Feb 20 Covid outbreak adds to capital’s retail space glut

Content image - Phnom Penh Post
The average monthy rent for ‘prime shopping mall’ units was $28.46 in the first quarter of this year,unchanged from the previous quarter. Photo supplied

Prolonged stress from the Covid-19 epidemic crushed Phnom Penh’s retail market over the first quarter of this year in terms of rental prices, occupancy rates and consumer spending, a new report obtained by The Post on April 7 revealed.

CBRE Cambodia, the local affiliate of US commercial real estate services and investment firm CBRE Group Inc, noted in the report that four projects were completed and put up for lease, bringing retail space in the capital to nearly 500,000sqm.

The projects were The Green Avenue (6,864sqm) in Sen Sok district, TK Central (3,540sqm) in Tuol Kork district, View Park Mall (5,485sqm) in Daun Penh district and Boeung Snor Food Village (12,000sqm) in Chbar Ampov district.

The report lists the current average monthly rates at $23.61 per sqm at “prime high-street” units, or down by 10 per cent over the fourth quarter of 2020.

Rent for “prime shopping mall” and “prime retail podium” units remained flat quarter-on-quarter at $28.46 and $24.50, respectively.

“Community mall” units, however, saw a 4.2 per cent uptick in average rates to $22.31.

The report noted that the occupancy rate dipped 8.6 percentage points quarter-on-quarter to 74.9 per cent in the first quarter and that customer spending “fell sharply”.

Earlier CBRE Cambodia reports revealed that occupancy rates in 2019 had been 89.80 and 89.37 per cent in end-June and end-December, respectively, prior to the pandemic.

CBRE Cambodia senior manager Kim Kinkesa told The Post that the February 20 community outbreak had hamstrung a retail market that had already been struggling in the first quarter, eroding rent, occupancy rates and customer traffic – a trend she believes could extend long into the future.

Compared to the first quarter of 2020, retail customer traffic had fallen 20 per cent just prior to the latest outbreak, and 47 per cent afterwards, she said, citing data from Google Mobility Tracker.

“The retail market is projected to continue to be adversely affected in the second quarter, even after the government introduces a series of measures to stave off the spread of Covid-19.

“However, these measures are paramount in completely eliminating this community transmission and avoiding long-term damage to the retail market in Cambodia,” Kinkesa said.

Global Real Estate Association president Sam Soknoeun said the Kingdom’s retail market never returned to pre-pandemic levels and that the February 20 outbreak had undermined its recovery and slowed the pace of leasing activity.

And the market could remain on that trajectory if the epidemic persists, or if not enough people are immunised, he said.

“This market will recover once Covid-19 is able to be controlled, and then, not only will local customers return, but even international tourists visiting Cambodia, catalysing a retail market recovery,” Soknoeun said.