While the scores of new condominium properties appearing in Phnom Penh are selling well, their buyers are mainly speculators hoping to make quick profits, a leading property firm has said.
A report by international realty group CB Richard Ellis (CBRE), distributed Wednesday, says that the city’s property market in 2012 was resilient, and points to a “thriving” serviced apartments sector.
It says an influx of Japanese expatriates, following Japanese investment into the country, have led to 90 percent occupancy for apartment complexes, particularly in the Boeng Keng Kang I area.
Following a 2010 sub-decree that opened up the possibility of foreigners owning properties above the ground floor, hundreds of condos have been built in Phnom Penh. Some 637 new units came onto the market in 2012, according to CBRE.
The report says that nearly 66 percent of them were sold, an increase of 5.1 percent compared with 2011.
However, it says the market is “still heavily dominated by condominiums being sold off-plan to speculators,” referring to the often cut-price deals on properties sold before the completion of a project.
“This has resulted in completed condominium projects having low physical occupancy rates,” it says, noting that many of these original investors would soon be looking to offload their properties, which would make for a “highly competitive” market.
But CBRE does predict that demand for condos will go up this year. “[A]s the city expands, with land prices increasing the domestic market will start to look towards condominiums,” it predicts.
Sung Bonna, chief executive of Bonna Realty Group, said developers and buyers should be cautious about speculation in condos.
“Whenever they buy at an inconvenient market price, when it’s higher than people will pay, it makes a bubble,” he said, adding that he did not think there was demand for a large number of properties at a price higher than $1,500 per square meter.
“Any developers that expect to sell at more than $2,000 per square meter, that’s a concern.”
Sunny Soo, country head for Knight Frank Real Estate, said that speculation was only a concern when it was made on a large “institutional” scale, and that those buying condos represented legitimate investors. “There’s no room to speculate on apartments” in Phnom Penh, he said, adding that buyers may not be living in the country at all times, or may still be readying the properties for renters.
“The wave of speculation is over. There is a real demand,” he said.