CambodiaPart of the CBRE affiliate network
MARKETVIEW
Construction investment cools
down but markets remain heated
Phnom Penh, Q1 2017
© CB Richard Ellis (Cambodia) Co., Ltd 2017 | 1
Prime Condominium Rent$15.6/SQM
Prime Retail Mall Rent$39.8/SQM
Q1 2017 CBRE Research
Average High-end Condominium Price$3,108/SQM
Prime Office Rent$22.2/SQM
OVERVIEW
The Asian Development Bank (ADB) expects to see
GDP growth of 7.1% in 2017 and 2018; 0.1% higher
than their previous prediction.
In contrast to a significant increase in the volume of
investment into construction seen last year, the first
quarter of 2017 saw a 22% decline in approved
construction projects year on year to a total value of
1.28 billion USD across 786 projects. The most
popular projects to gain approval during the period
were mid to high rise commercial and residential
buildings, in addition to factories.
In the first quarter of 2017, land values across
Phnom Penh’s principal districts appreciated by an
average of 3.5%. A lack of available land plots in
addition to historically high prices in central
districts have caused developers to further consider
secondary locations. Alongside increasing
development activity, infrastructure improvements
connecting those locations to central districts and
the presence of some prominent commercial
developments have driven land price appreciation in
secondary districts. Of particular note is the city’s
Sen Sok district where land prices rose 11.8% q-o-q.
In the wake of new office supply, overall occupancy
and rents were stable in Q1 2017 compared with the
previous quarter.
Quoting prices for condominium units witnessed a
slight decrease in Q1 this year, compared to Q4 2016.
The capital is set to welcome a significant wave of
new condominium supply over the course of 2017.
HIGHLIGHTS
The Asian Development Bank expects Cambodia’s
GDP to expand by 7.1% in 2017 and 2018, a slight
upwards revision from the 7% predicted last year.
Construction investment in Cambodia saw a 22%
drop in Q1 2017, compared to the corresponding
period last year. A total of 786 projects with a
combined value of 1.28 billion USD were approved.
In Q1 2017, overall occupancy and rents of modern
office stock in Phnom Penh were stable compared to
the previous quarter, whilst supply increased by 6%.
Quoting prices of condominium units saw a marginal
decrease across all grades in Q1 compared to the
pervious quarter.
Two condominium projects, totaling 1,055 units were
launched during Q1, both are in secondary districts.
Figure 1: Indicative Land Price by District in Phnom Penh (USD/SQM)
Source: CBRE Research, Q1 2017
*Arrows indicate change from the previous quarter.
$0
$1,000
$2,000
$3,000
$4,000
$5,000
2010 2011 2012 2013 2014 2015 2016 Q1 2017
Doun Penh Chamkarmon 7Makara
Toul Kork Russey Keo Sen Sok
Chroy ChangvarNote: Average price of Land plots
between 0.2ha and 3ha.
MARKETVIEW
CambodiaPart of the CBRE affiliate network
SUPPLY
Phnom Penh is set to welcome a significant wave of
condominium supply in 2017, with circa 7,000 units
due to be delivered by the end of this year. CBRE
expect to see the completion of more than 1,500
condo units in Q2. We are aware that sales went
well in Q1 for projects that combine high-quality
finishes and design, with a strong location.
Only two condominium projects were launched off-
plan over the course of Q1. The two projects
together comprise a total of 1,055 units both are
located in Phnom Penh’s secondary districts.
SALES PRICES
Average quoting prices marginally decreased during
Q1 2017 across all grades compared to the
preceding quarter. Meanwhile sales prices in the
secondary markets also dropped 1.5% q-o-q. On
average quoting prices have shrunk 1.0% since Q1
2016.
Average quoting prices in the affordable segment
were broadly stable, prices have fallen 0.8%
compared with Q1 2016. Quoting prices for mid-
range condominiums reduced by 2.2% q-o-q, while
high-end projects saw quoting prices shrink by
0.7% q-o-q and 2.7% compared with the same
period last year.
Average quoting prices of newly launched projects
in Q1 were in the order of US$1,350 per sqm based
on net internal area.
PRIME CONDOMINIUM RENTS
Prime condominium rents were stable in the last
quarter compared to the previous quarter, with an
average rent per square meter per month recorded
at US$15.6. Lower grade condominiums achieved
rents in the region of US$10 per sqm per month.
Monthly rents for prime 1 Bedroom units achieved
between US$800 and US$1,500 per month, whilst
prime 2 Bedroom condominiums were rented at
between US$1,500 and US$2,000 per month.
Q1 2017 CBRE Research 2
PHNOM PENH CONDOMINIUM Q1 2017
Source: CBRE Research, Q1 2017
Figure 4: Achieved Rents of Prime Condominiums (High-End)
Source: CBRE Research, Q1 2017
Figure 3: Average Price Per Sqm of Phnom Penh Condominiums (Q1 2015-Q1 2017)
Source: CBRE Research, Q1 2017
Figure 2: Phnom Penh Condominium Supply by Grade (2009-2019F)
© CB Richard Ellis (Cambodia) Co., Ltd 2017 |
0%20%40%60%80%100%120%140%160%180%200%
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
Affordable Mid-Range High-End % Change
$1,250
$1,750
$2,250
$2,750
$3,250
$3,750
Q12015
Q22015
Q32015
Q42015
Q12016
Q22016
Q32016
Q42016
Q12017
Affordable Mid-Range High-End
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$500
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1-Bedroom 2-Bedroom 3-Bedroom
USD/
Month
Rental Range Per Month (High-End) Average Rent Per Sqm
MARKETVIEW
CambodiaPart of the CBRE affiliate network
SUPPLY
A total of 17,000 sqm across two office buildings
was added to the capital’s Grade-C stock during
the first quarter of 2017, representing a 6%
increase in the total office stock.
Exchange Square, the second Grade-A office in
Phnom Penh, is on-track to deliver 18,000 sqm
of new office space during Q2 2017.
In the wake of new supply, the overall occupancy
rate was broadly stable during Q1, recording a
marginal decrease to 75.7%, from 75.9% during
the previous quarter. CBRE estimate the total
net absorption in Q1 was approximately 6,000
sqm.
RENTS
Average rents across all grades were stable in Q1
2017 compared to the previous quarter, whilst
when compared with the corresponding period
last year rents were 0.7% lower.
Quoting rents for Grade-A space remained stable
at approximately US$28 per sqm, exclusive of
service charge.
STRATA-TITLE OFFICE
As of Q1 2017, 11 strata-title office projects
comprising a total of 150,000 sqm have been
announced or are under construction. More
than 90,000 sqm of strata-title offices are set to
be delivered by the end of 2018, with a further
40,000 sqm in 2019. Average quoting prices for
strata-title office stood at approximately
US$3,300 per sqm as of Q1 2017.
We expect to see continued interest from both
local and international developers in the strata-
title office market over the course of 2017.
Q1 2017 CBRE Research 3
PHNOM PENH OFFICE Q1 2017
Source: CBRE Research, Q1 2017
Figure 7: Strata-title Office Under Construction / Announced (2018f –2020 onward)
Source: CBRE Research, Q1 2017
Figure 6: Average Quoted Office Rental Rates (USD/SQM/Month) (2012 – Q1 2017)
Source: CBRE Research, Q1 2017
Figure 5: Phnom Penh Office Supply by Grade (2008- 2017 Q1)
© CB Richard Ellis (Cambodia) Co., Ltd 2017 |
*Exclusive of service charge
SQM (NLA)
0
10,000
20,000
30,000
40,000
50,000
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100,000
2018F 2019F 2020 onward
0%10%20%30%40%50%60%70%80%90%100%
-
50,000
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150,000
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2008
2009
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2013
2014
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2016
Q1 20
17Grade C Grade B Grade A Occupancy Rate
0102030
2012
2013
2014
2015
2016
Q1 2017
Grade B (CBD)
-5 5 15 25
Grade C (CBD)
MARKETVIEW
CambodiaPart of the CBRE affiliate network
0
100,000
200,000
300,000
400,000
500,000
600,000
Shopping Mall Community Mall Retail Podium Other Retail
Q4 2015 CBRE Research 4
PHNOM PENH RETAIL Q1 2017
Source: CBRE Research, Q1 2017
Figure 10: Phnom Penh Retail Demand
Source: CBRE Research, Q1 2017
Figure 9: Quoted Retail Rental Rates by Type (USD/SQM/Month)
Source: CBRE Research, Q1 2017
Figure 8: Retail Supply by Type (2009-2019F)
SUPPLY
By the end of 2018 the supply of modern retail
space in Phnom Penh is set to double from the
current levels of supply. These increases are
primarily driven by a combination of new
shopping complexes developed by international
groups and significant retail components within
residential led mixed-used schemes.
Following the success of TK Avenue, CBRE are
aware of a number of planned community mall
developments either announced or under
construction, two of which are due to complete
between 2017 and 2018.
RENTS
Prime retail rents were stable over the course of
the first quarter of 2017, although prime rents at
shopping malls decreased slightly to US$31.1
per sqm per month, representing a decrease of
0.9% q-o-q but an increase of 1% compared with
Q1 2016.
As of Q1 2017, the highest average prime rents
were attributed to retail arcades at US$52.5 per
sqm, followed by retail podiums at US$48.3 per
sqm.
Achieved rents are noted to have fallen within
aging retail stock, where competitive rents are
offered to attract tenants in the face of changing
consumer preferences and an increasing supply
of international quality stock.
DEMAND
According to the CBRE’s research, the top three
occupiers of shopping malls in Phnom Penh are
Fashion & Accessories, Food & Beverage and
Entertainment; together they occupy a total of
62% of existing retail space within shopping
malls in the city.
The expansion of Phnom Penh’s middle-class
acts as a key driver to the trend of international
brands entering the city’s retail scene. CBRE
expects to see sustained demand principally
from Food & Beverage and Fashion & Accessories
retailers across 2017.
© CB Richard Ellis (Cambodia) Co., Ltd 2017 |
SQM (NLA)
Q1 2017 CBRE Research
$31.1
$48.3
$30.5
$52.5
$- $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 $80.00 $90.00
Prime ShoppingMall
Prime RetailPodium
Prime High Street Prime RetailArcade
Rental Rate Range Average Rental Rate
27%
21%14%
9%
7%
4%1%1%
16%
Fashion & Accessories F&B Entertainment
Houseware & Furniture Electronics Beauty & Health
Finance & Services Stationary Others
MARKETVIEW
Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy andcompleteness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.
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CambodiaPart of the CBRE affiliate network
For further information, please contact:
James Hodge
Associate Director
+855 89 333 722
Sambath Phal
Analyst
+855 92 791 750
To learn more about CBRE
Research, or to access
additional research reports,
please visit the Global Research
Gateway at
www.cbre.com/researchgateway.
Muyngim Lim
Analyst
+855 98 331 771
T+855 23 964 099
F+855 23 964 088
www.cbre.com.kh
CBRE Cambodia,
9th Floor, Phnom Penh Tower
#445 Monivong Blvd
Boeung Prolet Quarter
7 Makara District
Phnom Penh, Cambodia.
PHNOM PENH Q1 2017