Turning Inwards

The pandemic has resulted in a shift in Cambodia’s property sector as affluent locals invest in landed developments and even dip their toes into the foreigner-dominated condo market

- George Styllis

Since foreign buyers took a shine to Cambodian real estate, locals have often been overlooked. The construction of grandiose condos, luxury villas and holiday homes has gone unabated in cities across the country, at prices beyond the means of most Cambodians. But as the pandemic endures, developers are looking to local buyers to help cushion the blow.

By the end of last year, sectors underpinned by foreign demand continued to be ravaged, with the condominium market among the worst affected.

In Phnom Penh, the sales rate of high-end and mid-tier condominiums dropped to 5% in the first half of last year compared with 15% in the first half of 2019. By the end of the year, the pandemic “had started to take a more serious toll on the condominium sector” as a result of fresh outbreaks which had led to the government closure of businesses, said Knight Frank Cambodia in a recent report.

In the provinces of Siem Reap and Sihanoukville, both popular with tourists and expatriates, the real estate services firm similarly recorded lower transaction activity throughout the year.

“Siem Reap has been one of the worst impacted markets due to the pandemic. Large numbers of hotels and retail outlets are being mothballed or closed permanently as tourist arrivals have declined by approximately 76% during 2020,” said Ross Wheble, country director for Knight Frank Cambodia.

In stark contrast, segments geared towards locals have done surprisingly well as banks and developers have recalibrated their operations.

The National Bank of Cambodia reported homeowner loans had surpassed US$3.5bn in August, driven by landed property, which remains off-limits to foreigners by law.