What and where are we supposed to invest in property in 2021?

[Compass Real Estate Platform] The COVID-19 pandemic will put pressure on Cambodia's real estate market in 2020. The Cambodia Valuers and Estate Agents Association (CVEA) estimates that the volume of transactions has decreased by 15% to 20%. According to CBRE Cambodia, the retail sector is the most hit, followed by the office and condo sectors.

What about the year 2021? Experts in the area believe that the market will gradually revive with the worldwide distribution of the COVID-19 vaccine. According to Ann Sothida, managing director of CBRE Cambodia, the real estate market in 2021 would improve by 60% over 2020.

Despite the growth prediction, investors remain cautious, particularly when it comes to deciding whether or not to invest in real estate in 2021; and if they do, where and what to invest in for success? Three local real estate analysts were interviewed by Construction & Property Magazine to give their perspectives and expectations for the market in 2021.

Consider the Suburbs First in Phnom Penh

Ms Sothida believes that if you want to invest in 2021, the suburbs of Phnom Penh should be your first choice. Whether north, south, east or west, they all have great opportunities, depending on the investors’ goal and the types of property they prefer.

Focus on the business and hotel industries in the north

In recent years, infrastructure development in Phnom Penh's northern reaches has accelerated. Furthermore, the local level of living has improved from average to above average. As a result, Ms Sothida indicated that there are investment prospects in the business and hotel sectors, as demand is expected to rise soon.

South: Keep a watch on the housing market

The new Phnom Penh International Airport project, the 60-meter road, and ring roads, among other key infrastructure development projects, are all located in the southern section of the capital. Real estate prices in this neighborhood are relatively high when compared to other areas. Given that, many commercial projects have already been developed. Therefore, according to Ms Sothida, rather than developing more commercial real estate, investors should consider focusing on the housing sector.

Consider investing in retail in the west

Because of the improved infrastructure, the population in Phnom Penh's western district has been growing as well. Because many residential projects have already been launched, Ms Sothida cautioned that prospective investment prospects in the retail market exist. However, because local people's income is still limited, investors may need to choose the type of retail they want to engage in carefully.

Invest in the residential or business sectors in the east

Some could argue that the eastern portion of Phnom Penh is the least booming, but once the proposed bridge is constructed, it will become the one with the greatest future potential. Because it is bordered by rivers and has little industrial development, this area is ideal for residential communities. According to Ms Sothida, the eastern side will soon become a commercial zone in addition to being a residential area. As a result, depending on the objectives of investors, there are investment opportunities in both residential and commercial real estate.

Apart from Phnom Penh's suburbs, the real estate industry in neighboring provinces is also booming. Those provinces, according to Mr Sorn Seap, Founder and Director of Key Real Estate Co., Ltd, include Sihanoukville, Kampong Speu, Kampot, Kep, Siem Reap, and Mondulkiri.

The Next Property Boom is Sihanoukville

COVID-19 is a virus that infects people.  Mr Sorn Seap projected that Sihanoukville's real estate market would gain the most traction after COVID-19, owing to a number of positive aspects including infrastructure, special economic zones, the airport, the deep-sea port, gorgeous beaches, islands, and, most importantly, oil production.

He suggested investing in the property surrounding the Ream district for investment prospects. Aside from being seaside land, the pricing is rather reasonable when compared to city costs. Because the land price has yet to hit the cap, investors can either develop the land into resorts or sell it for a profit in the future.

In addition, Ms. Sothida proposed that, in order to balance the city's expansion, investors should prioritize an industrial estate above the housing sector. To put it another way, if the city becomes an industrial zone, the workers will want enough housing. As a result, creating residential complexes has a bright future.

The Kingdom's Future Industrial Zone: Kampong Speu

After Kompong Som, Mr Sorn Seap believes Kampong Speu has the greatest potential, particularly along NR41, NR51, and NR44. Because of the favorable infrastructure and location, these are ideal for industrial plants.

Other high-potential regions identified by Cambodia Valuers and Estate Agents Association (CVEA) President Chrek Soknim include Oral district, Tbong district, and Chbamon city. He went on to say that certain places are better suited to large investors than smaller ones because the locations are ideal for establishing warehouses or factories.

Soknim noted that Kampong Speu is in an ideal location because it is halfway between Phnom Penh and Sihanoukville. There are also large enough land holdings for companies and warehouses. Those wishing to invest should purchase large parcels of land.

Kampot and Kep are ideal locations for resort development

According to Mr. Sorn Seap, these two provinces will have a lot of potential after the COVID-19 pandemic, particularly in terms of resort development. He did not, however, propose purchasing land with the expectation of being able to sell it for a higher price in the future, as the price will not rise quickly.

Siem Reap: More Time Is Needed to Recover

The real estate market in Siem Reap would take longer to improve, according to all three analysts, at least three to five years. Given the pandemic's economic crisis, however, those with a large budget should explore purchasing hotels that are being sold below market value.

Investors can renovate them and wait for the pandemic to stop to profit

Mr Sorn Seap also recommended investors and developers interested in investing or developing in the Siem Reap real estate market to research the rigorous rules carefully, as there are building height restrictions and development zones that are restricted.

Experts also recommend that investors diversify their investments to decrease risk by focusing less on tourism real estate and more on residential and business real estate.

Mondulkiri has a lot of potential, but it also has a lot of risk

The real estate market there is currently highly dangerous, as there are numerous questions regarding land ownership, such as the protected land issue. Land prices in this province are relatively low as a result of the uncertainty, which presents a great opportunity for high-risk investors who are familiar with the market, according to Mr Sorn Seap.

Guaranteed Victory in Border Provinces

Last but not least, Ms Sothida stated that border provinces, whether along the Thai or Vietnamese borders, have tremendous potential, particularly in the areas of tourism and industrial estate. Bavet and Poipet, for example, are two potential investment destinations.

Overall, the Cambodian real estate market will begin to revive slowly in 2021. According to economists, there is still time to acquire real estate below market value in 2021. When it comes to deciding what and where to invest, individual investors' cash flow, ambitions, and risk appetite all play a role, as each region has its own set of features and opportunities. To respond to the final question on whether or not to invest this year, all three experts agreed that good opportunities don't last long, so act now or never.

Author ៖ Samnang, Editor-in-Chief ៖ Sunnie, Editor-in-Chief / Producer ៖ Nicole

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