The real estate industry in Cambodia has invigorated the economy for the last decade, driving in foreign and local investment that has transformed Phnom Penh’s skyline.
As residential condominiums and apartment buildings continue to pop up across the capital, how can real estate investors ensure that their projects become profitable? In Setha, vice president of World Trust Estate, met with Post Property to provide advice for investors looking to enter into the market, and to talk about the current state of the industry.
How are some of the current projects doing?
Most of the projects underway are operating smoothly. However, a few have encountered problems such as Gold Tower 42, The Star River and Booyoung Town. I believe that eventually these projects will perform well and become successful. But it is important that the investors for these projects take the time to diligently research Cambodian society, the current state of the economy, politics and local demographics—especially when it comes to people’s incomes and purchasing power.
What is the current level of competition in the real estate sector?
Competition has increased year after year as more investors enter into the market. There is a growing demand for modern residential apartments and condominiums as people continue to look for places that they can afford. In general, investors continue to expect a high return on their projects as demand increases.
For investors to make sure that their developments become profitable, what are some things they should do?
Real estate developers need to focus on a variety of factors. Of course choosing the proper location for their project is essential to their success. I also advise that investors study the present level of supply and demand and closely monitor the activities of their competitors to make sure it is the right time to enter into the market. They also need to follow current styles and trends to meet consumers’ needs. It is important that when an investor is entering into the market, that they employ a reputable company that can conduct market analysis, develop marketing strategies, set the prices and provide sales management. Additionally, they need to comply with government regulations and laws so that they receive the proper construction permits. It is important that investors collaborate with reputable firms within the financial system. They also need to concentrate strongly on how they manage their human resources and marketing strategy through advertisements.
What are some specific things that developers have to focus on during the construction process?
Developers need to focus on security and safety of their worksite, discipline over their staff, the immediate environment and proper sanitation.
Between houses, office space, apartments and condominiums that are on the market, which one is the most successful and where are their areas for potential growth?
Currently, housing construction is the most successful, followed by condominiums. Our research shows that the current listing price for newly constructed homes in Cambodia range from $30,000 to $1 million.
The reason why condominiums are doing so well is because they need a relatively small plot of land to develop, and can build 15 to 35 floors on 600 to 1200 square meters. Condominium prices are dependent on what floors they are on. The higher up you go, the more expensive it becomes. Investors expect to see returns on their property in the near future as Cambodians begin to opt for condominiums as the city becomes more crowded and traffic congestion increases.
Beoung Keng Kang 1 has seen a big increase in residential development. Besides that area, which other areas are you following?
We can say that Beoung Keng Kang 1 is the hottest area for residential development as land prices are reaching $7000 per square meter due to increasing demand and the construction of high-rise buildings. Besides that area, we see growth in Tonle Bassac and on the Chroy Changvar Peninsula as connectivity has improved.
When it comes to the Phnom Penh’s outskirts, where do you see the most potential?
According to my perspective, the development towards the northeastern area along National Road 6 is favourable because it is well suited for residential and high-rise projects. And also because it is a gateway to the provinces. Along National Road 2, there is potential due to the existence of factories on the outskirts of the city.