Property Prices Remain Flat in Phnom Penh

Real estate agents say that property transactions are making a recovery

In the past three months, Visal Realty Director Sier Chhaylin says he has sold three villas in Phnom Penh worth roughly $1 million each.

Mr Chhaylin, who laid off staff last year when sales dried up, said the recent large transactions were reflective of a more active property market in the municipality.

“Buyers have again started to buy property,” he said yesterday, adding that property transactions at his real estate company are up about 20 percent for the first nine months of the year.

His analysis of today’s property market paints a much rosier picture than this time last year when Cambodia was going through a recession.

But regardless of signs pointing toward more activity in the real estate market, property prices in Phnom Penh have remained flat during the first eight months of the year, according to latest data received yesterday from Bonna Realty Group. And experts say there could yet be a further drop in prices before the market completely bottoms out.

Residential property prices along the riverside sold for between $3,000 to $3,500 per square meter in the month of August compared to between $2,000 and $3,500 in May, data from Bonna Realty Group show.

Commercial property on Norodom Boulevard remained stable in August compared to May costing between $3,000 and $4,000 per square meter north of Independence Monument and around $2,500 per square meter to the south of the landmark.

Residential property near Wat Phnom fell slightly to between $1,400 and $1,600 per square meter in August, compared to between $1,500 and $1,800 in May.

The most recent data from the National Valuers Association of Cambodia show that both residential and commercial property prices were down by about 45 percent in the second quarter of this year at an average of $1,500 and $2,600 per square meter respectively compared to the first quarter of 2008 when prices peaked.

Keuk Narin, general manager at Bonna Realty Group, said that in some cases property prices in Phnom Penh might continue a slight downward trend due to weak demand.

“More or less, it can decrease a little bit more,” he said.

Still, with economists expecting to see a slight rise in foreign direct investment by the end of the year and the economy expected to grow by around five percent, Mr Narin is carefully waging that property prices will experience growth by the beginning of next year.

He said transactions have increased by about 40 percent in downtown areas in the first three quarters compared to the same period last year, while other urban areas continue to experience little activity.

Sales will “start from the city [center] first and hopefully move to other urban areas” by the beginning of 2011, he said.

“The market sentiment is generally better than this time last year,” said Tan Hong Kiat, country manager for Knight Frank. “But the thing is, like many sectors in the market, you aren’t seeing much movement.”

On a more positive note, Mr Tan said that buyers and sellers have started to base their investment decisions on less speculative grounds.

He added that the recent announcement by large-scale projects – Gold Tower 42 on Monivong Boulevard and Star River project near the Tonle Bassac river – that construction would temporarily cease, would “definitely dampen the confidence in the market.”


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