CBRE Market Insights Q3 2023: The industry recovers slowly, with new projects and rentals rising steadily

Recently, CBRE Cambodia released its market insights report for the third quarter of 2023, to provide an overview of Cambodia's real estate market, including GDP growth forecasts, the recovery of tourism, and trends and prospects for office, retail and residential sectors.

‖ GDP Growth Rate

Expected to grow by 5.97% from 2023-2025

the graphic showed that before covid-19 from 2013-2019, the average GDP growth rate in Cambodia reached 7.13%; during the  period of covid-19 from 2019-2022, GDP growth dropped to 1.70%; and from 2023 to 2025, GDP is estimated to grow by 5.97%.

‖ Approval  Investment into Construction

Approved investment value  VS Number of projects

In the first 7 months of 2023, the Ministry of Land, Planning and Construction approved a total of 2,036  investment projects with an investment value of approximately US$2.97 billion, cover an area of approximately 8 million square meters.

According to CBRE’s report, the total investment value have increased by 186% year to date in 2023, while the number of approved projects has decreased by 16%.

‖ Tourism Sector

Tourist arrivals forecast increased to 5 million 

In the first 8 months of 2023, Cambodia received more than 3.5 million international tourists (a year-on-year increase of 250.8%), while the number of local tourists was 12.38 million (a year-on-year increase of 62.5%.

Among them, the four major source countries of international tourists include: Thailand (accounting for 34% of total tourists); Vietnam (accounting for 18% of total tourists); China (accounting for 10% of total tourists); Laos (accounting for 6% of total tourists). Cambodia is expected to receive more than 5 million international tourists in 2023.

‖ Office

Due to more affordable rents, better amenities and professional property management, more tenants are moving into formal and better functional office spaces.

In the third quarter of 2023, the average occupancy rate of office in Phnom Penh was 64.2%. Among them, the average occupancy rate of strata title offices is 50.5%.

In terms of rental market, the office’s average quoting has declined slightly. In the third quarter of 2023, rents for Grade A office remained stable, while Grade B office in Phnom Penh’s CBD increased  by 0.6%. 

However, rents for Non-CBD of Phnom Penh and Grade C office have declined to varying degrees compare to the previous quarter.

‖ Retail

Retail mall events are more frequent as the owners invest more in marketing activities to attract more footfall and maintain the vitality of retail properties.

However, there has been a relative slowdown in brand expansion, retailers become more cautious in expanding their businesses as a result of potentially lower sales revenue.

Retail occupancy rates are showing a downward trend, with the average occupancy rate falling to 67.7% in the third quarter of 2023.

In addition, new retail projects are facing further delays, with more than 32,000sqm of retail supply delayed into 2024.

However,  rents for all retail types (Prime Shopping Mall, Prime Retail Podium, Community Mall, Prime High Street) remained stable,  only community Mall type decline by 0.8% compare to the previous quarter.

‖ Residential

+Condominium

As of the third quarter of 2023, more than 120 condominium projects have been completed, supplying over 53,000 units to the market.

The sales prices have stabilized after continuous adjustments. Among them, the sales price of high-end Condominium increased slightly by 0.2% compared with the first quarter of 2023, with an average price of $2,612 per sqm.

+Serviced Apartment

As the condominium supply surges in the market, a large number of rental units have entered the market, which poses an indirect challenge to the serviced apartment sector, offering competitive rents and services.

In addition, after the period of covid-19, the landlords are seen continues to offer flexible daily rate for both leisure and business travelers.

 In the third quarter of 2023, rents for Grade A and Grade B apartments increased by 1% and 3% respectively from the previous quarter, which reflects the recovery of market demand. Among them, the average rent for Grade A apartments is $19.6/㎡ per month; and the average rent for Grade B apartments is $13.5/㎡ per month.

+Landed Property

There were only three newly launched land-connected residential projects In the third quarter of 2023.

In terms of sales prices, landed Property types of Link House, Shophouse, Twin Villa and Single Villa increased by 1.8%, 0.5%, 1.5% and 0.1% respectively compare to the previous quarter.

However, compare to the same period in last year, only Link House’s sales price increased by 3%, while the other types showed a decrease to varying degrees.

Overall, with the steady growth of Cambodia's economy and the strong recovery of tourism sector, the entire real estate market is still in a slow recovery period. It is hoped that a significant recovery trend will be seen by the end of 2023 or 2024.