Amidst a challenging global economic landscape, the Cambodian real estate market has weathered a prolonged downturn since 2019, leaving industry stakeholders pondering when and how recovery will take place. Key experts weigh in on the factors influencing this recovery and the direction developers and buyers should steer towards in these uncertain times.
Balancing the Equation, Oversupply vs. Real Demand: According to a recent CBRE Cambodia report, a significant hurdle to the market’s resurgence is an oversupply that does not align with genuine demand. Condos, once constructed with Chinese investors in mind, have faced headwinds post-COVID-19 as cautious Chinese investors navigate their own economic challenges. Concurrently, the local demand remains insufficient to absorb the surplus, aggravated by prices that outstrip the purchasing capacity of the domestic population. The economic downturn has further dampened consumer spending, exacerbating the real estate squeeze.
A New Generation’s Priorities: Dr. Kessara Thanyalakpark, a prominent real estate analyst and Managing Director of Sena Development, underscores a generational shift in Southeast Asia, particularly among Generation Z. For these individuals, the traditional prestige attached to homeownership is fading. Instead, they prioritize work-life balance and a simpler, pressure-free lifestyle. Furthermore, their income levels often do not match the rising housing costs, driven by construction and financial expenses.
Sectoral Implications: These factors have far-reaching consequences. The condo market in Cambodia is expected to remain under pressure, while even the robust Borey sector begins to feel the pinch as more developments emerge. Similarly, the retail and office markets grapple with oversupply due to the absence of large-scale international corporations in Cambodia.
The Correction Period: Kim Kin Kesa, Deputy Managing Director of CBRE Cambodia, believes that the market is currently in a “correction period,” where property values don’t correspond with their actual worth. The question remains – when will the market bounce back?
Government and Private Sector, A Dual Responsibility: Marc Townsend, Chairman of CBRE Cambodia, stresses that the recovery timeline depends on both government actions and private sector initiatives. Drawing comparisons with neighboring countries like Thailand and Vietnam, Townsend advocates for Cambodia to attract large-scale investments akin to the Samsung investment that boosted economies in these nations.
Transparency and Tourism, Catalysts for Growth: He posits that increased investor confidence hinges on new policies and government transparency. The infusion of substantial investments promises positive spillovers, stimulating land sales, office rentals, factory construction, job creation, and more, bolstering both the residential and commercial real estate sectors.
Simultaneously, tourism holds the key to revitalizing the stagnant retail sector. Measures such as reduced airfares, the creation of new attractions, and tax exemptions and visa waivers could rejuvenate Cambodia’s tourism industry.
Malaysia for instance can attract tourists through modern and convenient shopping malls, a variety of brands, and cheap prices. Thailand is another good example. Given the world’s economic crisis, this kingdom is expected to attract 25 million to 30 million inbound visitors in 2023 with 2.38 trillion baht in revenue. Between January and mid-September, Thailand received over 19 million foreign tourists, representing a 271-percent year-on-year increase. (Read more)
Thailand is also granting a temporary tourist visa exemption to passport holders from China and Kazakhstan until the end of February 2024 in support of its vital tourism.
Private Sector Transformation: Yet, the private sector must also pivot. The CBRE report recommends developers consider strategies such as reusing and repurposing existing assets to align with current demand, including sectors like senior living, data centers, ecotourism, and budget accommodation. Diversifying into new ventures that support core businesses, such as agriculture, green energy, and technology, is another avenue ripe for exploration.
For example, Sena Development has transitioned into a “lifelong trusting partner,” offering a spectrum of services beyond real estate. Their portfolio includes housing loans, secondary housing agents, senior living homes, green and smart homes, renewable energy, and more.
In navigating these uncharted waters, Cambodia’s real estate market awaits a synergy of efforts, combining innovative thinking, government reforms, and private sector adaptability to carve a path toward revitalization.
The post Experts Share Cambodia’s Real Estate Market Recovery Path appeared first on Construction & Property News.