Only three condos finished in Jan-Mar as market sputters

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The Picasso City Garden, along with M Residence and The Peninsula Private Residences, were the three Phnom Penh condos completed in the first quarter of this year, according to CBRE Cambodia. PICASSO CITY GARDEN VIA FACEBOOK

Three new condominiums were completed and ready for move-ins in the first quarter of 2022, adding 700 units to bring the capital’s condo supply to about 33,800, as rental and sale prices of high-end units extended a decline seen in October-December 2021, according to a prominent real estate firm.

In the period from January-March, there was a complete lack of new groundbreaking and sales announcements from the condo segment, with the Phnom Penh market registering a “steady decline” since end-2019, CBRE Cambodia said in a research report.

The report revealed that per-sqm condo sales prices in the first quarter for high-end and mid-tier units averaged $2,600 and $2,000, respectively, falling by 4.1 per cent and 0.3 per cent quarter-on-quarter. However, the corresponding rates for affordable units – mostly snatched up by Cambodians – averaged $1,400, up by 1.6 per cent on a quarterly basis.

On the rental front, the average monthly per-sqm price for high-end units dropped by four per cent on-quarter to $10.70, whereas the analogous rates for mid-tier and affordable ones inched up by 1.1 per cent and 1.4 per cent, respectively, to $9.20 and $7.80.

CBRE Cambodia said that Covid-19 pandemic-driven cross-border travel restrictions had a “significant impact” on the Kingdom’s condo market – especially on developments that target foreign customers – with many projects facing major delays.

The real estate firm estimated that more than 13,000 condo units would be completed this year.

It listed the three projects completed in the first quarter of 2022 as the high-end Picasso City Garden and M Residence in Boeung Keng Kang district, and the mid-range The Peninsula Private Residences in Chroy Changvar district.

Kim Kinkesa, senior manager of research and consulting at CBRE Cambodia, told The Post on May 4 that although Cambodia and other regional countries have reopened “almost 100 per cent”, condo prices will not recover immediately.

She said prices are more likely to “improve somewhat” from the beginning of 2023, and added that the number of projects announced for sale this year will be limited, reasoning that the market requires more time for vacancy rates to drop.

“I believe condo prices will continue to fall further, in a trend that may last until the end of 2022,” Kinkesa said.

Global Real Estate Association president and Sam SN Realty CEO Sam Soknoeun said that the Cambodian condo market is “not recovering well at the moment”, noting that residents of the units most commonly tend to be foreigners, numbers of which have dropped dramatically in the Kingdom during the Covid-19 crisis, whether as tourists, investors or workers.

He said the decline in number of foreigners has not only catalysed a reduction in condo prices and occupancy rates, but led to stagnation in the construction sector and a dearth of sales announcements for new condos.

He stressed that the slump could prolong, especially for foreign-focused projects. “Most condo projects highly relied on foreign customers, so without foreigners coming in, things will be quieter and cheaper,” he said, echoing Kinkesa’s view that the market still needs more time to recover.

For reference, the government approved 652 investment projects in the first two months of 2022, down from 859 in the year-ago period, with total registered capital of $137 million, marking an 88.9 per cent plunge year-on-year, according to the Ministry of Economy and Finance.