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Phnom Penh land prices, condo sales continue to rise

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The Phnom Penh property market continued to see a broad rise in sales and rental values during the final quarter of last year, with land values across the capital’s four central districts rising by an average of 8.4 percent from the third quarter, according to the latest report by real-estate consultancy CBRE

The report showed that while the traditionally prime residential area of Chamkarmon district saw the greatest volume of pre-sale condominium units launched, with a total of 2,597 units accounting for a 37 percent share, secondary locations, such as Chroy Changva and Sen Sok districts, accounted for about 15 percent of total units coming onto the market last year. A total of 689 condominium units, across five projects, were announced during the fourth quarter, bringing the total number of off-plan condominiums launched last year to 7,014 in 26 buildings, the report said.

While condominium supply rose 22.4 percent over the course of last year the figure is set to rise significantly by 2018, with an additional 19,018 units coming on to the market – up 794 percent – bringing total supply to 21,414 units by the end of 2018, according to the report.

The majority of planned condominium projects fall into either the mid-range or high-end categories and will account for 44 and 42 percent respectively of the overall supply by the fourth quarter of 2018.

Chris Hobden, CBRE Cambodia manager, said the Phnom Penh condominium market saw a notable volume of presale project launches last year. “In terms of supply delivered over the course of 2015, it would be fair to say that supply and demand are broadly balanced, with predominantly investment focused demand, from both domestic and international purchasers absorbing recently introduced stock,” he said.

“The key to supporting the considerable volume of units planned by developers, over the course of the coming five years, will be an increase in domestic purchasers and, perhaps most importantly, a significant rise in end-user demand, rather than demand driven by buy-to-let or wider investment purposes,” he added. The number of condominium units purchased by foreigners saw an increase of almost 56 percent rise last year compared with 2014, according to data from the Ministry of Land Management, Urban Planning and Construction.

Foreigners bought 480 condo units last year compared with 308 in 2014, up 55.8 percent, at an average price of about $100,000, the report said. Most of the foreigners investing in Cambodian property are from South Korea, China, Singapore, Japan, England, Malaysia, Taiwan and Thailand.

Po Eavkong, managing director of Asia Real Estate Cambodia, said the number seemed low. “However, maybe the ministry collected the number of foreign buyers from the completed projects,” Mr. Eavkong said. “Due to the current projects under way, there are many condo units that have been booked and bought by foreigners. The condo supply in 2016 is so different from 2015 because most projects will be completed in the second half of 2017 and 2018, so the supply will increase dramatically in those years while the demand still sees an increase.”

Kim Heang, the CEO of Khmer Real Estate and the president of the Cambodian Valuers and Estate Agents Association, said there had been a lot of negativity. Many people are negative about the sector because their knowledge is limited, he said. “Why aren’t they looking at the positive effects?” Mr. Heang asked.

“Based on my observations, 2013 to 2014 were the years with the most land transactions and the year 2015 saw more development. However, some people say in 2016 there are fewer land transactions. If we look at the past, the developers have bought the land already for development. “Where were the condos in 2013? There were none. As you can see, now there are many condominiums completed and others being built. I would like to name 2016 as ‘The Year of the Condo’. Now the transactions are for condo units,” Mr. Heang said.

Average condominium sales prices, across mid-range and high-end categories, broadly appreciated over last year, with both existing and off-plan mid-range prices rising by 11.1 percent over the course of the year. Average prices broadly appreciated over the course of 2015, with mid-range condominiums seeing the greatest fluctuation, demonstrating an overall year-on-year rise of 11.1 percent, the CBRE report said.

The average price of high-end condominiums, both in terms of existing stock and off-plan sales, rose by 2.5 percent, with sales prices of affordable stock depreciating by 1.4 percent, on average over the course of the year, the report added. While the report showed a lack of available land plots, in addition to increasingly high prices in central districts, that is likely to drive further development activity to secondary locations over the course of 2016 and 2017.

These are averages as of the fourth quarter of last year and based on net area: Chamkarmon is $2,835.91 per square meter (psm), Sen Sok is $1,655.50 psm, Toul Kork is $2,116.11 psm, 7 Makara is $2,489.25 psm and Chroy Changva is $2,354.60 psm on average, according to Mr. Hobden.

He said that inbound capital from the wider Asia region has been a key to driving the rise in Phnom Penh condominium development activity last year. Asian outbound real estate investment reached another record high in 2015, standing at $62.4 billion – a 37 percent year-on-year increase. “While 2015 saw a significant increase in allocations of Asian outbound capital beyond the Asia Pacific region, Cambodia has evidently benefited from the growing appetite of both developers and investors, notably from China, Singapore, South Korea and Taiwan, to expand development activity and holdings beyond their respective domestic markets.

“With sustained GDP growth, attractive returns and the widespread adoption of the US dollar, Cambodia is well placed to attract continued real estate investment from the wider region over the course of 2016,” Mr. Hobden added.

$2 billion project, 133 story twin tower sky scrapper project begin in Phnom Penh this year

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Construction of the $2 billion, 133-story twin tower skyscrapers planned to rise opposite NagaWorld will start in the middle of this year, an official who helped design the project told Khmer Times yesterday.
Tous Saphoeun, dean of the Architecture and Urban Planning Faculty of Mathematics, Sciences and Engineering at Pannasastra University, also said the massive project would be finished in three years.
The project will cover a five hectare block of land opposite Phnom Penh’s sole casino. It is a joint venture between Thai Boon Roong Co. Ltd, IP Group, Shang Hai Company and China State Construction Engineering Corp.
The twin towers will be called Thai Boon Roong Twin Commercial Center.
After the project was announced, some media reported the cost of the mammoth project would be $1 billion. However, the investment capital in the construction of the project changed after a study was carried out.
“The company planned to inject about $1 billion into the project, but after a study, it cost more and they increased the investment capital to about $2 billion,” Mr. Saphoeun said. “The presence of the building will change Phnom Penh’s skyline,” he added.
Phnom Penh governor Pa Socheatvong said during the official launch that the towers would be 500 meters tall, the biggest ever built in Cambodia, and would inject billions of dollar into Cambodia’s property sector.
“This twin-building project is not only situated in a good location, but it will promote Phnom Penh’s skyline to the next level and attract more investors to the country,” Mr. Socheatvong said.
Dith Channa, the managing director of Lucky Realty, said the project, if it proceeds, would boost the property sector. “It would help

boost land prices around the area and attract big investors from overseas and as well as tourists,” Mr. Channa said.
“If the project truly pops up in Phnom Penh, it will have no risk because with such a big project the developer will study about the supply and demand before they put in their investment capital,” he added.
Mr. Channa was not as optimistic about the current status of the condo market, saying supply seemed to exceed demand.
“We can say that one condo project is successful when the project is filled with residents, but now some completed projects do

not have many residents as many people here have not changed their lifestyle to live in condos,” he said. “It takes times to fill the

market.”
Investment in the construction sector reached an all-time high last year at almost $3.5 billion, up about 40 percent from the $2.5

billion invested in the sector in 2014, according to data from the Ministry of Land Management, Urban Planning, and Construction.
About 700 buildings, ranging from five to 55 floors, were built last year across the country, with most going up in the capital, Kandal, Siem Reap, Sihanoukville and Battambang provinces, officials said.

 

Source:

http://www.khmertimeskh.com/news/22617/twin-tower-construction-to-begin-this-year/

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