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This week Thmey Thmey senior journalist, Ky Soklim interviews Tom O’Sullivan, chief executive of realestate.com.kh. Although the condo market may be at risk of being saturated, he says demand for landed property known as ‘boreys’ is expected to remain strong.
KY SOKLIM: Could you share your thoughts on why Cambodians are not interested in buying condos?
O’SULLIVAN: It is a bold statement to say that Cambodians are not interested in buying condos at all. However, it is a fair assessment of the condo market that the majority of buyers are international.
Condo market attracting younger Cambodians
We are seeing an increase of Cambodians buying condos these days. In fact, a Khmer friend of mine recently purchased a property at Urban Village. Most of the Cambodians that are buying condos are the younger generation and typically those that have traveled or studied overseas.
The middle-class Khmer dream remains to buy a property in a borey. Cambodian buyers much prefer something on the ground. They clearly understand what they own this way. It’s their land, it’s their house.
KY SOKLIM: In general, who are buying condos? Which nationality?
O’SULLIVAN: The majority of buyers in the condo market are international investors and expats living in Cambodia. The largest pool of buyers is Chinese nationals with Japanese, Koreans, Singaporeans and French also prominent.
KY SOKLIM: Which country invests the most in construction and real estate in Cambodia? Why?
O’SULLIVAN: Cambodia, of course, is the leader. However, China is a huge player and investor in the construction industry in the local market. Japan, Korea and Singapore also have leading projects in Cambodia. Creed from Japan, for example, has two borey projects as well as one of the most well known condo developments in Bodiaju.
KY SOKLIM: Some say Cambodia is the perfect place for foreign retired people. Why?
O’SULLIVAN: People often think to retire in a country like Cambodia as they are attracted to warmer climates. And the low cost of living seems to be the catalyst for many choosing Cambodia over its neighbors Thailand or Vietnam.
Adding to this, Cambodian people are extremely accommodating, happy and welcoming to foreigners. Cambodia is also a very safe country which is also important to someone looking to move in their retirement years.
KY SOKLIM: Is the housing market saturated? Do they buy for resale or for living?
O’SULLIVAN: The landed property market (boreys) is very strong and most people are buying in boreys for living. The condo market is really where international investors and some local investors play — and are really looking for healthy returns on their investments. The condo market is possibly at risk of being saturated. However, sales still remain strong from international and some local investors.
We are also seeing condo developers think deeper about what they are building now, and looking at ways to appeal more to the local market. Urban Village, for example, is a very smart thought-out project. And, given its location on Hun Sen Blvd combined with public space, entertainment areas etc, we are seeing even Cambodians buying there for living purposes.
KY SOKLIM: How do you see the real estate market for the next few years in the big towns? Is the price going down?
O’SULLIVAN: I think the rental prices will start to come down a little bit, as there will be 20,000 to 40,000 units being finished over the next few years. This is when I think we will see more Cambodians move into and adopt the condo way of living. I say this as the price will become more affordable and Cambodians will start to want to live closer to work due to the increase of traffic congestion.
Borey demand still strong
I see the price of properties in borey developments increasing as demand is still so strong. In the condo market, I don’t see the price decreasing. However, I do see condo developers building more affordable projects as to better appeal to the local market.
KY SOKLIM: It’s said that real-estate prices going up could curb investment. How do you comment on that?
O’SULLIVAN: If prices continue to rise, then investors may start to consider Thailand or Vietnam as a more viable market for them. However, there is a long way to go before Cambodia catches up to those markets in terms of price. The land price in BKK-1 in Cambodia, for example, is $6,000 per square meter whereas in Vietnam prime land is $30,000 per square meter. There are also very attractive foreign ownership laws in Cambodia as opposed to Thailand or Vietnam.