Investors renting out condos on rise amid construction boom

Content image - Phnom Penh Post
A view of Sihanoukville at night. The town has seen a surge of Chinese investment. Heng Chivoan

Investors renting large buildings and condominium blocks have increased with the Kingdom’s current construction boom, in what appears a good approach for growth in the property market, according to industry insiders.

Though experts admit there is no data on condo leasing, they have noticed the practice increasing over the past two years, principally from a push from Chinese investors.

Key Real Estate Co Ltd director Sorn Seap said the arrival of Chinese investment has kept the market vibrant, especially in Sihanoukville and Phnom Penh.

He said the Chinese often rent a whole building and re-rent it to other Chinese.

“Chinese gather in groups, where they set up their own services – such as shops, restaurants, and Chinese-style entertainment places. This is the reason they rent whole buildings,” Seap said.

Good health indicator

He said as condo development continues to rise, the trend of leasing entire buildings will be a good indication as to the health of the sector, while the state receives tax revenue and jobs are created.

“If the buildings were vacant, they would be useless. Leaving a building vacant or underused cannot maximise the economy,” he said.

Lucky Realty Co Ltd CEO Dith Channa said that while the model has been used in neighbouring countries for some time, such investments are new to the Kingdom.

He said the trend in Cambodia began with the increased arrival of Chinese, especially in Preah Sihanouk province.

“When someone takes a whole building and puts it up for re-rent to other investors, it shows an active market,” he said.

Emerging Markets Consulting senior adviser Ngeth Chou said any investment, regardless of its form, is beneficial to the national economy.

However, he said that it depended on the smooth performance of the investment and how it performs in the long run.

“This will lead to a boost in building occupancy, allowing building owners and investors to mutually profit,” he said. “However, it could spell a lot of trouble if we are not well prepared, especially in terms of lease contracts,” he said.

Chou said that although Cambodia is a free market economy and investment opportunities are high, the government also has to lay out suitable laws to regulate the market.