Can Cambodia real estate market recover quickly?

The CBRE Cambodia report pointed out that the impact of the COVID-19 pandemic on real estate prices at the end of the first quarter, especially on apartments are still in the early stages. The prices of apartments in the middle and high-end sectors have begun to decline, and the price per square meter in the mid-end market fell by 1.5% As the high-end market fell by 0.5%, apartment rental prices also fell. As most foreigners withdrew from Cambodia, the transaction volume in the rental and sales market also experienced a steep decline.

Overall, the Cambodian real estate market is currently not optimistic. Should we stand still with the situation or give up Cambodian market at this time?

                             Real estate in Diamond Island

The real estate sector is different from the ordinary consumption market, and transaction impact and recovery time cannot be generalized. Although various industries in Cambodia have been affected to varying degrees. Due to the fact that the Cambodian pandemic is still manageable in the early stage, the real estate sector have not been affected so severe compare with other consumption markets.

After the global pandemic intensified, a large number of foreigners in Cambodia evacuated, and the demand for rentals plummeted. Many sales departments and intermediaries have also suspended their operations. In addition, foreign investors have been affected by the pandemic in various countries. The drop of transaction is inevitable.

Although the global pandemic has not been effectively controlled, the Cambodia economic situation is not very optimistic (the IMF predicts that Cambodia ’s GDP will be negative in 2020 and the growth rate will be reduced to -1.5%), but this has not affected the prospects of the real estate market, many people still believe that the real estate sector can maintain a positive adjustment situation.

The first is that the real estate market itself is extremely resilient and relatively controllable.

After the pandemic get better situation, the real estate rental and sales market will warm up.  It is uncertain whether Cambodia's housing prices will rise, but the potential demand may bring more transaction to the market.

Secondly, from the perspective of the construction sector, which is closely related to the real estate sector, the investment market still stable.

Due to the impact of the pandemic, the global construction sector is expected to decline by 50%, but Cambodia is showing a trend of growing against the trend, especially residential projects, including town houses.

According to the report of the Ministry of Finance and Economics of Cambodia, in the first two months of this year, the total investment in the construction sector in Cambodia was nearly 2 billion US dollars, a year-on-year increase of 47%. The Ministry of Land Planning and Construction approved a total of 728 construction projects, a year-on-year increase of 28.1%.

Demand in real estate will recover gradually.

The real estate audience in Cambodia is mainly composed of local people in need and foreign investors. The rigid local demand in Cambodia still stable. In recent years, it has also become the mainstream of the market. The pandemic situation of major investment countries such as China, Japan and South Korea has improved, and market demand will recover gradually.

As Ms. An Shudida, the manager of CBRE, said all areas of Cambodia will be affected more or less during the pandemic, but the real estate sector can maintain a positive adjustment situation compared to other fields, real estate will soon recover to a good situation, ups and downs of real estate will not be so notable.

Cambodia ’s overall economy is dependent on foreign countries, and the recovery of various fields still depends on the control of the global pandemic. Hope that the Cambodia real estate market can maintain a good advantage in this field and overcome COVID-19 as soon as possible.