CambodiaPart of the CBRE affiliate network
MARKETVIEW
A landmark year for construction
investment and real estate FDI
Phnom Penh, Q4 2016
© CB Richard Ellis (Cambodia) Co., Ltd 2016 | 1
Prime Apartment Rent$21.9/SQM
Prime Retail Mall Rent$36.5/SQM
Q4 2016 CBRE Research
Average High-end Condominium Price$3,131/SQM
Prime Office Rent$22.4/SQM
OVERVIEW
Data recently released by the National Bank of Cambodia confirms that Foreign Direct Investment (FDI) reached US$2.15 billion during 2016, a 25% uplift when compared to 2015. China remains the country’s largest source of FDI, but with a significantly reduced share of the total, down from 61% in 2015, to 35% in 2016.
FDI into real estate totaled US$370 million, representing 17.2% of the total. Investment into approved construction projects increased by approximately 12.4% over the fourth quarter, ending the year at US$8.5 billion, up 143% on 2015.
During October, a visit by Chinese President Xi Jinping resulted in the agreement of almost US$2 billion of infrastructure investment and aid to the country, including a $1.9 billion highway project linking Phnom Penh and the port city of Sihanoukville.
The fourth quarter saw a continued slowdown of condominium project launches, together with downward adjustments in ‘high-end’ condominium quoting prices. Meanwhile quoted prices in the ‘mid-range’ and ‘affordable’ segments continued to hold up well.
Grade-B and Grade-C office rents diverged further, with Grade-B quoting rents recording a Y-o-Y increase of 11.2%, whilst Grade-C depreciated 1.2% over the course of 2016.
HIGHLIGHTS
Cambodia’s FDI totaled US$2.15 billion in 2016, representing a 25% increase from 2015. The top three recipient sectors for FDI are banking, manufacturing and real estate.
Nationwide, investment into approved construction projects reached $8.5 billion across 2,636 projects by the end of 2016, an increase of 143% on 2015, which saw $3.5 billion invested in 2,305 projects.
Grade-B office’s average quoted rents appreciated by 2.2% q-o-q and 11.2% y-o-y. Average quoted rents of Grade-C offices slightly depreciated by 0.4% q-o-q and ended the year down 1.2%.
616 condominium units were launched across two off-plan projects during Q4; representing the lowest level of new launches seen during the last two years.
Figure 1: Sources of FDI Inflow and FDI Value (2012-2016)
Source: National Bank of Cambodia, Q4 2016
*Arrows indicate change from previous quarter.
$ .0 Bn
$ .5 Bn
$ 1.0 Bn
$ 1.5 Bn
$ 2.0 Bn
$ 2.5 Bn
0%
20%
40%
60%
80%
100%
2012 2013 2014 2015 2016
China Vietnam Japan
Singapore Other FDI (Bn USD)
MARKETVIEW
CambodiaPart of the CBRE affiliate network
PHNOM PENH TO WITNESS THE FIRST LARGE
WAVE OF CONDOMINIUM SUPPLY IN 2017
Phnom Penh’s condominium supply is due to increase significantly during the next 12 months.
Over the course of 2017, more than 8,000 units are
set to complete, accounting for an approximate 200% increase on supply levels as of Q4, 2016.
An additional 13,000 units are scheduled to be delivered during 2018, representing a five-fold
increase from the current market position. By 2018,
CBRE estimates that 47% and 34% of total condominium supply will be attributable to the
‘mid-range’ and ‘high-end’ segments, respectively.
AVERAGE SALES PRICES DEPRECIATED ACROSS
‘HIGH-END’ SEGMENT IN Q4
Average quoted prices in the ‘affordable’ and ‘mid-
range’ segments increased marginally over the
fourth quarter. ‘Mid-range’ condominiums rose by 1% q-o-q, whilst prices in the ‘high-end’ segment
dropped by 1.8% q-o-q.
Overall, during 2016 the average quoted sales price
saw an increase across all grades compared to the
previous year. ‘Affordable’, ‘mid-range’ and ‘high-end’ segments rose by 4.7%, 2.9% and 3.5% y-o-y,
respectively.
FUTURE CONDOMINIUM PROJECT LAUNCHES
TO TARGET MIDDLE INCOME HOUSEHOLDS
Two off-plan projects, totaling 616 units, were
launched in Q4, which was significantly lower than
the number of new launches in previous quarters, and a continuation of the pattern seen in Q3, 2016.
We anticipate the persistence of this trend over the
coming year.
Furthermore, it is worth noting that both projects
launched during Q4 are located outside the capital’s prime residential areas and that both target local
purchasers. In 2017, we expect to see new
condominium project launches focused in secondary locations and on the ‘affordable’
segment to target 'middle income households.
Q4 2016 CBRE Research 2
PHNOM PENH CONDOMINIUM Q4 2016
Source: CBRE Research, Q4 2016
Figure 4: Number of Off-plan Condominium Units Announced by District, and Number of Project Launches (Q1 2015-Q4 2016)
Source: CBRE Research, Q4 2016
Figure 3: Average Price Per Sqm of Phnom Penh Condominiums (Q1 2015-Q4 2016)
Source: CBRE Research, Q4 2016
Figure 2: Phnom Penh Condominium Supply by Grade (2008-2018F)
© CB Richard Ellis (Cambodia) Co., Ltd 2016 |
0
5,000
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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F 2018F
Affordable Mid-Range High-End
-
2
4
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12
-
1,000
2,000
3,000
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Q12015
Q22015
Q32015
Q42015
Q12016
Q22016
Q32016
Q42016
No. o
f Unit
s
Chamkarmon Daun Penh 7 MakaraToul Kork Chroy Changvar Sen SokPor Sen Chey Mean Chey Russey KeoNumber of Projects Launched
No. of Projects
$1,250
$1,750
$2,250
$2,750
$3,250
$3,750
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016
Affordable Mid-Range High-End
MARKETVIEW
CambodiaPart of the CBRE affiliate network
QUALITY SUPPLY SET TO INCREASE
DURING 2017
Over the course of Q4, only one Grade-C office building completed, delivering approximately
4,000 sqm. Meanwhile “Hong Kong Center”, one
of the capital’s earliest purpose-built office buildings, was closed. Overall, occupancy fell by
1.5 pp compared to the previous quarter.
During the next 12 months, a total of around
65,000 square meters of office space is due to
launch, with Hongkong Land’s ‘Exchange Square’ on track to add 18,000 square meters as
the city’s second Grade-A office, by Q1 2017.
MARGINAL DECREASE IN GRADE-C RENTS
IN THE CONTEXT OF NEWLY COMPLETED
STOCK
During Q4 2016, average quoted rents of Grade-B stock increased by 2.2% q-o-q and ended the
year up 11.2%. By contrast, quoted rents in the
Grade-C segment saw a slight decrease of 0.4% q-o-q and 1.2% y-o-y; a result of relatively low
rents quoted by newly completed Grade-C stock.
Quoted rents for Grade-A space remained stable
at approximately US$28 per sqm, exclusive of
service charge.
FUTURE OFFICE SUPPLY DRIVEN BY
STRATA-TITLE PROJECTS
During the last 24 months, Phnom Penh has witnessed increasing interest in strata-title
commercial developments. We expect to see
continued interest in developing strata-title offices from both local and foreign developers.
Strata-title office projects announced or under construction constitute circa 70% of total future
office supply due to be delivered during the
coming 36 months, and will represent approximately 24% of Phnom Penh’s total office
supply by the end of 2019.
Q4 2016 CBRE Research 3
PHNOM PENH OFFICE Q4 2016
Source: CBRE Research, Q4 2016
Figure 7: Future Office Supply Under Construction / Announced (Q4 2016)
Source: CBRE Research, Q4 2016
Figure 6: Average Quoted Office Rental Rates (USD/SQM/Month)
Source: CBRE Research, Q4 2016
Figure 5: Phnom Penh Office Supply by Grade (2008- 2016)
© CB Richard Ellis (Cambodia) Co., Ltd 2016 |
*Exclusive of service charge
SQM (NLA)
0%
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100%
-
50,000
100,000
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2008 2009 2010 2011 2012 2013 2014 2015 2016
Grade C Grade B Grade A Occupancy Rate
0510152025
Grade B (CBD) Grade B (Non-CBD)
0 5 10 15 20 25
2012
2013
2014
2015
2016
Grade C (CBD) Grade C (Non-CBD)
0 20,000 40,000 60,000 80,000 100,000 120,000
2019F
2018F
2017F
Centrally-Owned Office Strata-Title Office
MARKETVIEW
CambodiaPart of the CBRE affiliate network
Q4 2015 CBRE Research 4
PHNOM PENH RETAIL Q4 2016
Source: CBRE Research, Q4 2016
Figure 10: Location of Modern Retail Supply by District (Q4 2016 –2019F)
Source: CBRE Research, Q4 2016
Figure 9: Quoted Retail Rental Rates by Type (USD/SQM/Month)
Source: CBRE Research, Q4 2016
Figure 8: Retail Supply by Type (2007-2018F)FLAGSHIP RETAIL SCHEMES SET TO
COMPLETE IN 2017
Phnom Penh has seen no significant volume of new retail supply during the last 24 months.
However, retail supply in Phnom Penh is set to
rise significantly by the end of 2018, driven by a combination of new international shopping
complexes and significant retail components
within residential led mixed-used schemes.
‘Parkson Phnom Penh City Center’, comprising
57,000 sqm of leasable space, is now rescheduled to complete during 2017.
Hongkong Land’s ‘Exchange Square’ is on-track
to deliver 8,000 sqm of leasable space within a dedicated retail podium by the end of the first
quarter of 2017.
PRIME RENTS WERE STABLE OVER THE
QUARTER
Prime retail rents across all formats were stable
over the course of Q4, although rents in prime high street locations dropped by 1% q-o-q.
In Q4, the highest average prime rents by type were attributed to retail arcades at US$52.50 per
sqm and retail podiums at US$48.30 per sqm.
SUPPLY OF MODERN RETAIL SET TO
DECENTRALISE
As of Q4 2016, 68% of modern retail supply is
focused on 2 central districts, namely Chamkarmon and Daun Penh.
Future developments are more widely dispersed, and although Chamkarmon, the traditional
retailing heart of Phnom Penh, is forecast to
retain its crown with 28% of supply, other districts will claim a greater share. This trend is
supported by rising land prices in central areas
and greater availability of large development plots in less developed locations.
© CB Richard Ellis (Cambodia) Co., Ltd 2016 |
SQM (NLA)
$31.4
$48.3
$30.5
$52.5
$- $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 $80.00 $90.00
Prime ShoppingMall
Prime RetailPodium
Prime High Street Prime RetailArcade
Rental Rate Range Average Rental Rate
Q4 2016 CBRE Research
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
Shopping Mall Community Mall Retail Podium Other Retail
42%
26%
8%3%
4% 10%7%
Q4, 2016
28%
19%
15%1%
15%
3%
2% 9%
8%
Q4, 2019FChamkarmorn
Daun Penh
7 Makara
Tuol Kork
Sen Sok
Mean Chey
Chroy Changvar
Chbar Ampov
Por Sen Chey
CambodiaPart of the CBRE affiliate network
MARKETVIEW
CambodiaPart of the CBRE affiliate network
Q4 2016 CBRE Research 5
PHNOM PENH SERVICED APARTMENT Q4 2016
Source: CBRE Research, Q4 2016
Figure 13: Demand for Serviced Apartments by Budget Based on CBRE’s Enquiries (2016)
Source: CBRE Research, Q4 2016
Figure 12: Rental Rate Range by Unit Type and Grade (Q4 2016)
Source: CBRE Research, Q4 2016
Figure 11: Serviced Apartment Supply by Grade (2010-2016)
© CB Richard Ellis (Cambodia) Co., Ltd 2016 |
Rental Range Per Month (Grade B)
NEW SUPPLY FOCUSES ON MID-RANGE
GRADES
The supply of serviced apartments reached 5,633 units by the end of 2016, an increase of 3.7% q-o-q and 26.9% y-o-y. Grade-B stock saw the most rapid increase in supply over the year, adding an additional 86% of 2015 supply, whilst Grade-C added 50% and became the most populous market segment.
As of Q4 2016, Grade-C or below stock accounted for a collective share of 70% of total serviced apartment supply. In addition, Grade-A and B contributed 17% and 13% of supply, respectively.
PRIME SERVICED APARTMENT RENTS HOLD
STEADY OVER THE QUARTER
Average Grade-A and B quoting rents remained stable over the course of Q4.
Rental rates across prime Phnom Penh serviced apartment stock range from US$500 Per
Calendar Month (PCM), for a one-bedroom
Grade-B apartment, through to US$8,000 PCM for a flagship penthouse unit, as of Q4 2016.
Average quoted rents for Grade-A serviced apartments ended the year at $21.02 per sqm,
whilst the average quoted rent of a Grade-B
apartment is 29% lower at $14.96 per sqm.
ENQUIRIES CONTINUE TO DEMONSTRATE
DEMAND ACROSS A RANGE OF BUDGETS
Affordable and mid-priced serviced apartments continue to be the most sought after market
segments. Only 6% of enquiries received during
2016 were seeking accommodation priced in excess of US$3,000 PCM.
69% of enquiries received by CBRE were from tenants with budgets of less than $2,000 PCM, a
trend that supports the recent increases in the
supply of Grade-B and C serviced apartments.
0
1,000
2,000
3,000
4,000
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6,000
2010 2011 2012 2013 2014 2015 2016
Below C Grade C Grade B Grade A
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25
PH 3 2 10
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1 2 3 PH
Grade A Grade BUSD/Month
USD/
SQM/
Month
Rental Range Per Month (Grade A)
Average Rent Per Sqm
0
35%
34%
25%
4%2%
<US$1,000
US$1,000<US$2,000
US$2,000<US$3,000
US$3,000<US$4,000
US$4,000+
MARKETVIEW
Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy andcompleteness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.
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CambodiaPart of the CBRE affiliate network
For further information, please contact:
James HodgeSurveyor+855 89 333 722 [email protected]
Sambath Phal Analyst+855 92 791 750 [email protected]
To learn more about CBRE Research, or to access additional research reports, please visit the Global Research Gateway atwww.cbre.com/researchgateway.
Muyngim Lim Analyst +855 98 331 771 [email protected]
T+855 23 964 099F+855 23 964 088 [email protected] www.cbre.com.kh
CBRE Cambodia, 9th Floor, Phnom Penh Tower #445 Monivong Blvd Boeung Prolet Quarter 7 Makara District Phnom Penh, Cambodia.
PHNOM PENH Q4 2016