Cambodia’s buoyant property market looks set to go from strength to strength through 2015 on the back of several driving influences, according to Knight Frank manager Victor Harris.
Harris, an Australian accredited property Valuer, has been in the Kingdom for a little over a year and in that relatively short time has seen the landscape shift.
“Following the prolonged disputes of the election in late 2013, which rolled into the New Year, activity in the real estate market was seemingly on standby with little activity by most industry stakeholders,” Harris says.
Knight Frank, working closely with its regional network, saw this evidenced by foreign investors who were taking a “wait-and-see” approach, highlighting the need for stable governance in order for Cambodia’s real estate sector to remain competitive regionally.
“Post elections, it was as though a light switched and confidence rapidly returned to the market,” Harris notes.
The sight of green netting shrouding new developments quickly became ubiquitous, particularly in Phnom Penh.
“From my apartment balcony I count seven developments in the immediate vicinity with construction underway seven days a week, 14 hours a day,” he says, “A year ago many of these projects were yet to be conceived, and within a very short period of time they have come to fruition.”
Harris explains that the development occurring is as a result of need, not greed, with serviced apartments in downtown areas experiencing occupancy rates anywhere from 90 to 100 percent.
Similarly, office accommodation such as Phnom Penh Tower and Canadia Tower are both achieving high occupancy. Landed residential or borey developments such as Peng Huot, New World and Daun Penh Land are also seeing great success due to the increased quality of construction and a strengthening of the local market.
Moreover, the entry of international retailers such as Aeon Group and Parkson Group is set to create local development hubs due to the amenities they bring to these locations.
Harris attributes the cause of this increasing development to several contributing factors.
He believes investors are optimistic about the Cambodian market, explaining: “There’s been good economic growth over the past few years—it rebounded well from the financial crisis.”
This steady growth obviously gives investors confidence, but it’s not the only thing driving investment.
Optimism is also building as a result of completed and even proposed infrastructure developments, says Harris.
“Look at Chruoy Changva,” he explains, “We’ve seen the benefit of infrastructure in Chruoy Changva with prices almost doubling over the last year, and that’s simply due to the opening of the second bridge and the on-going widening of the national road.”
Knight Frank has even seen foreign investment and development driven as a result of potential infrastructural improvements, many of which are still at the proposal stage.
“These will undoubtedly add value to areas that are currently considered to be fringe city locations,” says Harris.
On top of economic growth and optimism around infrastructural developments, Harris sees improving transparency and more accurate market data as critical to an improving property market.
“One of the restrictions to foreigners investing in Cambodia is the lack of transparency,” explains Harris. “They’re considering entering a country which is perceived to be quite unsafe, which is actually really far from how Cambodia is today, and then there’s the lack of transparency so investors can’t get the access to the information that they need, particularly those investors attempting to adhere to standard international practice for investment due diligence procedures.”
This is why Knight Frank is focusing heavily on market research.
“Research is the backbone of everything in property,” Harris asserts. “Knowledge is power, it really is. If you don’t have the market data that you need, you’re really going to struggle as a business—particularly in real estate.”
Harris says Knight Frank has been investing in local staff who understand the market and are able to document trends effectively, in an attempt to provide transparent market data for their clients.
“Our valuation and consultancy work is heavily reliant on what’s actually happening in the market,” he says.
Harris believes that strong market research, in conjunction with improving regulatory processes at government level, such as building codes and enforced master-planning with definitive zoning regulations, will improve transparency and attract more foreign investment in the coming years.