Cambodia is a Southeast Asian country with a population of about 17 million people and a land area of 181,035 square kilometers. The country has experienced rapid economic growth and social development in the past two decades, with an average annual GDP growth rate of 6.8% from 2010 to 2020(realestate.com.kh). The real estate sector has been one of the key drivers of Cambodia’s economic transformation, attracting both domestic and foreign investment.
Overview of the Real Estate Sector
The real estate sector in Cambodia can be divided into four main segments: residential, commercial, industrial and land. Each segment has its own characteristics, trends and challenges.
Residential
The residential segment consists of various types of properties, such as apartments, condos, villas, townhouses and shophouses. The demand for residential properties is mainly driven by the growing urban population, the rising income levels, the increasing preference for modern living standards and the availability of financing options. The supply of residential properties is also increasing, especially in the capital city of Phnom Penh, where many new projects are being developed by local and foreign developers.
According to realestate.com.kh(cambodiainvestmentreview.com), the median sales price for all residential properties in Phnom Penh was $230,000 in December 2022, with no change from September 2022. The median rental price was $800 per month, also with no change from September 2022. The most popular locations for residential properties in Phnom Penh were Sangkat BKK 1, Sangkat BKK 3 and Sangkat Chbar Ampov II.
The residential segment in Cambodia has been recovering from the COVID-19 pandemic, which has caused a slowdown in economic activity, a decline in tourism and a reduction in consumer confidence. However, some experts believe that the market will continue to grow in 2023, as Cambodia has managed to contain the virus effectively and has vaccinated its population. Moreover, some developers have offered discounts and incentives to attract buyers and tenants during the crisis.
Commercial
The commercial segment consists of various types of properties, such as office buildings, retail spaces, hotels and resorts. The demand for commercial properties is mainly driven by the expansion of business activities, the growth of tourism and hospitality sectors, the emergence of e-commerce and online platforms and the diversification of investment portfolios. The supply of commercial properties is also increasing, especially in Phnom Penh, Siem Reap and Sihanoukville, where many new projects are being developed by local and foreign developers.
According to realestate.com.kh(cambodiainvestmentreview.com), the median sales price for all commercial properties in Phnom Penh was $1.5 million in December 2022, with no change from September 2022. The median rental price was $3,000 per month, also with no change from September 2022. The most popular locations for commercial properties in Phnom Penh were Sangkat BKK 1, Sangkat Boeung Tumpun 2 and Sangkat Tuek L’ak 1.
The commercial segment in Cambodia has also been rebounding from the COVID-19 pandemic,
which has caused a disruption in business operations, a drop in tourist arrivals and a shift in consumer behavior. However, some experts believe that the market will continue to grow in 2023, as Cambodia has implemented various stimulus measures to support the economy and has resumed its trade and travel relations with other countries. Moreover, some developers have offered flexible payment terms and rental relief to attract buyers and tenants during the crisis.
Industrial
The industrial segment consists of various types of properties, such as factories, warehouses, logistics centers and special economic zones. The demand for industrial properties is mainly driven by the development of manufacturing and export sectors, the improvement of infrastructure and connectivity, the attraction of foreign direct investment and the promotion of regional integration. The supply of industrial properties is also increasing, especially in Phnom Penh, Kandal, Kampong Speu and Svay Rieng provinces, where many new projects are being developed by local and foreign developers.
According to Global Property Guide(cambodiainvestmentreview.com), the average land price for industrial properties in Phnom Penh was $350 per square meter in 2020, with an increase of 7.7% from 2019. The average land price for industrial properties in Kandal province was $250 per square meter in 2020, with an increase of 8.7% from 2019.
The average land price for industrial properties in Kampong Speu province was $200 per square meter in 2020, with an increase of 11.1% from 2019.
The average land price for industrial properties in Svay Rieng province was $150 per square meter in 2020, with an increase of 15.4% from 2019.
The industrial segment in Cambodia has been relatively resilient to the COVID-19 pandemic, as the country has maintained its export competitiveness and has attracted new investors from China, Japan, South Korea and Taiwan. However, some challenges remain, such as the labor shortage, the power supply instability, the environmental compliance and the trade preference uncertainty.
Land
The land segment consists of various types of land plots, such as agricultural land, residential land, commercial land and industrial land. The demand for land plots is mainly driven by the speculation of future development potential, the diversification of investment portfolios, the expansion of urbanization and infrastructure and the availability of financing options. The supply of land plots is also increasing, especially in Phnom Penh, Siem Reap and Sihanoukville, where many land owners are willing to sell their land at attractive prices.
According to realestate.com.kh(tourismcambodia.org), the median sales price for all land plots in Phnom Penh was $1,300 per square meter in December 2022, with no change from September 2022. The most popular locations for land plots in Phnom Penh were Sangkat Boeung Kak 2, Sangkat Boeung Tumpun 2 and Sangkat Tuek L’ak 1.
The land segment in Cambodia has also been recovering from the COVID-19 pandemic, which has caused a decline in demand and a drop in prices for some types of land plots.
However, some experts believe that the market will continue to grow in 2023, as Cambodia has a strong economic outlook and a high potential for development.
Moreover, some developers have offered installment plans and low interest rates to attract buyers during the crisis.
Outlook for 2023
The real estate market in Cambodia is expected to face some opportunities and challenges in 2023, depending on the recovery of the economy and the containment of the pandemic.
According to realestate.com.kh(tourismcambodia.org), some of the key trends to watch for in 2023 are:
- The residential segment will see a steady growth in demand and supply, as more people will seek affordable and quality housing options.
- The condo market will also see a shift from luxury to mid-range segments, as more local buyers will enter the market.
- The villa and shophouse market will remain stable, as they offer more space and privacy for families.
- The commercial segment will see a rapid growth in demand and supply, as more businesses will resume their operations and expand their activities.
- The office market will also see a rise in flexible and co-working spaces, as more companies will adopt hybrid work models.
- The retail market will also see a growth in e-commerce and online platforms, as more consumers will shop online.
- The hotel and resort market will also see a recovery in tourism and hospitality sectors, as more travelers will visit Cambodia.
- The industrial segment will see a sustained growth in demand and supply, as more investors will seek opportunities in manufacturing and export sectors. The industrial park market will also see a diversification of industries and locations, as more investors will explore new sectors such as agro-industry, electronics and logistics. The special economic zone market will also see a promotion of regional integration and cooperation, as more investors will benefit from preferential trade agreements such as RCEP.
- The land segment will see a mixed performance in demand and supply, as some types of land plots will appreciate while others will depreciate.
- The agricultural land market will see a growth in demand and supply, as more investors will seek opportunities in agriculture and food processing.
- The residential land market will see a recovery in demand and supply, as more people will seek housing options in urban and suburban areas.
- The commercial land market will see a rebound in demand and supply, as more investors will seek opportunities in business and tourism sectors.
- The industrial land market will see a sustained growth in demand and supply, as more investors will seek opportunities in manufacturing and export sectors.
In conclusion, the real estate market in Cambodia is undergoing a transition from a period of adjustment and recovery to a period of growth and development. The COVID-19 pandemic has posed some challenges and risks for the sector, but also some opportunities and prospects for the future. The real estate sector will remain a key engine of Cambodia’s economic development and social progress, as long as it can adapt to the changing market conditions and leverage its potential.
# References(asean2022.mfaic.gov.kh): World Bank. 2021. World Development Indicators. https://databank.worldbank.org/source/world-development-indicators(rcepsec.org): realestate.com.kh. 2023. Cambodia Property Index and Market Trends. : Global Property Guide. 2021. Investment Analysis of Cambodian Real Estate Market. https://www.globalpropertyguide.com/Asia/Cambodia/Price-History
: RCEP – The Regional Comprehensive Economic Partnership. 2022. https://rcepsec.org/