While the condo prices in places like Bangkok, Ho Chi Minh City and Metro Manila have climbed, things have remained relatively flat in Phnom Penh. While experts remain buoyant about the long-term prospects of the Phnom Penh condo market and point to the rising skyline as an example of progress, prices have remained stable over the past few years.
In the Phnom Penh: CBRE Fearless Forecast 2020 report, numbers showed that prices for high-end condominiums fell by more than 2.3 percent between the fourth quarter of 2018 and 2019 while mid-range condominium units rose by a little more than 1 percent during the same time.
Another issue facing Phnom Penh condo market investors is the fact that supply continues to increase. According to CBRE, high-end condo supply increased by 23 percent year-on-year in 2019 and is expected to grow by 24 percent in 2020. The mid-range sector recorded supply growth of 53 percent last year and supply could grow by an additional 46 percent this year.
The average square meter price for a luxury condominium in Phnom Penh was USD3,184 in the fourth quarter of 2019. For comparison, the average square meter price for a luxury condominium in Bangkok was USD8,701 in the final quarter of last year.
Affordability is the star of the Phnom Penh condo market
The high-end and mid-range segments of the Phnom Penh condo market may be stagnant, but the affordable sector grew quite a bit in 2019 and has a bright outlook. The average square meter price for a unit in the affordable sector increased by more than 5 percent between the end of 2018 and 2019 with prices rising for eight consecutive quarters.
CBRE noted that Cambodian millennials are driving the demand for affordable condominiums and developers are now looking towards this part of the Phnom Penh condo market for future launches. The consultancy found 4,560 affordable condominium units were launched in 2018 with 5,230 more added last year.
There could also be a growing number of Cambodian millennials willing to rent properties which would be a boon for the market, especially for investors wanting the stability of long-term tenants. Some completed condominium developments have been transformed into hotels in order to bring in rental revenue for unit owners.
