Cambodia's Real Estate Market Divergence: Phnom Penh Remains Resilient Amidst Sihanoukville's Awaited Recovery

Cambodia's real estate sector has undergone significant changes in recent years, particularly in two key economic areas: the capital, Phnom Penh, and Sihanoukville province. Chea Kimse, Senior Manager of Research and Consulting at APS, a real estate service provider, provided an in-depth analysis of the differences between these two major markets. Chea Kimse stated that during 2017, the real estate market in Sihanoukville experienced a strong surge, but it was a speculative bubble that was easily burst. The construction and pricing of real estate were directed solely at wealthy Chinese customers. When the Chinese left, the market collapsed, as projects that were previously sold at high prices could no longer be sold or even reduced to $30,000 to $40,000. Chea Kimse explained that due to the market's lack of diversity and its near-complete reliance on Chinese nationals, the real estate market in Sihanoukville collapsed immediately after the Chinese departed. He asserted that the Sihanoukville real estate market can only recover if the issue of stalled buildings is resolved and if the government provides clear incentives or policies to attract foreign investors back. Furthermore, the recovery of the real estate sector in this key coastal economic zone also depends on resolving the real estate crisis in China, which is currently facing its own difficulties. In contrast to Sihanoukville, the real estate market in the capital, Phnom Penh, is a genuine market with balance, not relying 100% on Chinese customers. Chea Kimse compared the potential of the real estate markets in Phnom Penh and Sihanoukville, noting that the mix of buyers in Phnom Penh is diverse, including Cambodians, Chinese, Singaporeans, Taiwanese, Poles, and Germans, among others. The real estate expert confirmed that even with the COVID-19 crisis, the real estate market in Phnom Penh continued to move forward, albeit at a slower pace. Over the past approximately three years, the real estate market in Phnom Penh has shifted from selling high-priced residences to focusing on mid-priced and affordable housing below $50,000, such as new housing projects or condominiums for local buyers. According to Chea Kimse, with a population of millions, Phnom Penh always has demand as long as the real estate is reasonably priced. Especially, about 51% of the population is the new generation of youth who are open to living in condominiums or strata-titled buildings. The real estate sector expert foresees that Cambodia's real estate market will begin to rebound in the next approximately five years. However, the expectation of returning to the abundance and fervor seen before the COVID-19 crisis is not yet certain. While waiting, Chea Kimse emphasized that Cambodia must not rely on a single source. Cambodia needs to attract more investors of diverse nationalities by focusing on creating clear laws and policies to ensure safety, reduce risks, and build confidence among national and international investors.