A Review of Phnom Penh’s Condominium Market.

By Bobby Peoples – Country Director of HomeConnect Cambodia

A quick tour of Phnom Penh can’t help but give you the impression that there is a major building boom in progress, probably the biggest since the Khmers undertook the famous Angkor nearly one thousand years ago, yet no temples this time, this time its condo’s.

The sheer number of new condo units being built is a debatable subject with figures probably close to forty thousand mark if you include all the outlying area’s with nearly ten thousand of these are on Koh Pich alone, most of these will come online by 2018 / 2019.


As I see it this raises three very important questions, firstly will there be enough expats / locals to rent these, secondly will the increase in supply negatively effect the rental returns and thirdly will the capital appreciation be effected and in what way ?

In-order to answer the first question you must look at the breakdown of tenants. Traditionally the tenants are expats who looked to rent a home of similar standard to the apartments in their own countries, starting back in the 90’s during the UNTAC days and gradually increasing as business’s moved to Cambodia increasing demand. Over the last number of years the tenants have increasingly came from other Asian countries and will integration into the Asean group of countries this trend will be set to continue. The impact of the burgeoning middle class will add to the tenant dynamic as a shift from the traditional borey style home by younger Khmers takes place and an increasing interest in modern condo style living takes root. The number of foreigners will increase in the near future yet it’s doubtful that the increase will be at a rate sufficient to fill the condo supply.

The second question can best be answered as a real estate agent who having taken hundreds of clients around condo’s in Phnom Penh and listened to their feedback, usually their surprise at the high rent being asked for compared to Thailand and Vietnam both of which had their condo boom years ago and rents being lower as a result of this. It’s a simple case of supply and demand, of-course a quality product can always demand a premium. I have seen condo’s being sold promising rents of $1500 for a one bedroom making the capitalization rate look very attractive only for the owner to accept $900 some six months later. An owner of an entire apartment building can control the rent for the building yet with condo’s its different because of multiple owners, some of which will drop the rent substantially to get a quick rental setting a precedent for future rentals.

The final question is a difficult one, with minimal increases seen to date and with many foreign investors buying merely to get money out of their own countries the increase hopefully will be incremental and sustainable rather than an unsustainable jump. Management of buildings will start to become a noticeable difference between condo’s, with the better condo’s being properly managed ensuring correct maintenance and sink funds meaning your investment remains at a high standard. The lack of finance being used to purchase condo’s in Cambodia is a relevant point, housing bubbles are caused in part by borrowing from banks which then becomes subject to interest rates and the global money markets, yet if the purchases are mainly cash then it’s easier to ride through a period of economic downturn.

In conclusion the condo market is in its infancy in Cambodia, but with the correct management, marketing and rent being asked for the future should be beneficial for everyone involved. As markets develop corrections within the market naturally happen and this isn’t to be feared but rather understood as a part of its growth, I believe that the Cambodia property market is a good investment but it’s always advisable to seek proper advice before entering. The Phnom Penh of the future will increasingly start to emulate its neighbours as high land prices cause developers to build up and condo’s become the home of choice for those who wish to stay within the city.