Property Prices on the Rise in Phnom Penh

Preliminary results of a new survey show a steady rise in the price of land in Phnom Penh since the country’s property boom in 2008 and spectacular bust in 2009.

The initial findings of the survey by VTRUST Property Co. Ltd. examine land prices during the fourth quarter of this year in Phnom Penh’s three Boeng Keng Kang communes in Chamkar Mon district. 

According to the survey, asking prices ranged between $1,000 per square meter and $5,800 per square meter in the most sought-after areas

In Boeng Keng Kang I commune, the average price of land was on sale for $3,300 per square meter, with a minimum price of $1,300 per square meter and a maximum of $5,800.

In Boeng Keng Kang II, the average was $2,100. The minimum was $1,000 and the maximum was $3,800.

In Boeng Keng Kang III, the average was $2,000. The minimum was $1,100 and the maximum was $2,600.

Some of the factors affecting the prices included size of the land for sale, building types and location. For example, in Boeng Keng Kang I, the difference in price between land on a main street and a side street was $500 per square meter.

While the prices show an increase since Cambodia’s property market crash five years ago, when prices had jumped by more than 1,000 percent between 2005 and 2009, before falling through the floor, industry executives said Monday that there is no immediate concern of a new bubble forming.

At the height of the boom in 2008, property in some of the city’s most sought-after locations in Daun Penh district rose to $5,000 per square meter from $550 in 2005.

“The prices are not going down,” said Chrek Soknim, deputy director of VTRUST.

“It will increase year to year. But the prices won’t rise like 2008. At the moment, the prices will increase 10 to 15 percent” per year, he said.

Grant Knuckey, CEO of ANZ Royal, said the bank has seen “strong growth” in demand for residential mortgages, but that a property bubble at this time is not likely.

“I do not see any evidence of a ‘bubble’ developing in residential property at this point. Bubbles are primarily a function of excessive leverage, and at this stage borrowers are only financing against 60 to 70 percent of the property’s value,” Mr. Knuckey said.

“I also don’t see any real evidence of heavy speculative buying—it’s genuine demand at this stage. So for now, I’m fairly relaxed,” he said.

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