By Eric Wong Chon Lap
With record units of residential properties available to the public in Phnom Penh, sales rates have fallen to a new low, with many empty homes in Phnom Penh which are mostly unsold or without residents.
Due to COVID-19, we can foresee the postponement of new launches and discounts on unsold units which will hit the real estate sector hard. Some developers have postponed their launches indefinitely because it is difficult to estimate how long the COVID-19 outbreak will last. For some of the new launches, sales activities and campaigns have stopped. For others that remain open, sales offices have also seen fewer walk-in customers.
Discounts on unsold units, the disappearance of Chinese buyers and the postponement of new project launches have all worsened the situation in the residential real estate sector. The significant fall in demand from Chinese buyers has been caused by the travel restrictions China has imposed since the outbreak began and travel restrictions by Cambodia since, as well as the slowdown in world economic activities following the lockdown in many countries.
On the other hand, the condominium market has slowed down due to the accumulation of unsold stock. However, many developers are optimistic that Chinese buyers could return before the end of the year at the earliest. In the long run, Cambodia could still be an attractive destination for condominium buyers as the market provides better yields, and it does not limit minimum spending amounts while providing affordable maintenance fees compared to neighbouring markets.
Some analysts also expect a surge in transactions later this year after the coronavirus outbreak settles down. Frankly speaking, once all the negative factors surrounding the property sector diminish, and if the global virus outbreak is under control by September or October this year, developers should be able to recover, and the market will revive by 2021.
As condominiums are mostly used for investment purposes, while low-rise residential units such as townhouses, shophouses and villas are mostly used for residential purpose, investors should invest in condominiums carefully during this situation. As a result, developers should shift their overall development portfolio to the low-rise housing market where demand for single-detached houses and townhouses etc. is driven entirely by local Cambodian end-users and owner-occupier purchasers. This should be the time where developers can reach out to existing customers because it will be difficult to have new customers during this slowing economy.
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Eric Wong has extensive experiences in the field of property consulting and development sectors, primarily within the emerging markets of Southeast Asia. His previous role involved with assisting in the development of project budgets to ensure the operations are within cost restraints, developing and executing projects for the assigned market areas etc. From the property consulting prospective, he has lead market research assignments inclusive of providing descriptive, exploratory market research and analysis reports within the office, residential, hotel and retail segments in both quantitative and qualitative methods to determine suitable development types, scale and product mix, and address property-related matters from project positioning to absorption rates, phasing and pricing and marketing strategies etc.
From: https://www.construction-property.com/low-sales-rate-hits-phnom-penh-condominium-market/