Property News · August 24, 2016

Is Phnom Penh at risk of growing too fast?


With developers eager for a slice of Phnom Penh pie, is the city’s growth spurt too quick?
Independence monument in Phnom Penh. Image credit: khlungcenter / Shutterstock.com
A surfeit in condominium supply continues to raise suspicions of a bubble encapsulating Phnom Penh’s luxury residential property market, according to CityLab.
In a country with no centralised government data on property values and an unregulated real estate industry, some experts believe investors are heading to the Khmer capital’s apartment market with expectations of improbable returns.
“One of the signs that there could be a bubble is people seem to buy for the capital appreciation and not for cash flows, so not for rent,” Matt van Roosmalen, manager of regional investment advisory service Emerging Markets Consulting for Cambodia, told CityLab. “They’re looking to flip, which is not a great sign. They have low rent yields, a lot of them are sitting empty.”
Investors may find condominiums a hard sell among the city’s locals, bound by tradition to live in multi-generational homes. The idea of leaving the nest is still a relatively alien concept to Cambodians, save for the occasional young professional who prefers the nuclear lifestyle.
More: Why Phnom Penh is Asia’s next top city for real estate
Another conundrum that condo investors need to contend with is the high premium that Khmer culture places on landed homes. “Cambodian people like to live in a house and a big plot of land,” said Cambodian architect Pen Sereypagna, adding that land investments in themselves are highly prized by domestic investors.
This leaves foreign investors as the single most important fount of investment in Phnom Penh condos. “All these condos are being built on the idea that Phnom Penh is going to become another Bangkok or Jakarta, and all the foreigners are going to come and live and work here,” James Whitehead, director of content at realestate.com.kh, told CityLab. “But how many foreigners can come here and pay this price? Because most locals can’t.”
According to Knight Frank, the condo supply in Phnom Penh will increase to 24,553 units by 2020. The property consultancy, however, recently reported a 35.8 percent quarter-on-quarter price decrease in the country’s property sector.
Read next: For Singaporean investors, there’s no place like Cambodia

Source : property-report.com
Read more…Is Phnom Penh at risk of growing too fast?

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