At the tail end of 2015, Southeast Asian nations inaugurated the ASEAN Economic Community (AEC), a borderless market for commodities, services, capital, and labour between 10 of the world’s fastest-growing economies. Long seen as a laggard behind more established neighbours Thailand and Vietnam, Cambodia has wasted no time proving its mettle within this union.
“With sustained gross domestic product growth, attractive returns and the widespread adoption of the US dollar, Cambodia is well-placed to attract continued real estate investment from the wider region over the course of 2016,” CBRE Cambodia manager Chris Hobden told the Nikkei Asian Review.
Indeed, the World Bank noted that Cambodia’s economy rose by 7.5 percent a year on average between 2005 and 2014. Next to Laos, Cambodia is the second-fastest urbanising nation in Southeast Asia.
All this growth easily shows in the skyline of Phnom Penh, the capital. CBRE projects Phnom Penh’s condo supply to rise by 794 percent or 19,018 units in 2018.
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Already, the Cambodian government is due to make a statement in the Thai Boon Roong Twin Trade Center in Phnom Penh, poised to become Southeast Asia’s tallest building by 2019.
Not everyone is impressed by this growth, however. Stephen Higgins, a principal at investment and corporate advisory firm Mekong Strategic Partners, expressed reservations about the realisation of the skyscraper, a symbol of the government’s flair for “vanity projects” with no stringent market research.
At the annual ASEAN Valuers Association Congress held in May in Phnom Penh, Cambodian Valuers and Estate Agents Association president Kim Heang urged property developers to build houses for lower-income people as there seems to be an oversupply of condos and villas for high-spending Cambodians.
“70 percent of our people are under 35 years old, and there are only very few who have spending power,” he said.
“Who else is left to buy all the high-priced homes?” he added.
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If Cambodia has a strong suit, it appears to be the real sector. CBRE expects retail supply in Phnom Penh to significantly grow over the next two years, owing to “new international shopping complexes and significant retail components,” per Nikkei.
At least one ASEAN neighbour is already helping out in this area. Malaysia-based retail chain Parkson is currently developing two shopping malls for the capital city.
Japanese retail group Aeon has assimilated well, building Cambodia’s largest mall in Phnom Penh in 2014.
However its prospects look now, Cambodia is apparently in good company. Home to over 600 million, ASEAN boasts a much larger market than the European Union: the seventh largest single economic market in the world.