals tremendously. the retail sector. The typical shopping
a number of measures necessary to habits have transformed with visitations
curb the spread of this outbreak. Non- With leasing activity put on hold, it to shopping malls and hypermarkets
essential businesses involving close is anticipated that operators will be being more direct and purposeful rather
physical contact such as cinemas, KTVs, providing additional incentives to entice than window shopping. Also, at times
pubs and bars were ordered to shut until tenants to their shopping mall. of uncertainty, consumer spending will
further notice. also moderate as consumers will be
As a result of the pandemic and reduced cautious especially on big ticket items,
As the outbreak worsened, governments footfall, relief assistance was also leading to lower business turnover.
of other countries began implementing provided on a case-by-case basis by For non-essential items, retailers will
“movement control” or “lockdown” landlords to existing tenants. inevitably be faced with consolidation
or “circuit breaker” measures to curb and closures as they re-allocate
the spread. These measures restrict all Retail Sector Outlook resources and operations. To prevent
citizens and anyone residing in those major retail closures, landlords and
countries from non-essential travel for Despite continuity of operations, shopping mall operators will be expected
a fixed span of timeframe. Although shopping malls were not operating at full to work hand-in-hand with existing
the retail footfall reduced enormously capacity due to the government’s strict retail tenants to ensure sustainability
during the months of March and April, social distancing measures. Cinemas and maintain occupancy levels.
the retail sector in Phnom Penh was not were shuttered whilst F&B retailers
as severely impacted compared with found not adhering to the government With the supply expected to double up
its regional neighbours as Cambodia’s operation guidelines were ordered to by 2022, shopping mall operators will
government restriction imposed were close. Online retail appeared to be the be required to constantly adapt to the
minimal. silver lining from this pandemic as it dynamic retail environment to remain
became the preferred options, and many competitive and to entice tenants.
The overall occupancy rate slipped to F&B consumers and fashion retailers
85%, a 0.3 percentage points drop as
compared with occupancy rates noted Figure 6: Distribution of Existing Retail Space by District
during the end of 2019, underpinned by
strong F&B and entertainment retailer
take up rates noted in Samai Square and
Daun Penh 15% Chbar Ampov 3%
Khalandale Mall. TL Sky Mall however
7 Makara 24% Mean Chey 5%
is located in the suburban area and Chamkarmon 21% Chbar Ampov 3%
recorded an occupancy rate of 66% Boeung Keng Kang 3% Porsenchey 1%
during its first quarter of opening. Toul Kork 2%
Sen Sok 26%
Prices and Rental
Subsequent to the peak of the outbreak,
rentals for prime grade shopping malls Source: Knight Frank Research
registered a slight decline, ranging
6
P H N O M P E N H H OT E L S E CTO R
PHNOM PENH
Key findings
HOTEL SECTOR
The global tourism industry was one
of the hardest hit sectors following Hospitality sector left exposed as tourism industry took a plunge in
the outbreak of Covid-19. This led to a incoming passenger arrivals stemming from travel restrictions and
64.6% year-on-year decline in tourist lockdowns imposed by global governments to contain the Covid-19
arrivals to Cambodia during the first global pandemic.
half of 2020.
Supply of the overall market share) followed
Average hotel occupancy rates and ADRs by Chamkarmon (22%), Boeung Keng
during H1 2020 plummeted by 33% and Three hotels namely Anik Palace Hotel, Kang (11%), Chroy Changva (9%) and 7
25% respectively, over H1 2019. Poulo Wai Hotel & Apartment and Makara (8%). The remaining hotels are in
Aurea Central Hotel, officially opened Toul Kork, Mean Chey and Porsenchey
The existing supply of hotels in Phnom and contributed 392 keys to the overall districts.
Penh increased to 11,727 keys despite Phnom Penh hotel supply during the
the temporary and permanent closure first half of 2020. Despite the new additions, the category
of many establishments. distribution remained the same with
As at H1 2020, the cumulative supply Midscale & Economy (3-star) dominating
Until global travel restrictions are of hotel rooms in Phnom Penh rose to the existing supply (50%). Luxury &
relaxed, the hospitality sector will 11,727 keys, an increment of 392 keys over Upper Upscale (5-star) and Upscale &
remain challenging and we will three new hotels; Anik Palace Hotel (129 Upper Midscale (4-star) hotels had equal
continue to see operators shift focus to keys), Aurea Central Hotel (98 keys) and market share at 25%.
the growing domestic market. Poulo Wai Hotel & Apartment (165 keys).
Anik Palace Hotel is an Upscale & Upper Two hotels were added to our monitored
To cushion the impact, the Government Midscale hotel whilst the other two are future hotel pipeline during the first
of Cambodia in collaboration with the within the Midscale & Economy segment. half of 2020; Hotel Nikko Phnom Penh
National Bank of Cambodia launched a (201 keys) and The Khom Hotel (130
series of monetary and fiscal policies to In addition, Lumiere Hotel comprising 88 keys), both of which are Upscale & Upper
assist tourism stakeholders including keys, an Upscale & Upper Midscale hotel in Midscale (4-star).
tax exemption and increased liquidity Daun Penh district was officially rebranded
for affected businesses. to Lyve Inc Hotel during Q2 2020. Hotel Nikko Phnom Penh is located in
Chamkarmon District whilst The Khom
Daun Penh remained the district with Hotel, which is under the Autograph
the highest concentration of hotels as it Collection of Marriott International
encompasses the CBD and the Phnom is located in Daun Penh District. Both
Penh riverside tourist belt. hotels are scheduled to complete and
Daun Penh comprised 4,444 keys (38% commence operation by 2022.
Figure 7 : Cumulative Hotel Supply by Year
Cumulative Supply New Supply
No.
Rooms
22,000
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020f 2021f 2022f Post
2022f
Source: Knight Frank Research
Lyve Inc Hotel, Phnom Penh
7
P H N O M P E N H H OT E L S E CTO R
Towards the end of 2020, four additional Figure 9 : Average ADR, Revpar & Occupancy Rate for Phnom Penh Hotels
hotels are expected to open their doors ADR (LHS) RevPar (LHS) Occupancy (RHS)
if the projects complete as scheduled, US$ %
180 60
contributing an additional 556 keys to
160
the overall supply, including the much 50
140
anticipated Hyatt Regency which has
120 40
completed construction work and is 100
30
slated to open by H2 2020. 80
60 20
Between 2021 and Post 2022, 40
10
approximately 7,143 keys are expected 20
- 0
to be added to the hotel supply, a large 2016 2017 2018 2019 2020
proportion of which is contributed by
Source: Knight Frank Research/STR
Naga World 3 in Chamkarmon district.
If all monitored projects complete as
scheduled, the cumulative supply of and February ranging between 47% to The international travel bans which are
hotels in Phnom Penh will rise to 19,426 50%. As the outbreak worsened during being implemented to varying degrees
keys representing an increase of 66% over March, and travel bans accelerated in across the globe, coupled with fear of the
the existing supply. regional countries, occupancy rates highly contagious Covid-19 virus, will
declined to 20% by June 2020. continue to hamper the performance of
Occupancy rate and average the hotel sector over the short term.
room rates Due to the low occupancy level, the
Ministry of Tourism reported that To cushion the impact and prevent a
Visitor arrivals to Cambodia plunged approximately 324 hotels had requested further closures, the government has
64.6% year-on-year during the first half for temporary suspension nationwide, worked hand-in-hand with the National
of 2020 as countries around the world at least until the situation improves. Bank of Cambodia and launched a series
battled with the Covid-19 pandemic. Between January and June 2020, of monetary and fiscal policies to assist
the ADR for Phnom Penh across all tourism stakeholders including tax
The severe disruption of the tourism classifications declined sharply, by 37% exemptions and increased liquidity for
sector, which stemmed from global as hotels which continued operations affected businesses/hoteliers.
travel restrictions imposed by global either slashed their room rates or offered
governments, has directly impacted the extended monthly stays at low rates. Additionally, travel bans on incoming
hospitality sector in Cambodia. foreigners were lifted towards the end of
Hotel sector outlook H1 2020 and replaced with mandatory
Average hotel occupancy rates and requirements such as health certificates,
Average Daily Rates (ADR) during H1 Whilst quarantine measures are still insurance and medical/quarantine
2020 in Phnom Penh plummeted by in place, tourist arrivals will remain deposits which became a barrier of entry
33% and 25%, respectively, over H1 2019. depressed and hoteliers will face for foreign tourists.
The year began with relatively healthy decreasing RevPar over the short term
occupancy rates recorded during January The Covid-19 global pandemic
continued to bring much uncertainty
Figure 8: International Tourist Arrivals to Cambodia
and the recovery period of the hotel
2015 2016 2017 2018 2019 2020 sector is unclear depending on the
No. Tourists longevity of the outbreak or until
800,000 a viable vaccine is established and
700,000 global travel restrictions relaxed. The
600,000 hospitality sector is likely to remain
500,000
challenged and hoteliers are expected
400,000
to shift focus to the growing domestic
300,000
tourism market over the short term.
200,000
100,000
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: Tourism Statistics Department, Ministry of Tourism
8
P H N O M P E N H S E R V I C E D A PA R T M E N T S E C T O R
PHNOM PENH
Key findings
SERVICED APARTMENT
SECTOR
Two new serviced apartments namely
Lyzones Tower and 85 SOHO Premium
Serviced Residences, contributed
192 units to the cumulative serviced Average occupancy rate of serviced apartments contracted to 61%, a
apartment supply in Phnom Penh. y-o-y decrease of 18 percentage points over the same period during
2019. Although advertised asking rates remained stable, landlords
Knight Frank’s basket was updated with increased flexibility with tenancy terms and lengths of stay
a number of newly identified serviced
apartment taking the cumulative supply
of serviced apartments in Phnom Penh Supply Additional units were also added to the
to 6,577 units spread across 167 blocks. Mid-tier segment with the completion of
Two new serviced apartments within 85 SOHO Premium Serviced Residences.
Mid-tier serviced apartments the High-end and Mid-tier segments Located within part of the Axis
dominated the existing supply with contributed 192 units to the overall condominium development, this block
a slight uptick of the overall share to supply during H1 2020. contributed 108 units to Sen Sok district.
57%, followed by High-end (23%) and
Affordable (21%) units. In addition, Knight Frank’s basket has Despite the new entries spread across
been updated with four newly identified other districts, Boeung Keng Kang
Travel restrictions implemented by projects, taking the total existing serviced District still commanded the largest
governments to contain the Covid-19 apartment supply to 6,577 units spread market share at 34% of the overall supply,
global pandemic outbreak have limited across 167 projects. followed by Chamkarmon (17%), Daun
accessibility of incoming foreigners Penh (17%), Toul Kork (11%), 7 Makara
and expatriates, thus causing During the first half of 2020, the operator (10%), Chroy Chongva (6%), Sen Sok (4%)
downwards pressure on the serviced of Lumiere Residence, a High-end and Mean Chey (1%).
apartment sector occupancy rates as serviced apartment comprising 166 units
it contracted to 61%; a y-o-y decrease in 7 Makara District, was replaced with a Approximately 56% of the overall supply
of 18 percentage points over the same new operator and rebranded to Lyve Inc is categorised as Mid-tier whilst the
period during 2019. Hotel & Residence. remaining 23% is High-end and 21% is
Affordable. The city centre continues to
The newly completed High-end serviced be the sought-after location for serviced
apartment, Lyzones Tower, contributed apartments. Approximately 89% of the
84 units to Boeung Keng Kang District. existing supply is located within city
centre districts whilst 11% are located in
suburban districts.
Figure 10: Cumulative Supply of Serviced Apartments (2009 - 2020f)
Existing Supply New/Added Supply
No. Units
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020f 2021f
Source: Knight Frank Research
Lyzones Tower, Phnom Penh
9
P H N O M P E N H S E R V I C E D A PA R T M E N T S E C T O R
An additional 1,371 serviced apartments Occupancy Serviced Apartment
have been identified and will be added Sector Outlook
to the supply over the next two years, The overall occupancy rate was
reflecting an increase of 21%, assuming impacted by the onset of Covid-19, The full impact of Covid-19 on the serviced
all identified projects complete as contracting to 61%, a y-o-y decrease apartment sector is largely unknown as it
scheduled. of 18 percentage points over the same will depend on the scale of the outbreak
period of 2019. and also government travel restrictions.
Rental
Demand for serviced apartments The increased supply of condominiums
Asking rentals for serviced apartments is mainly driven by tourists and and serviced apartments, the repatriation
remained resilient despite the increased expatriates. The bleak situation due of expatriates stemming from the Covid-19
competition from condominiums and to the Covid-19 pandemic forced pandemic and the entries of hotels in
hotels. governments around the world the city offering extended stay have all
to impose travel restrictions and adversely impacted occupancy rates for
The significant increase in the supply lockdowns to contain the spread of the serviced apartments.
of new condominiums has intensified outbreak.
competition among serviced apartment Towards the end of the first half of
operators. In addition, the lack of The outbreak caused many expatriates 2020 the government lifted travel bans
tourists due to Covid-19 and global in Cambodia to return to their that were imposed on six countries
travel restrictions has pressured hotel countries of origin via repatriation and also relaxed entry requirements
operators to offering long-term stay at flights and also prevented incoming into the Kingdom. Despite the above
heavily discounted rates. foreign workers. This led to the average actions, incoming tourist arrivals are
occupancy rate falling to 61% during the expected to remain depressed which will
Despite the increased competition, first half of 2020. negatively impact on demand for serviced
advertised asking rentals remained apartments over the short term.
resilient with High-end rents averaging By segment, High-end apartments were
US$21 per sq m over the net lettable area, impacted the most, with the average However, there are now some green shoots
Mid-tier rents averaging US$13 per sq occupancy rate recorded at 42% whilst emerging, as businesses that temporarily
m and Affordable rents averaging US$7 Mid-tier and Affordable units recorded closed begin to slowly re-open, enticing
per sq m. However, serviced apartment occupancy rates of 68% and 74% foreign business owners back to Cambodia,
landlords and operators were more respectively. and office expansions of MNCs that were
open to negotiation in terms of rentals put on hold are becoming active again.
and shorter tenancy duration. Other Location-wise, Chamkarmon, Boeung
incentives offered were free months stay Keng Kang, Daun Penh and Toul Kork The short term outlook of the serviced
with yearly tenancy, free cleaning, free districts all recorded the highest apartment sector remains cautious. In
internet, free cable TV and so on. occupancy rates averaging between 61% general, rentals and occupancy rates will
to 63% whilst 7 Makara, Chroy Changva remain under pressure if the longevity of
and Sen Sok were slightly lower ranging this outbreak is prolonged which could
between 51% to 58%. lead to acquisition opportunities.
Figure 16: Cumalative Supply of Land Housing Units (2009-2021f)
Figure 11: Existing supply by District Figure 12: Monthly asking rents for high-end units by Quarter
Chamkarmon 18% 7 Makara 10% 1Bed 2Bed 3Bed
Boeung Keng Kang 34% Daun Penh 17% US$
Toul Kork 10% Chroy Changva 6% 4,000
Sen Sok 4% Mean Chey 1%
3,500
3,000
2,500
2,000
15,000
1,000
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020
Source: Knight Frank Research Source: Knight Frank Research
10P H N O M P E N H C O N D O M I N I U M S E CTO R
PHNOM PENH
Key findings
CONDOMINIUM SECTOR
The cumulative supply of
condominiums was recorded at Although demand for condominiums weakened with the onset of the
21,935 units across 77 condominium Covid-19 global pandemic, new launches and prices remained resilient
developments as at the end of H1 and there was a noticeable increase in the number of domestic buyers
2020. There were six new project
completions.
Supply and Demand increasingly popular residential district,
After reconfiguration of Knight Frank’s Chroy Changva.
condominium classification , the The first half of 2020 saw the completion
current ratio of High-end and Mid-tier of six condominiums (2,699 units) and UK Condo is within Toul Kork District
units in the city stood at 65% and 35%, 10 new off-plan launches (3,712 units). and Sky Tree is within Russey Keo
respectively. District, both of which are established
Amidst the Covid-19 pandemic, six new residential districts. The remaining new
Growing domestic demand for condominiums were completed during the completions are spread across Sen Sok
condominiums helped to off-set first half of the year, lifting the cumulative and Mean Chey districts.
the declining demand from foreign condominium supply in Phnom Penh up
investors subsequent to the Covid-19 to 21,935 units (including the balance units Although Chamkarmon remains the
outbreak. within Star City which has been completed) district with highest concentration of
spread across 77 projects; a y-o-y growth of condominiums, the latest incoming new
Developers and market players 25% from H1 2019. entries spread across various districts
remained unwavering during these have reduced its overall share to 33%,
testing times with 10 new off-plan To reflect the overall increase in followed by Sen Sok (19%), 7 Makara (12%)
condominium projects launched during residential prices in Phnom Penh, Knight and Chroy Changva (11%). The remaining
the first half of the year Frank’s condominium classification districts Boeung keng Kang, Toul Kork,
has been reconfigured; the Affordable Daun Penh, Chbar Ampov, Russey Keo
To cushion the impact of Covid-19 and segment now comprises units priced and Mean Chey all recorded less than
stimulate investment activities, the up to US$1,000 per square metre of net 10% share each.
Government of Cambodia exempted saleable area (NLA), Mid-tier units are
transfer taxes on property valued below priced between US$1,001 to US$2,500 per Despite the economic turbulence caused
US$70,000 until the end of 2020. square metre of NLA. Properties selling by the outbreak of Covid-19 during Q1
above US$2,500 per square metre of NLA 2020, developers remained unwavering
are categorised as High-end. and 10 new off-plan condominium
launches were recorded.
The ratio of existing condominium supply
now stood at 65:35 for Mid-tier and High- Eight of the launched projects are Mid-
end, respectively. To-date, there are still tier namely Leedon Heights (1,190 units),
no existing Affordable units. Garden Residency 2 (369 units), Phnom
Penh Galaxy Garden (1,140 units), Parc 21
The six completed Mid-tier Residence (132 units), AKJ Bright Pearl
condominiums were UK Condo (224 (286 units), Grand Central (800 units),
units), Highland Condominium (213 The Golden World (864 units) and Grand
units), Mekong View Tower 6 (262 units), Condo 7 (142 units).
Paramount Residence (400 units), Sky
Tree (268 units) and Axis Residence (432 The only two High-end condominiums
units). Additionally, the remaining 800 launched are namely Go Home Residence
units of the 1,600 units in Star City have (448 units) and Le Conde’ BKK1 (1,040 units).
also been completed this quarter.
Despite the weakening global economic
Both Mekong View Tower 6 and Highland outlook which caused many corporates
Sky Tree, Phnom Penh Condominium are located within the and businesses to reduce non-essential
11P H N O M P E N H C O N D O M I N I U M S E CTO R
employees and implement salary largest market share of condominiums Meanwhile, Le Conde’ BKK1 is sited in
reductions, the condominium sector at 20%, followed by Sen Sok (18%), Chroy Boeung Keng Kang District. Comprising
showed little sign of a setback, with Changva (15%), Mean Chey (12%) and 1,040 units, it is a large scale High-end
on-going projects continuing as Toul Kork (11%). project positioned as being the country’s
scheduled. Over the next three years, if first smart home project with high-tech
all the monitored launched projects are Inevitably, the Covid-19 pandemic voice recognition technology from China
completed as scheduled, the cumulative took a toll on the sales rate of both tech giant, Xiaomi. Developed by Wangfu
supply of condominiums in Phnom High-end and Mid-tier condominiums. Guo Ji Property Development, the prices
Penh is projected to surge up to 75,447 The restrictions of international start from US$2,800 per square meter
units post 2023 which is equivalent to a travel directly impacted demand for over the net saleable area.
244% growth if compared to the current condominiums. The average sales rate
number. of monitored projects moderated to 5%, Condominium Sector Outlook
from 7% during H2 2019 and 15% during
The worsening outbreak of the Covid-19 H1 2019. The travel restrictions under the “new
pandemic has adversely impacted the normal” raises a concern for developers as
financial, manufacturing, logistics, Prices and Rental the Cambodian condominium market is
automobile, tourism and hospitality currently underpinned by foreign demand.
sectors. This has led to an economic Average selling price continued rising
uncertainty and an increase in relentlessly despite the onset of Covid-19 The condominium sector is clouded with
unemployment in many countries as pandemic; corrections yet to be evident. uncertainty as the impact of the Covid-19
corporates and businesses consolidate pandemic continues to unfold. However,
and look to reduce operational Although price corrections were still although sales rates began to show signs
expenditure. not evident, a number of developers of distress, price corrections were still not
began offering flash discounts to evident, save as for temporary discounts,
As the condominium market is still entice purchasers and to improve sales rebates and free gifts offered by
mainly driven by foreign purchasers and rates. However, the average selling developers as incentives for new buyers
investors, the magnitude of impact is price of new launches as advertised by
yet to be determined, depending on the developers during the first half of 2020 The global economic uncertainty has
longevity of the outbreak. In addition, was recorded at US$2,138 per sq m over reduced offshore purchases as investors
buyers are adopting a wait-and-see the net saleable area; a 15% increase over adopt a wait-and-see approach and
approach towards investments and home the second half of 2019. International travel restrictions implemented
purchases due to the uncertain economic have further exacerbated the situation by
repercussions post Covid-19. Notable projects included Leedon obstructing incoming expatriates to the
Heights, located in Sen Sok and country, leading to an even more reduced
Despite surging land prices, comprising 1,190 condominiums, demand for condominiums.
condominiums in city centre locations and Go Home Residence, a High-end
are more sought-after and preferred, condominium in Toul Kork. It is a The softening of investment activity
encouraging developers to continue 36-storey residential project developed and concerns over surplus supply in the
selling projects in Chamkarmon District. by NEC Development Corporation pipeline will only weigh down investors
Over the next three years, taking into comprising 448 units and priced on sentiment and the general outlook for
account all newly launched and on-going average at US$2,635 per sq m over the net the condominium sector is cautious,
projects, Chamkarmon will retain the saleable area. subject to the right product positioning,
location and price range.
Figure 13: Sales of Newly Launched Condominium units by Quarter Figure 14: Cumulative Supply of Condominium units (2009-Post2023)
Average Price
Unites Launched Unites Sold Existing Incoming Supply
USD per sq m
10,000 3,000 80,000
9,000
2,500
70,000
8,000
60,000
7,000
2,000
6,000 50,000
5,000 1,500 40,000
4,000
1,000
30,000
3,000
2,000
20,000
500
1,000 10,000
0 0 -
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
09
10
11
12
13
14
15
16
17
18
19
20
f
f
f
f
f
2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020
20
21
22
23
23
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
Source: Knight Frank Research Source: Knight Frank Research
st
Po
12P H N O M P E N H L A N D E D H O U S I N G S E CTO R
PHNOM PENH
Key findings
LANDED HOUSING SECTOR
12 new housing projects contributed
3,369 units to the monitored existing Consumer spending and home buyer sentiment was curtailed during
supply, taking the cumulative supply to the first half of 2020 resulting in a significant drop in the sales rate of
59,301 units as at the end of H1 2020. new launches
11 off-plan housing projects were Supply and Demand All three landed housing segments
launched during the first half of 2020, inched forward in tandem. Mid-tier
dominated by Chip Mong Group. Grand The rapid growth of landed housing supply housing still accounted for the majority
Phnom Penh, which was sold to Chip continued unabated despite the Covid-19 of supply with 30,221 units (51%),
Mong Land towards the end of 2019, outbreak; cumulative existing stock stood followed by High-end with 22,348 units
launched a new phase in May 2020. at 59,301 units as at the end of H1 2020. (38%) whilst the remaining 6,732 units
(11%) were Affordable.
The total cumulative supply of landed Whilst the Covid-19 pandemic has
houses in Phnom Penh is projected negatively impacted the global economy, Location-wise, Sen Sok remained the
to increase to 78,066 if all projects including the real estate sector, it did not dominant district with the most landed
complete as scheduled. deter developers from launching 11 new off- houses (25% of the overall supply),
plan housing projects in Phnom Penh. followed by Dangkor (13%), Russey Keo
The Covid-19 pandemic has caused (12%), Kamboul (11%), Mean Chey (10%),
global economic uncertainty and toned Although there were supply-side disruptions Chbar Ampov (8%), Chroy Changva
down consumer spending, specifically on on the import of construction materials in (7%), Porsenchey (7%), Prek Pnov (3%).
big ticket items. Thus, sales rates of new Cambodia, 12 new housing projects were Chamkarmon, Daun Penh and Toul Kork
launches were placed under pressure, completed, delivering 3,369 units to the made up the remaining 4%.
declining to 16% during H1 2020. existing stock. A few notable completions
were The Park Land 598 (360 units), The The total future supply of landed housing
The total cumulative supply of landed Park Land 271 (316 units), The Woods, a in Phnom Penh scheduled for completion
housing in Phnom Penh is projected to Natha Residence (12 units) Borey Vimean between the second half of 2020 and
increase to 78,066 units by post 2022. Phnom Penh P8 (600 units), Elite Town 3 post 2022 was recorded at 18,765 units
(147 units), Mekong Royal Phase 2 (172 units) across 59 developments as at the end of
Sen Sok is the most landed housing and New World Kour Srov (870 units). H1 2020. The majority (72%) of the total
concentrated district with 25% of the future supply comprises units within the
total supply on the market. With the new additions during H1 2020, Mid-tier category, followed by Affordable
the existing supply of landed housing was (24%); the remaining units (4%) are
recorded at 59,301 units spread across 154 within the High-End category.
developments. Of the overall supply, 96%
(57,009 units) are located in suburban areas Due to higher land costs in the city centre,
whilst the remaining 4% (2,292 units) are with only a small percentage of the
within the city centre. population being able to afford the higher
end projects that have been launched in
Figure 15: Distribution of Existing Landed Housing
Phnom Penh, all of the future incoming
Supply by District housing projects are located in suburban
areas. Dangkor comprises most of the
incoming stock with 27%, followed by
Chamkarmon 2% Kamboul with 16%, Mean Chey with 14%
Daun Penh 1%
Toul Kork 1% and Chbar Ampov with 11%. The rest are
Sen Sok 25%
Russey Keo 12%
distributed in Sen Sok, Russey Keo, Chroy
Chroy Changva 7% Changva, Prek Pnov and Porsenchey.
Chbar Ampov 8%
Mean Chey 10%
Porsenchey 7%
Prek Pnov 3%
Year 2020 started off robustly with eight
Dangkor 13% project launches, mostly within the Mid-
Source: Knight Frank Research Kamboul 11%
The Woods, a Natha Residence, Phnom Penh
tier segment. Notable launches during
13P H N O M P E N H L A N D E D H O U S I N G S E CTO R
the first quarter of 2020 included Chip consumption dropped to near record lows, The repercussions of the Covid-19
Mong 50M (435 units), Borey Chea Ry The and purchases of big ticket items were pandemic have been felt globally, and
Green Ville (600 units), Chancastle (119 placed on hold which tempered home- the short term outlook remains cloudy.
units), Borey CT Villa (18 units) and Borey buying momentum. The overall sales rate Unemployment has risen in Cambodia
Galaxy 11 (150 units). for landed housing dipped down to 16%, as many hotels, restaurants and garment
from 34% recorded during H2 2019. factories temporarily or permanently
However, towards the end of the first closed their doors and Cambodia’s GDP
quarter, after the announcement by the Prices and Rental growth is expected to contract during
World Health Organisation (WHO) of 2020 compared with growth of 7%
Covid-19 as a global pandemic, lockdowns Average selling price across all segments recorded in 2019.
and movement controls circled from continued accelerating, uplifting from
country to country as local governments $830 during H2 2019 to $1,131 per sq metre During H1 2020, consumer spending
implemented measure to contain the over the gross floor area during H1 2020. and consumption declined significantly
outbreak. The global financial, real subsequent to the Covid-19 outbreak,
estate, aviation, hospitality, logistics and Although the repercussions of the particularly for big ticket items.
manufacturing sectors were severely Covid-19 pandemic impacted all real The market uncertainty and rising
impacted as global mobility stagnated. estate sectors, landed housing remained unemployment led to a subdued home
Investment activities plummeted and a sought-after purchase, whether for buyers sentiment. Launches during
unemployment rose, leading to a decline owner occupation or investment, driven end of March and April were noted
in home-buying sentiment. Only three new by the strong domestic market. to achieve poor sales rate, however,
launches were recorded during the second developers remained optimistic and
quarter of 2020; Borey Cheam Tech (170 The landed housing sector saw a 36% began providing additional discounts
units), Borey Uptown (127 units) and Chip uplift in average pricing, largely due and attractive payment plans to entice
Mong Grand Phnom Penh City (176 units). to additional launches by Chip Mong prospective home buyers.
Land and Peng Huoth, both of which are
Chip Mong Grand Phnom Penh City prestigious and well-known developers Although the home-buying momentum
was formerly owned by Grand Phnom with units priced $1,000 per square meter was temporarily dampened during
Penh International City (GPPIC), a onwards. With a generally low household the first half of 2020, there remains a
joint venture between LYP Group and debt ratio and healthy gearing ratio by severe shortage of landed housing when
Ciputra Group. It is an on-going mixed most home owners, price corrections are compared with the growing household
development currently comprising an unlikely over the shorter term outlook formation rate.
18-hole golf course surrounded by landed as demand for landed housing will
housing on 250-hectares of land. Upon be continuously underpinned by the Due to Cambodia’s restriction on
acquisition, Chip Mong launched its new domestic market. foreigners owning landed properties, the
phase which includes landed housing landed housing sector is driven mainly
and a Central Park, with its ground Landed Housing Sector by the domestic market which is more
breaking commenced in May 2020. Outlook sustainable over the medium to long
term. The widely proclaimed V-Shaped
The global economic fallout caused Optimism observed among house builders Recovery is expected and applicable to
by the Covid-19 pandemic and rising and developers; new projects continuously the landed housing sector and the sector
unemployment have impacted all real launched and on-going projects to remains one of continued optimism.
estate sectors. Consumer spending and complete as scheduled.
Figure 16: Cumulative Supply of Landed Housing Units (2009-2021f) Figure 17: Existing Supply by Location and Classification
Existing Supply Incoming Supply Affordable Mid-tier High-end
10,000
9,000
9,000
8,000
8,000
7,000 7,000
6,000 6,000
5,000
5,000
4,000
4,000
3,000
3,000 2,000
2,000 1,000
1,000 0
ng r l
eu g on ara nh Ko
rk ok eo
ng
va v
po Che
y y
he Pno
v
ko ou
Bo Kan arm ak Pe ul nS yK ha Am ean nc ng amb
0 7M un Se sse rse Pre
k Da
mk Da To Ru y C hbar Po
K
ng Cha ro M
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2020f 2021f 2022f Post Ke Ch C
2022
Source: Knight Frank Research Source: Knight Frank Research
14SIEM REAP H1 2020 REVIEW
SIEM REAP H1 2020 REVIEW
Overview entertainment centres and drinking easing international tourist restrictions
establishments were ordered to cease by lifting the initial ban on foreigners
Siem Reap is major tourism city in operations until further notice forcing from a number of countries with high
Southeast Asia and is home to the world- many retailers and shops to shutter. level of infection. The ban was then
famous Angkor Archaeological Park. This replaced with new measures which
has underpinned steady growth in tourist The drop in international tourist arrivals required all incoming international
arrivals during the past five years, with placed significant pressure on hotel tourists to deposit US$3,000 upon arrival
Siem Reap consistently welcoming over 2 occupancy rates in the city, forcing to cover expenses for compulsory hotel
million international tourists annually. many hotels and guesthouses to begin quarantine, food, medical and Covid-19
reducing operational expenses by tests and treatments along with a
Tourism remains the main driver of cutting workforces and salaries, whilst compulsory medical insurance certificate
the economy in Siem Reap Province, many suspended operation, including a with a minimum coverage of US$50,000.
supporting many local businesses. number of international hotel chains.
However, towards the end of 2019, the Looking at the residential sector, the
number of international tourists arrivals Indirectly, the absence of international impact of the Covid-19 pandemic
began on a downward trajectory. The tourists in Siem Reap has also impacted moderated demand during H1 2020,
worsening of the Covid-19 pandemic the retail sector with much reduced however, developer selling prices
in early March 2020 decimated tourist footfall, causing many businesses to remained resilient, albeit with discounts
arrivals to Siem Reap which severely temporarily or permanently close. On offered to prospective purchasers.
impacted the local economy. top of that, guidelines to restrict the Despite the slowdown, developers
number of customers, compliance to remained upbeat on the residential
The spread of this highly contagious social distancing measures and generally sector. One notable launch during the
outbreak forced many governments the public’s fear of contracting the virus first half of 2020 was Rose Apple Square,
around the world to began implementing further worsened retail footfall. a mixed development comprising
lockdowns and restricting incoming and condominiums, co-living apartments,
outgoing tourists. Although the global restrictions began strata-title offices and co-working spaces.
easing towards the end of H1 2020,
Although Cambodia only underwent international tourism activities remained Other on-going projects in the pipeline
a brief lockdown period, restricting subdued with the global economic outlook which were unaffected include The Sky
domestic provincial travel in April, the uncertain amidst rising job losses. Park, ST Premier Residence, Bakorng
lack of international tourists and the Village, Borey Tourism City, SSC
unprecedented global disruption sent the The latest data from Ministry of Residence, Angkor Grace and various other
tourism and hospitality sector in Siem Tourism revealed that the number of smaller-scaled landed housing projects.
Reap grinding to a halt leaving most of international tourists visiting Angkor. All the listed projects were scheduled for
its tourist attractions and entertainment completion between H2 2020 and 2022.
streets eerily empty. Archaeological Park during the first half
of 2020 declined by 68% compared with Evidently, there are various on-going
Under the government’s guideline the same period in 2019. Towards the infrastructure improvements in and
to contain the outbreak, all schools, end of H1 2020, the government began around Siem Reap, notably the new
international airport, new outer ring
Figure 18: Siem Reap International Tourist Arrivals Y-o-Y % Change by Month (January to June 2020)
roads, road rehabilitations, upgrades to
0% the water supply system, improvements
-20% of the western causeway of Angkor Wat,
-40%
conservation of Tonle Sap lake and
improvements along National Road 6.
-60%
-80%
These continuous efforts by the
-100%
government enhances accessibility
-120%
January February March April May June to/from Siem Reap, promoting both
international and domestic tourism,
Source: Ministry of Tourism
whilst also driving economic growth.
15SIEM REAP H1 2020 REVIEW
HOTEL SECTOR
The declining tourist arrivals through Siem Apsara Angkor Resort & Conference to guests to comply with the government’s
Reap International Airport towards the announced its temporary suspension after enforced virus prevention measures.
end of year 2019 was further exacerbated two decades of operations to undergo
by the onset of the Covid-19 pandemic. As extensive renovation works. A number of No new hotels inaugurated during the
the outbreak worsened during Q1 2020, other operators also took this opportunity first half of 2020. The ratio of hotel
governments around the world began to undertake much needed refurbishmemt segment also remained the same as
implementing lockdowns and restricting and renovation works to their hotels. at the end of 2019 with 64% of the
international travel to contain the chain of overall supply being Upscale & Upper
infection. According to the latest tourism As at H1 2020, the total existing supply Midscale,23% were Luxury & Upper
data released by the Ministry of Tourism, of hotel rooms remained the same since Midscale hotels and the remaining 13%
Cambodia, the cumulative incoming the end of H2 2019 at 12,148 keys . This were Midscale & Economy.
arrivals and international tourist arrivals aggregate includes the aforementioned
plummeted by 75% and 69%, respectively, hotels that suspended operations either The bleak outlook of Siem Reap’s
during the first half of 2020 when permanently or temporarily. During the hospitality sector caused by the global
compared with the same period in 2019. first half of 2020, approximately 25% of outbreak has derailed many expansion
the hotels in our monitored supply were plans for hotel operators with no new
The lack of tourists and decline in hotel operational, with most operators limiting operator agreements signed. The much
occupancy rates and room rates led to the number of available rooms. anticipated 158-room Luxury & Upper
a number of operators permanently Upscale, Angsana Siem Reap under
closing their doors. The latest tourism Heightened hygiene and sanitation policies Banyan Tree Holdings, which was
data by the Ministry of Tourism recorded were noted across all hotels including initially scheduled to open by H1 2020
approximately 172 hotels under temporary temperature checks and hand sanitizers has now rolled over to H2 2020.
suspension and 18 hotels shuttered, placed strategically around hotels. Most food
equating to 78% of the overall hotel and & beverage and recreational facilities (spa, Data from STR during revealed an average
guesthouse supply in Siem Reap. swimming pool, sports) remained off-limits occupancy rate of 38.5% which is a 24.5
percentage points decrease compared over
the same period of 2019 for Luxury, Upper
Figure 19: International Tourist Arrivals by months between H1 2019 and H1 2020
Upscale & Midscale rooms. Starting off
H1 2019 H 12020
vigorously during January with an average
300,000
250,000
of 61.5%, it slid during February and March
200,000
to 41.8% and 12.7%, respectively.
150,000
100,000 Conversely, ADRs reported an
50,000 increase of 3.8% during Q1 2020 as a
0 result of various hotel closures and
January Ferbruary March April May June
room limitations as operators reduce
Source: Ministry of Tourism
operation costs to stay afloat.
Outlook:
Towards the end of June 2020, the Government of Cambodia lifted the ban on incoming foreigners from specific countries with high level of
infection. In addition, the tax exemption for tourism-related industries was prolonged to July 2020 for affected businesses, provided by the
government to ease the burden of hoteliers and to prevent a cascade of closures.
By the end of H1 2020, incoming tourists showed no sign of improvement as countries around the world entered into different stages of
the Covid-19 outbreak cycle. Although Cambodia reported a very low level of infection rate, the absence of incoming international tourists
continues to place significant pressure on profitability for operators. The lackluster commercial activities surrounding the tourist belt of
Siem Reap town led to a continuous cascade of business closures.
Amidst the global economic uncertainty and until a vaccine is found, the tourism sector will continue to be challenged and the path to
recovery for Siem Reap’s hotel sector will be heavily reliant on domestic tourism.
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