Phnom Penh's
Real Estate Market Report H2 2023

The real estate market in Year 2023 was characterized by soft transaction markets. Business confidence is easing – in the face of weak consumer sentiment and the general slowing of business activities. While the office sector has enjoyed a slow pick-up, with global uncertainty weighing on demand from local and international businesses taking up office spaces. The retail sector witnessed a modest recovery in discretionary spending, where cost-of-living pressures were under control. In the hospitality sector, the return of mainland Chinese tourists remain the key headwind on the demand prospects. However, Cambodia’s international travel has not picked up at the same degree elsewhere such as Malaysia, Thailand, and Vietnam. The market anticipates a moderate influx of international travelers to replace the limited domestic ‘staycation’ business that does not suffice to support the hotel occupancy.

I. Hospitality

The additional supply entered the market – 11 projects totaling around 7,000 keys are expected to be delivered within 3 to 5 years. However, the hotel market for high-end hotels still has not reached its previous peak prior the pandemic. All hotel classes, including high, mid, and low-end hotels, witnessed a slightly recovered occupancy level with the return of business & leisure travelers.

II. Office

Net absorption of office space for H2 2023 has improved. However, the market is experiencing an uneven recovery in office buildings, coupled with the slowdown in vacated spaces. With several new developments launched in the office market, we project a lower net take-up in the coming years due to more increased supplies of Grade A offices coming online – particularly projects along Norodom Boulevard with the under-construction buildings of National Bank of Cambodia (NBC) headquarters, Norodom Business Tower, Odom Tower, Royal Group Headquarters. These projects will bring an addition of over 65,000 sqm of new office spaces to the market.III. Residential

Landed Property

A key feature of the landed-property housing market in Year 2023 was the increasing number of mid to mid-low end housing projects launched. We believe the impact of pandemic boosted demand for larger spaces provided with specific functions for new ways of living. It is also worth noting there is an oversupply of landed housing in the primary market (new home sales), while the majority transactions occurred in the secondary market (resale). Over 80% of new supply are located in the outskirt areas targeting the low- to mid-end products.

Condominium

Condominium market saw a healthy level of activities for the new launches in condominiums. Most newly launched condominium projects in Year 2023 focused on the areas of Boeung Keng Kang 1, Chamkarmon, primarily along Preah Monivong and Mao Tse Tong Boulevard such as Time Square 6 and J Tower 3. The affordable condominium market has proven resilient during the pandemic, and we expected to see even more units for sale in Year 2024.

Serviced Apartment

There is one newly launched Serviced Apartment in H2 2023, Capri by Frase – Phnom Penh, an 88-key serviced apartment operated by Frasers Hospitality located in Daun Penh district. Apart from that, Frasers Hospitality developed two more projects in Phnom Penh. They are the 1) Capri by Fraser, City Centre Phnom Penh, and 2) Fraser Residence Leedon which are slated to open in the Year 2025 and Year 2027, respectively. These properties will provide an additional 300+ units of service apartments

IV. Retail

The retail market showed signs of recovery, thanks to rising consumer confidence, driven by the return of local spending and the wider improvement in the economy. In addition, there has been positive leasing demand due to pent-up demand in major shopping centers with increased footfall. Retailers can be successfully turning challenges into opportunities. We also witnessed another form of retail development in the market, The night market concept, such as Ground Market – Koh Norea, which blends traditional markets, retail malls, and urban parks. Prince N5 Night Market, operated by Prince Real Estate Group, opened in November, attracting over 30,000 visitors and over 330 vendors. This night market installed new experiences to capture the local’s preference. These included new landmarks, as well as altering F&B tenant mix in comparison to the existing night markets.