Thailand
Cambodia: Rental market experiencing very high levels of oversupply
Cambodia’s commercial and residential rental market is currently experiencing very high levels of oversupply, particularly for properties traditionally marketed to foreigners, according to industry experts.
The oversupply comes as the COVID-19 pandemic causes a mass exodus of foreign workers and high levels of uncertainty in the market, in addition to calls by the World Bank this year that the government needed to develop policies to reduce speculative activity.
In response, landlords have been advised to be flexible with current tenants and to renew any existing contracts as soon as possible before market conditions are expected to worsen over the next six months.
Khmer Times has already been made aware of properties located in Phnom’s Penh’s popular expat locations of Daun Penh (Riverside) and Tuol Kork (Russian Market) that are now being advertised for 30 percent off their previous monthly price.
In addition, many foreigners who now don’t want to sign long-term leases are instead choosing to live in short term hotels, with monthly hotel rates being slashed in excess of 50 percent in some circumstances.
“We are now offering $100 a month dorms that we previously sold for $8 a night” said the manager of a hostel along Phnom Penh’s riverside. “Most of the customers we have simply don’t have the deposits required to sign a six or 12 month lease and are attracted by our super-low prices,” they added.
“Our monthly guesthouse rates are now down to $300 – including all amenities,” said another located near the Royal Palace.
Insiders believe that over the last decade investors have been oversold on the concept of never-ending growth with agents selling large developments aimed at foreign nationals for more lucrative rental returns.
Many estate agents suggest to investors that buying a condo or high-end villa in the heart of the city for anywhere between $120-$700,000 would bring $1,000 to $4,000 per month in rental return (around 10 percent a year).
However, as the first real downturn in the capital’s property market since the global financial crisis in 2008, that saw a 40 percent price drop and a three years recovery, low rents are causing similar fears again.
Serious concern is now mounting that the drop in rental prices will cause a flood of investment properties back on the market becauseinvestors cannot afford to pay back bank loans and cover maintenance fees.
Expect to see more bargain prices in the market towards the end of the year as businesses become desperate for cash-flow and begin selling assets to maintain current operations, CBRE Cambodia’s Director of Property Management, Dan Davies said.
“We are now recommending to all our clients to keep loyal tenants and be flexible with prices and contracts over the next year” he said. “If you have cash and equity then now would be a good time to invest, he added.”
Source: https://www.khmertimeskh.com/50735631/rental-market-experiencing-very-high-levels-of-oversupply/