Phnom Penh’s retail market continues to benefit from new international entrants, with food and beverage, fashion, accessories and cosmetics retailers driving demand for both shopping centre and high-street retail space. Q2, 2015 sees Aeon Mall, the country’s first international shopping centre, mark one year of operations. Whilst a number of retail groups have sought to reposition their brands within the centre, Aeon has maintained a commitment rate of 100% since launching at the end of Q2, 2014.
Although minimal retail supply is set to come on-stream over the course of 2015, with only the retail podium at Sokha Hotel delivering 1,020 sqm of leasable space in Q1, 2015, supply over coming 3 years is set to increase significantly, from to 214,520 sq.m to 455,348 sq.m by end of 2017, representing an overall rise of 112.26%. The growth in supply can be attributed to the delivery of new shopping complexes, such as the Parkson’s Phnom Penh City Cente, due to contribute 57,000 sq.m in Q2, 2016, and the rise in large-scale, predominantly residential schemes with plans to incorporate notable retail components, such as Oxley’s ‘The Bridge’, due to deliver 24,000 sq.m of retail space by Q4, 2017.
Demand for prominent high-street retail space on Phnom Penh’s key boulevards continues to expand, driven by both international retailers and more established domestic groups. Sihanouk Boulevard, as of Q2, 2015, enjoys minimal vacancy, typically commanding rents of between 20-30 USD per sq.m.
QUALITY RETAIL SUPPLY SET TO INCREASE THROUGH TO 2017
Retail supply in the capital is set to rise significantly by the end of 2017, driven by a combination of new international shopping complexes, such as Parkson’s Phnom Penh City Centre, delivering 57,000 sq.m in Q2, 2016 and Lion City, the second project by the Malaysian developer, set to deliver a further 61,000 sq.m of retail space over the course of 2017, in addition to Hongkong Land’s Exchange Square, supplying 13,000 sq.m of retail space in Q1, 2017.
CENTRALLY LOCATED RETAIL SPACE ENJOYING HEALTHY DEMAND FROM OCCUPIERS
Vacancy rates within Phnom Penh’s centrally located, purpose built retail centres remains comparatively low, at 22% as of Q2, 2015, with Aeon’s high-occupancy level reducing the overall vacancy rate amongst shopping mall’s from approximately 25% prior to its launch in Q2, 2014. Whilst a number of retail complexes, delivered in secondary locations, continue to struggle to attract retailers, centrally located retail centers are benefiting from high levels of occupier demand.
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CBRE Launches Blueprint
At CBRE, we believe real estate sits at the heart of how people work, live and thrive. Blueprint is an online magazine where the intellectual capital and institutional knowledge that lives within CBRE is shared with the global business community through an array of engaging, thought-provoking and illuminating content.
On Blueprint, you’ll find stories informed by urbanists, academics and big thinkers around the world. Our stories are unified by business ideas that transcend commercial real estate and examine the built environment’s potential and power to impact businesses, cities and people—told through the lens of commercial real estate.
Whether you’re an industry professional, an urban enthusiast, a member of the general business community or even just a curious reader, we believe our stories will inspire you to look at the world of real estate from a new perspective.
To find out more about Blueprint, please follow the link below:
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Phnom Penh Condominium Market , CBRE Cambodia Market View in December 2014
PHNOM PENH CONDOMINIUM SECTOR SEES RISE IN RESALE VALUES
Introduction
The condominium market in Phnom Penh continues to expand, with early investors in centrally located developments enjoying capital gains of up to 30% from early off-plan purchases.
Development activity of high-end condominiums looks set to continue in prime residential locations, with developers also looking to offer luxury projects outside of core residential districts.
CBRE has continued to witness strong interest from the wider Asia Pacific region, with increasing investment from Singaporean, Japanese, Hong Kong and Chinese residents. Although the comparatively high yield guaranteed by a number of leading developers is appealing to oversees purchasers, the main driver remains anticipated capital growth.
Currently, there are 35 Condominium projects in Phnom Penh, including both finished projects and developments currently under construction.
Q1, 2015 will see the sales launch and groundbreaking of Sovann Condominium, a 104 unit luxury development on Mao Tse Tong Boulevard, BKK1. Sky Villa Tower, comprising 254 units across two towers, is due to start construction by Olympic Stadium on Sihanouk Boulevard, with completion set for 2017.
Supply
Phnom Penh is experiencing a significant increase in supply, with De Castle Royal delivering 414 condominium units in Q3, 2014 and with Galaxy Residence having delivered a further 44 units in Q4, 2014.
Overall supply in Phnom Penh is due to increase by 533.75% by the end of 2018, driven by large-scale new projects such as D.I. Riviera and Olympia City, both currently under development by OCIC.
Sales
Sales of condominiums in Phnom Penh have traditionally been heavily marred by publicised failures of developments that have been sold off-plan and then subsequently ceased construction. Due to the successful completion of key new projects, such as De Castle Royal, this trend has clearly come to an end as confidence grows amongst domestic and international purchasers.
Early purchasers of off-plan condominiums, in successful schemes, have achieved healthy capital appreciation over the past year, with those who purchased in 2008 being in a position to resell for a premium of up to 30% over the course of 2014.
Achieved prices for high-quality condominium units range from $1,500 – $3,000 USD per sq.m in central areas of Phnom Penh. The Bridge, which is due to deliver a 762 condominium units, accounts for the upper figure.
Demand
Demand for condominiums is anticipated to increase and be met by supply over the course of 2015 through to 2016. The introduction of high quality projects in central locations will offer prospective investors an opportunity to acquire products that focus on the needs of a heavily expatriate driven area of the Phnom Penh residential market, as foreign nationals continue to require exclusive and up market accommodation in prime locations. Demand is also increasing from an ever more affluent domestic population, which is due to account for a notable proportion of purchasers over the coming years. Domestic demand is a key element of a successful condominium project, due to foreign ownership of an individual building being restricted by law at 70%.
Overview
Q1 2015 will see the launch of Sovann Condominium, a 104 unit luxury development located on Mao Tse Tong Blvd, BKK1, in addition to that of Sky Villa Tower, set to launch a further 254 units by Olympic Stadium.
The Q4, 2014 launch of Bhumi Emerald Condominium is set to deliver 47 luxury units located in the Toul Tompong area. The development will be set over 24 floors and is due to come on-stream in 2017.
Q3, 2014 saw the successful completion of De Castle Royal, which has set a new benchmark for quality in the market, further adding strength to the ever-growing sector. Comprising a total of 414 units, the project has been key in rebuilding confidence in the off-plan sales market.
CBRE note that a number of individuals, in addition to established developers, are making considerations towards the construction of further condominium developments. Whilst the majority remain focused on prime, central residential locations, it is likely that development activity will increase in secondary locations over the course of 2015.
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