2023 Cambodian Real Estate Review & The Forecast Of Market Trends For 2024

Recently, CBRE Cambodia released its report talking about 2023 real estate market and made preliminary forecasts for market trends in 2024, including the GDP growth, recovery of tourism, and changes in the office, retail and residential sectors.

✨ GDP Growth Rate

According to the CBRE report, Cambodia's GDP growth rate will be approximately 5.4% in 2023, and is expected to exceed 6% by 2025. In addition, affected by the global crisis in recent years, the consumer's demand and spending power has declined, making the annual inflation rate has dropped to 3%.

According to the draft Law on Financial Management 2024 announced by the Ministry of Economy and Finance of Cambodia, The Kingdom will achieve an economic growth rate of 5.6% in 2023 and continue to grow rapidly in 2024, with a rate of 6.6%. The report also forecasts that Cambodia’s GDP per capita will also increase from $1,917 in 2023 to $2,071 in 2024.

✨ Tourism

With the launch of the "Cambodia Tourism Year 2023" campaign, Cambodia welcomes 4.9 million international tourists from January to November 2023, equivalent to 84% of the total in 2019.

After the impact of the Covid-19, thetourism industry has gradually recovered. Cambodia is expected to receive 5.4 million foreign tourists in 2023 and 6.2 million foreign tourists in 2024, and more than 8 million international tourists in 2028.

Although the tourism industry is on a strong recovery, the income of the country has not increased significantly. According to CBRE data, the average daily expenditure per arrival of international tourists in Cambodia in 2022 is less than US$50, which is a decrease of 62% from 2019 of nearly US$140.

Currently, Cambodia’s main source countries include Thailand, Vietnam, China, etc. Although tourist arrivals is almost recover but Chinese tourist still visit less, with a decrease of 79% compared to 2019 before the Covid-19. But despite this, 2024 is the year of “Cambodia-China People-to-People Exchange”, which may be used as an opportunity to attract more Chinese tourists to Cambodia.

✨ Real Estate Supply

Cambodia’s property market supply continues to grow in 2023. Taking Phnom Penh as an example, there is a increases of nearly 200,000 square meters of new office supply compared to 2022. In the retail market, shopping malls and community malls will see greater growth, with an overall increase of about 50,000 square meters ; In the condominium market, there are 5 projects completed and delivered in 2023, and 5 new projects launched on the market , with an overall supply increased by approximately 10,000 units.

Based on this, CBRE believes that the recent hikes in supply have put pressure on pricing and occupancy rate.

In terms of price, with the exception of Grade B (NCBD) office average quoting rent that have dropped, other office average quoting rent remain stable; For the retail market, other types of retail products have shown a downward trend, with only the prime high street continued to be stable after average quoting rent increases at the beginning of 2023; In condominium market, the average quoting sales price of mid-range and high-end have rebounded in the fourth quarter of 2023, but affordable condominium have continued the downward trend.

In terms of landed property, although the supply continues to increase, buy the new launches rate is the lowest in a decade

✨ Demand and Sale

According to CBRE data, approximately 108,000 square meters of office products have been absorbed in 2023.  As of the end of 2023, there are approximately 620,000 square meters unsold inventory of office products in Phnom Penh

There are approximately 14,300 square meters of retail products have been absorbed in 2023, and as of the end of 2023, approximately 250,000 square meters unsold inventory of retail products in Phnom Penh.

In addition, among all the active developments, there are more than 17,400 unsold inventory of condominium units; more than 11,400 unsold inventory of  landed property across the top 10 developers. Therefore, CBRE believes that in 2024, Cambodia’s residential trend will not fluctuate much and will mainly be stable. Developers should focus on existing unsold inventory rather than launching new project. At the same time, they should be more active in mobilizing the local market, such as providing more favorable incentives and positioning their products in line with the market.