The second quarter continued to see a wave of off-plan, strata-title project launches across Phnom Penh, with a total of 2,796 condominium units announced over the period, approximately half of which are due to be located in secondary districts. The sale of Phnom Penh strata-title retail space debuted in Singapore, with Oxley Wordbridge launching sales of the retail component of their coveted mixed used scheme, The Bridge, scheduled for completion by Q4 2018. 

Exchange Square, Hongkong Land’s flagship office and retail development, continues to draw interest from multinational occupiers, in line with the performance of the overall Phnom Penh office market, which enjoyed net take-up of circa 6,000m2 q-o-q. Quoted rents across Grade C office stock fell by 3.9% q-o-q, with Grade C buildings located within the Central Business District (CBD) witnessing the greatest depreciation, standing at 4.6% q-o-q. 

This trend will likely continue, as the arrival of new higher-quality developments places further downward pressure on rents across ageing stock. Prime gross initial yields, derived from both existing and off-plan real estate, stood at an average 8.5%, representing a 4.2% premium over the average fixed deposit rate, over the second quarter. 

Q2/2016 HIGHLIGHTS:  

• The World Bank officially elevated Cambodia to the status of a ‘lower-middle income’ economy at the close of Q2. 
• Hongkong Land’s mixed-use development, Exchange Square, held its topping-out ceremony over Q2, with overall completion set for Q4 2016.  
• Prime sales and rental prices broadly appreciated over Q2, with the exception of serviced apartment rents, which remained stagnant over the quarter 
• Average quoting rents across Grade B buildings grew by 4.5% q-o-q, while average quoting rents across Grade C stock decreased by 3.9% q-o-q.  
• 2,796 condominium units, across 8 projects, launched over Q2, with Russey Keo district welcoming its first off-plan sales launch. 

Read the full market view and report here.