Thailand
Cambodia: Rent reductions increasingly possible for smaller firms
Small and medium-sized enterprises (SMEs) have taken a slight upper hand in the negotiation of commercial rental prices across the Kingdom as COVID-19 is still hindering the property sector.
Since March 2020, COVID-19 has caused numerous businesses to shut down, some under government instruction, others because of business owner fear of infection and the general decline in business activity over the pandemic period.
Some owners pleaded with landlords for leniency, rent reductions or even rent forgiveness, often to no avail. However, some business owners are now reporting rent reductions.
CBRE, which describes itself as the foremost property consultant in Cambodia, said that the overall data they gathered indicates a reduction in quoted rents of 13-18 percent year-on-year for most core property types in Phnom Penh.
CBRE Cambodia Senior Director, James Hodge said, “Many landlords have recognised that the current economic and business environment is challenging for many and that with increased competition for renters across almost all sectors, they must adapt and adjust their terms in order to compete and maintain their revenue as best they can.”
“The impact varies from sector to sector, but overall the data we are looking at indicates landlords quoting rents 13 to 18 percent lower year-on-year for most core property types in Phnom Penh, with some [dropping] even further. There was only a very small number of landlords who managed to increase their rental rates compared with the end of last year.”
Some businesses have even reported they have received complete rent-abatement during the pandemic.
The owner of one bar based in the Tuol Tompoung (Russian Market) area, who wished to remain anonymous for fear of his full rent being reinstated, explained that since August last year his landlord has given him a break from paying rent.
“When COVID-19 started it was devastating for many businesses in Cambodia. I have not been open as long as many other businesses in the area and the bar was just getting on its feet,” he said
“I was close to having to close the business altogether because of the pandemic, but my landlord decreased my rent slowly, to the point where now I am paying no rent. Business has started to pick up though so I am now paying a percentage to the owner,” he said.
Not all business owners have been so lucky. Some landlords will not budge on rent and point back to lease agreements that were made years before the virus. A lot of businesses have been relying on tax relief as well as other benefits from the government to stay afloat, but they say that rent continues to be their biggest problem because there are so few customers.
Remi Dee, general manager of Villa Langka Hotel in Phnom Penh, said: “We are grateful that the government was able to give us tax relief and they have also told us that the fee for our tourism licence for 2021 will be waived. However, the government also recommended that landlords should help tenants by decreasing rent prices and not all landlords are following these recommendations.”
“Our hotel is split into two. This means that we have two separate landlords and two different contracts. One of those landlords is giving us a 30 percent discount on the rent and has done since April last year. The other landlord refuses to help us at all. We have met them and asked for help several times, but they still refuse to give any discount even after 10 years of paying our rent on time.”
Source: https://www.khmertimeskh.com/50803836/rent-reductions-increasingly-possible-for-smaller-firms/