Notable uptick’ in Cambodian real estate and construction sectors: Study

March 28, 2022

A report titled Cambodia Real Estate Highlights-2nd half 2021, published by Knight Frank, suggest that the Kingdom is expected to clock an economic growth of 5.5 percent in 2022. Supplied

Knight Frank’s Cambodia Real Estate Highlights in the second half of 2021 predicts 5.5 per cent economic growth in 2022.

There was “a notable uptick in activity in the Cambodian real estate and construction sectors during H2 2021” due to the cautious optimism in business sentiment, according to a report.

Cambodia Real Estate Highlights-2nd half 2021, published by Knight Frank, suggested that the Kingdom is expected to clock an economic growth of 5.5 percent in 2022.

Some of the reasons for the turnaround in the real estate and construction sectors were the “effective implementation of the Covid-19 Vaccination Programme by the Royal Government of Cambodia. The Kingdom had vaccinated nearly 90 percent of its total population, one of the highest vaccination rates, globally.” The quarantine restrictions were lifted in the country in November last year.

The study also pointed out that “tourism is expected to drive growth over the medium term underpinned by the government’s approved 2021-2025 three-phased national tourism roadmap, complemented by the 2021-2035 Siem Reap Provincial Tourism Development Master Plan.” It said the new Law on Investment, which was adopted by the government on October 15, 2021, will also “help stimulate economic growth by creating a more transparent legal framework for investment with additional incentives to support the socio-economic development of the Kingdom.”

Ross Wheble, Country Head, Knight Frank Cambodia, was quoted as saying in the report, “With quarantine restrictions lifted at the beginning of November, there was a notable uptick in activity in the real estate and construction sector during H2 2021 as business sentiment turned cautiously optimistic.”

The report pointed out that an additional 106,777 sq m of NLA across eight developments completed during H2 2021 in the Phnom Pen Office Sector in the second half of last year, a 28 percent year-on-year growth from the same period in the previous year. This was achieved despite pressure on construction schedules due to the impact of the pandemic.

While providing the outlook for the Office Sector, it said, “Despite signs of recovery witnessed in Q4 2021 along with the government’s decision to reopen all services in the Kingdom, the office sector will continue to face downward pressure in tandem with anticipated supply coming on stream over the medium-term.”

The Retail Sector, on the other hand, saw a notable uptick towards the end of last year. However, retail mall foot fall remains well below pre-Covid levels, it pointed out.

It termed the announcement of Swedish fast-fashion retailer H&M’s proposed entry in 2022 at the Aeon Mall Phnom Penh as a “great milestone for the Cambodian retail sector.”

While being cautious in its outlook, it said, “whilst there is optimism from retailers over the outlook for Cambodia’s retail sector, there is a clear supply-demand imbalance, with retail supply set to more than double by 2025 if all future projects complete as scheduled. This is already placing pressure on rental rates and occupancy rates, which looks set to continue over the short and medium-term.”

Analysing the performance of the country’s hotel sector in the second half of the last year, the report pointed out that Cambodia was one of the first countries in Asean to fully reopen and remove all travel restrictions for vaccinated travellers in November 2021. “This led to a 65 percent increase in tourist arrivals during December 2021 compared with the previous years.”

It said the medium to long term prospects remain very positive
for the country as international tourist arrivals return, and the domestic market continues to grow in line with increasing disposable income in Cambodia.