Landed housing market awaits the new middle class, suggests report

09 Mar 2017 2050 | Cambodia Travel News

A Phnom Penh Housing Market report released by VTrust Appraisal last week has revealed significant growth in investments in the construction sector of the capital, amounting to a total of $8.5 billion in 2016 from foreign direct investments alone.

However, these factors in the landed housing market have stirred up questions as to the salability of these new and recently erected developments – particularly in the current demand outlook.

The climate in Phnom Penh remains conducive for investment, in comparison to what it had been in 2002 when the first borey, a gated community with houses and public space, projects launched.

The report indicates that the Phnom Penh landed housing market has gone a long way since the first landed housing cluster emerged during that time in Sen Sok district.

Supplies in different districts soon followed, and in 2017 the marketplace is frantic.

But Miguel Chanco, the lead analyst of Asean’s Economic Intelligence Unit, says “there have been strong signs over the past few years that the housing market, especially in Phnom Penh, is in oversupply” because of all the developments that have been approved.

This is particularly true for the condominium market in the country.

In terms of landed housing, the supply reached about 100,278 units by the end of 2016.

According to the Phnom Penh Housing Market report, about 28,097 more units will be added to the supply by the end of 2017.

This, Mr. Chanco believes, will cause sales to move at a slower pace in the coming years.

Yet Mr. Chanco says the upcoming landed housing supply will still be filled in the next few years. And this is all thanks to the rising salaries of workers in the capital.

“Phnom Penh’s population may be small compared to other capital cities in Asean, but salaries are rising rapidly,” he said.

Only last year, Cambodia was already declared a lower-middle income country by the World Bank.

According to the World Bank: “Robust economic growth averaging 7.6 percent per year in the past two decades has transformed Cambodia from one of the world’s poorest countries to a lower middle-income country today.”