Historically, apartment blocks have generally been constructed and retained by developers to be rented, and are locally referred to as serviced apartments. Condominiums are a relatively new concept in Cambodia and it is only since 2009 that the Government passed a sub-decree for the Management and Use of Co-owned Buildings which allowed building owners to obtain strata titles, thus enabling purchasers to obtain a hard title (most secure form of ownership) for individual units. This now enables purchasers to buy individual units within a condominium block and have the security of owning a freehold title.
This information was last updated for Q2 2020.
The supply of condominiums is subdivided into three principal categories, namely High-end, Mid-tier & Affordable based on the following criteria: Location; Quality; Price; Facilities; Design, Layout & Features; Tenure; Accessibility; Exclusivity; Rental
The geographical distribution of condominiums is divided into 14 districts within Phnom Penh, namely: Daun Penh, Toul Kork, 7 Makara, Chamkarmon, Boeng Keng Kang, Meanchey, Sen Sok, Russey Keo, Dangkor, Chroy Changva, Chbar Ampov, Prek Pnov, Por Senchey, Kamboul.
With the subdivision of Chamkarmon, five districts now make up the historical city centre; Daun Penh, Toul Kork, 7 Makara, Boeng Keng Kang and Chamkarmon, whilst the remaining districts of Por Senchey, Sen Sok, Dangkor, Meanchey, Chbar Ampov, Russey Keo, Prek Pnov, Chroy Changva and Kamboul make up the suburban areas of Phnom Penh.
Existing Supply of Condos in Phnom Penh, Cambodia
As at the 2Q 2020, there was a total of 21,935 condominiums in Phnom Penh. The number of Mid-Tier condominiums significantly increased and now dominates the existing stock (65%) whilst High-End condominiums comprised the remainder of the existing supply. There were no Affordable units (units priced below US$1,000 per sq m of net area) recorded within the exiting supply.
Out of the total existing supply, 7,336 units (33%) were located in Chamkarmon, 4,062 units (18%) were located in Sen Sok, 2,605 units (12%) were located in 7 Makara, 2,356 units (11%) were located in Chroy Changvar, 1,906 units (9%) were located in Boeng Keng Kang, 1,333 units (6%) were located in Toul Kork, 992 units (4%) were located in Russey Keo, 642 units (3%) were located in Duan Penh, 570 units (3%) were located in Meanchey and the remaining 133 units (1%) were located in Chbar Ampov. The units were distributed across sixty seven (77) condominium developments.
Future Supply of Condos in Phnom Penh, Cambodia
The total future supply of condominiums in Phnom Penh scheduled for completion between 2020f and post 2023 was recorded at 53,512 units as at 2Q 2020. The majority (59%) of the total future supply comprises units within the Mid-Tier category, and the remaining (41%) are High-End units. Within the 53,512 units, 5,611 units are scheduled for completion post-2023. As illustrated in Graph 6.1.2, the future supply comprises predominantly Mid-Tier units due to the current over supply in the High-End segment.
In terms of location, 9,818 units (18%) within the 2020 – post 2023 future stock are located in the District of Sen Sok, 8,794 units (17%) are located in Chroy Changvar, 8,106 units (15%) are located in Meanchey, 7,743 units (14%) are located in Chamkarmon, 6,621 units (12%) are located in Toul Kork, 4,815units (9%) are located in Boeung Keng Kang, 2,490 units (5%) are located in 7 Makara, 1,680 units (4%) are located in Russey Keo, 1,664 units (3%) in Porsenchey, 1,195 units (2%) are located in Chbar Ampov and the remaining 586 units (1%) are located in Daun Penh. The significant increase in the number of units to be delivered in Meanchey is attributable to R&F City, which is being developed within ING City and Meanchey is expected to be a key growth area in Phnom Penh over the coming years.
Trend of New Launches by Location
Knight Frank defines “New Launches” as new projects that are being introduced to the market and are open for sales, with a sales and purchase agreement ready for signing. “Soft Launches”, where units are reserved by way of deposits held by stakeholders are not considered as “launches”.
Of the monitored stock, since 2008 until the second quarter of 2020, a total of 75,447 condominium units were launched in Phnom Penh. The majority of the launches were located in Chamkarmon (20%), Sen Sok (18%), Chroy Changvar (15%), Meanchey (12%) and Toul Kork (11%). The remaining units were spread across Boeng Keng Kang (9%), 7 Makara (7%), Russey Keo (3%), Porsenchey (2%), Chbar Ampov (2%) and Daun Penh (1%). Chamkarmon is a popular residential area for expatriates commanding some of the highest prices and rental rates in Phnom Penh.
During the global financial crisis, the real estate market was heavily impacted and a number of developments were put on hold. It was only in 2012 that the market started to recover and this is evident in the trend of new launches. In 2011, only 164 condominiums units were launched, 493 were launched in 2012 and 1,225 in 2013. The number of new launches in 2014 reached 4,025, 8,590 in 2015 and 12,957 in 2016. In 2017, 5,818 units were launched with a further 11,291 units launched in 2018.
Trend of New Launches by Classification
In terms of classification, 39% were categorised as High-End and 61% were categorised as Mid-Tier.
Of the condominiums launched, the High-End units were mainly located in Chamkarmon (18%), followed by Chroy Changvar (11%), Boeng Keng Kang (5%) , Toul Kork (5%), Sen Sok (3%), Daun Penh (3%), 7 Makara (2%) and Meanchey (2%).
Mid-Tier units were mainly located in Sen Sok (15%), followed by Meanchey (7%), Toul Kork (5%), 7 Makara (5%), Chamkarmon (3%), Boeung Keng Kang (3%), Porsenchey (3%), Russey Keo (3%), Chbar Ampov (3%), Chroy Changvar (3%) and Daun Penh (1%).
Demand for Condos in Phnom Penh, Cambodia
The overall average sales rate of units currently available and monitored as at the second quarter 2020 was 6%. This was compared with a sales rate of 5% during the previous quarter, 8% during 3Q19 and 13% in 2Q19, indicating a slowdown in the market, albeit with a slight uptick q-o-q (only projects where sales rates have been obtainable have been included).
Between 4Q19 and 2Q20, the sales rate remained stable but lower in comparison to previous quarters. The number units that have been sold in 2020 is lower largely due to Covid-19 global pandemic.
Market Rents, Prices and Yields
Knight Frank tracks the monthly rent of High-end condominium units in Phnom Penh which also serves as a benchmark for Mid-tier units, having followed a similar trend over the same period.
The rental rates for three bedroom units have remained the most stable, largely due to the majority of new projects having a small allocation of three bedroom apartments whilst demand for larger, family-sized units has kept pace with supply.
The average rental rate across the High-end segment across all districts as at 2Q20 was recorded at $21 per sq m per month, however, this varies significantly across the different districts of Phnom Penh. Additionally, due to the over supply in the High-end segment, occupancy rates have been declining and market rents are expected to face downward pressure over the short to medium term. As at 2Q20, the overall occupancy rate of the monitored condominium stock was recorded at 67%.
The yield range is provided as a general guideline only and is by no means definitive. As at 2Q20, market yields for condominium units in Phnom Penh ranged between 5% and 7%.
This represents a significant decline of approximately three percentage points from yields of between 8% to 10% recorded in 2014 compared with yields of 5% and 7% in 2020.
Condominium Market Prospects
The concept of condominiums was only introduced to Cambodia in 2008 with the launch of De Castle Royal. In terms of timing, this was when the effects of the global financial crisis (GFC) started to impact on the Cambodian real estate market and take-up was initially slow, with the project being put on hold.
As the market recovered in 2011/12, demand began to pick up underpinned by the introduction of the 2010 Law on Foreign Ownership which allows foreign purchasers to own property from the 1st floor and above. Subsequent to the GFC, numerous developments commenced construction, by both local and foreign development companies and the concept has been well received.
The population of Cambodia is relatively young and open-minded, particularly Cambodians who have lived and studied overseas and are familiar with western concepts; however, the majority of purchasers of condominiums are still foreign buyers looking to invest in Cambodia.
Newer developments constructed by international developers are continuously improving the quality of the existing stock of condominiums in Phnom Penh and are continuing to set new benchmarks in both standards and pricing. This is evident with the recent launch of The Peak, a joint venture project between Singapore’s Oxley Group and Cambodia’s Worldbridge Land, achieving sale prices of $5,000 per sq m and above, the highest in Cambodia.
However, with more than 50,000 units in the development pipeline and selling prices now as high as $5,000 per sq m, there has been a considerable slowdown in the sales rate of condominiums as concerns of an impending oversupply weigh down on investor sentiment and the high pricing having priced out the local Cambodian Market.
Following the global pandemic of Covid-19, both sales rate and new launches of condominium projects in the kingdom have slowed. In the second quarter of 2020, there were only 3 new launches which is a small number in comparison to previous years. However, the prices have remained stable and developers are optimistic about the future outlook.
Please contact our professional team of real estate agents at +855 23 966 878 or enquiry@kh.knightfrank.com if you need any advice on condominiums in Cambodia.