Cambodia Property Market Faces Oversupply, Creating Tenant-Friendly Environment

Cambodia’s retail property market is expected to remain under pressure for years as new shopping centres continue entering the market faster than tenants can absorb available space, according to the Advantage Property Services H1 2026 Outlook. However, while the prolonged recovery presents challenges for landlords and developers, the report suggests the current market is creating one of the most attractive leasing environments in years for retailers, restaurants, entertainment operators and investors seeking premium commercial space at more competitive prices. According to Advantage Property Services (APS), Phnom Penh’s retail sector now has approximately 981,000 square metres of completed retail space, with average occupancy falling to 57% during the first half of 2026, down from 67% between 2018 and 2021. APS estimates around 450,000 square metres of retail space currently sits vacant across the market. Based on current leasing activity, the firm projects it could take approximately 18 years to fully absorb existing vacant retail inventory if current supply and demand trends continue. Oversupply Continues to Pressure Landlords The report attributes the extended recovery primarily to years of rapid retail development that have significantly outpaced tenant demand. As additional shopping malls, retail podiums and community centres have entered the market, landlords have faced increasing competition to secure and retain tenants. This has placed downward pressure on rental rates across most retail formats, particularly community malls and retail podiums. Between the second half of 2025 and the first half of 2026, asking rents declined by 4.2% for community malls and 2.4% for retail podiums, while shopping mall rents remained broadly stable. Prime high street locations were the exception, recording a 3.1% increase in average asking rents, reflecting continued demand for well-located street-front commercial properties. A More Favourable Market for Occupiers While landlords face a more competitive leasing environment, APS says the current market conditions are creating significant opportunities for businesses looking to expand or relocate. With greater availability of commercial space, tenants now have more negotiating power than in previous years, allowing retailers to secure better lease terms, larger premises and higher-quality locations at more competitive prices. For international brands considering entry into Cambodia, as well as domestic retailers planning expansion, the current environment provides greater flexibility than during previous market cycles when quality retail space was more limited. The report suggests businesses able to take a long-term view may benefit from securing premium locations while market conditions remain favourable. Consumer Demand Still Evolving Despite the oversupply, APS does not suggest Cambodia’s retail sector lacks long-term potential. Instead, the consultancy argues the market is undergoing a period of adjustment as supply catches up with evolving consumer demand and changing retail formats. The continued resilience of prime high street locations indicates consumers remain willing to spend in well-positioned retail destinations offering convenience and strong tenant mixes. The report suggests future success will increasingly depend on project quality, tenant curation, accessibility and customer experience rather than simply adding more retail floor space. Market Moving Towards Maturity APS positions the current cycle as part of Cambodia’s broader property market transition. Rather than signalling structural weakness, the report argues the retail sector is moving towards a more mature phase where competition, tenant quality and asset management will play increasingly important roles. For developers, this means greater emphasis on differentiation and operational performance. For retailers and commercial occupiers, however, the prolonged absorption period represents an opportunity to secure premium locations on more favourable terms while landlords remain focused on improving occupancy. According to APS, the combination of improving macroeconomic conditions, resilient investment activity and continued government support for business should provide a stronger foundation for long-term retail demand, even as the sector works through its existing supply overhang.