Real Estate Market Update in Q3 and Roadmap for Recovery

The same report also projects that due to the very low number of cases, thanks to effective government policy in coping with the pandemic, the market from Q4 onward will start to stabilise. Though it will not reach the pre-COVID-19 baseline by then, progress is expected to grow fast, as landed properties (boreys) always remains robust.

Condominium

Condominium supply sees a 3.97% q-o-q growth, among which the mid-range takes almost half of the proportion. There is only one new completion, adding 828 units to the existing supply. Though without any new launches, there are three new expansions: Urban Village Phase 2, Arakawa Residences Phase 2, and Yuetai Harbour Bay. These expansions will add over 2,000 units to the supply pipeline.

The quoting sale prices drop by 1%, 1.4%, and 1.2% for high-end, mid-range, and affordable. While the rent also sees a slight decrease of 2.88% for high-end and 1.71% for mid-range. This downturn illustrates that rents remain under pressure, though landlords keep offering more with facilities and amenities.

The report also suggests a 4-step roadmap to recovery for the condo market. The first step is to focus on local buyers by introducing new marketing strategies such as attractive sale prices and flexible payment terms. The next step is to set a suitable price growth date and total unit quantum. Step 3 involves innovations, which mean developers shall adjust their unit mix and size to match the market demand. Lastly, the final step is waiting for international buyers to return.

Borey (Landed Property)

Boreys are the only sector remaining robust and see prices increase despite the pandemic. There are 18 new launches across five districts, and four new completions in four districts with four new developers joining the market.

Compared to Q1 of 2020, the average quoting sale prices this quarter rise by 3.4%, 12.5%, 5.4%, and 9.2% for flats, link houses, shophouses, and twin villas. While single villas and king villas are on average down by 4.9% and 5%. To keep the market stable, developers have been introducing plenty of promotions during the COVID-19 period.

Though staying robust, CBRE also suggests four recovering strategies for developers. Those include giving more promotion, speeding up on construction activity, developing more low-to-mid range mixed-use developments, and focusing more on the project’s affordability in the future.

Office

The office market is still one of the hardest hit across the sectors, with over 50,000sqm of supply being delayed until 2021. There are no new launches, but there are three completions, adding over 30,000sqm to the market. The three completed projects include two Grade B—TK Central and The Point, and one Grade C—the Sayon Phnom Penh.

Centrally owned office supply sees an 8.9% q-o-q drop in occupancy rate. Similarly, rents also decreased by 6.3% and 9.4% for Grade B in the Central Business District (CBD) and the Non-Central Business District (NCBD). Surprisingly, the quoting rent price for Grade C offices in CDB rises by 2.6%.

Meanwhile, there are two newly announced projects for the Strata-Title Office Supply, which are Benrich Tower in Duan Pen district and Odom Tower in Chamkarmon district. Due to the pandemic, over 28,000 sqm of supply will also delay to 2021.

The roadmaps to recovery for the office market include reviewing lease agreements with more flexible terms and incentives, diversifying supply by giving more options to tenants, considering future market trends and digitalisation, and improving working strategies by optimising working environment and spatial requirements.

Retail

The retail sector remains the hardest hit. According to Google Mobility Tracker (17 Feb to 20 Aug), there retail & recreation is still 11% below the baseline. The vacancy rate has reached 10.97%, a 0.77% increase compared to the same quarter last year.

There are two new completions and four new brand entrants, adding over 21,800sqm to existing supply, or equal to a 6.1% q-o-q increase. The two malls are 312 Quayside Mall in Daun Penh and The One Mall in Chamkarmon, which are both community malls.

Compared to Q3 last year, there is no change in renting price for prime shopping, prime retail podium, and prime high street (average of US$28, US$26, and US$26, respectively). However, there is a slight drop (-0.4%) for the community mall (US$22).

Regarding the roadmap to recovery, there are three steps for both retailers and landlords. Retailers can start with improving marketing strategy in the first stage, then follow by cautiously expanding the omnichannel system and digitising the customer experience in the future. For landlords, making lease agreements more flexible by providing more incentive to anchor tenants should be the first step, followed by enhancing marketing strategy and proactively managing assets accordingly.