Phnom Penh is set to be flooded by a wave of condominiums that would quadruple the current market in two years, according to an industry report.
The new units are increasingly focusing on the outskirts of the capital and targeting mid-range prices, says U.S.-based real estate services company CBRE Group’s Cambodia affiliate.
The report forecasts more than 8,000 units will be completed this year, with 12,000 expected next year.
“We expect to see new condominium project launches focused in secondary locations and on the affordable segment, to target middle income households,” the report says.
James Hodge, a surveyor for CBRE Cambodia, said the report was referring to middle-tier condos being built outside the city center.
High-end condos are priced at about $3,100 per square meter, mid-range at roughly $2,700, and affordable units closer to $1,500, Mr. Hodge said.
“Historically, decentralized locations have not seen a significant density of condominium-style development, so the construction of projects in secondary areas is a sign of the market evolving,” he said.
Hoem Seiha, director of research at Vtrust Appraisal, a Phnom Penh real estate firm, said a lack of buyers of luxury condos had pushed developers to target the middle classes. He cautioned, however, that even a shift to more affordable units could prove unsustainable.
“Currently, we have about 6,000 to 7,000 units in total, and not even all of those have people living in them,” Mr. Seiha said.
“The concept of living in a condo is still not popular in Cambodia, like it is in Thailand. It might take up to five to 10 years for people to accept the habit to live in a condo.”
Condo buyers are mostly foreigners who aren’t permitted to buy landed houses, he said.
His concern was echoed by Kim Heang, president of the Cambodian Valuers and Estate Agents Association.
“Condos have to be built in the central areas of the city. If they are built on the outskirts, buyers would rather buy landed houses in those areas instead,” he said.
“The developers who want to build condos outside the central area should consider this carefully. I don’t think this is a good investment. They could face bankruptcy due to no buyers.”