Why Some Condo Projects in PP Remain Successful During Covid-19?
During the prolonged Covid-19 pandemic, some condo projects in Phnom Penh have been struggling to sell while some others were postponed because most developers are heavily reliant on foreign buyers who have been restricted from travelling. But even when the travelling restriction has been lifted by the Cambodian government, condo sale in the kingdom remains slow.
However, some condo projects with good location which offers discount and flexible payment terms are seen to perform well even during the Covid-19 pandemic. Why do some condo projects manage to sell successfully while some others not?
Mr. Ear Chakriya, CEO of AP Real Estate, told Harbor Property that the reason why some condo projects remain successful even during the Covid-19 pandemic is that they are unique. They are located in the city center adjacent to restaurants, coffee shops, schools, hospitals and markets, making it easier for dwellers. In addition, the projects are in front of big roads with high population density and the price is competitive.
He added: “successful condo projects offer discount and flexible payment options during the pandemic because some Cambodian people cannot afford to make full payment or pay an installment of $2,000-3,000 dollars per month. So, to get success, developers allowed them to pay an installment only from $500-1,000 dollars per month, making local people with salary over $1,000 per month able to buy condo.”
Due to the Covid-19 pandemic, some developers postponed their condo projects until 2022 with only one project reaching completion in the fourth quarter of 2021.
According to CBRE Cambodia Q4 2021 report, half of all expected condo projects to complete in 2021 were delayed into 2022. In Q4 of 2021, only one project reached completion – TK Star International. Widespread delays are a true reflection of where sentiment lies on both the demand and supply side.
It is anticipated that 2022 will see robust competition within the segment as several of the delayed projects will open simultaneously, potentially leading to a significant increase of 42 percent in total condominium supply. Sales will continue to struggle until reciprocal travel routes open as demand for condos has been driven substantially by foreign buyers, says the report.
The report notes that to stand out in the crowded market, developers are experimenting with product differentiation around both safety and wellness as well as varied sale strategies from raising agent commission rates up to 12% including home appliances or furnishing in their offering.
In the next 5 to 10 years, it is believed that more Cambodian people will change their mindset from buying housing in Borey in the suburb to buying condo in the city center thanks to two main reasons: traffic jam and high housing price in the CBD area.
Mr. Ear Chakriya is convinced that rising population in Phnom Penh will cause heavy traffic congestion in the city, wasting more travelling time from the outskirt to the city center. This will prompt professionals to rethink or change their mindset to live in condo to reduce travelling time from their home to the workplace in the CBD area.
Condo under $100,000 dollars per unit in the city center will become more affordable for them compared to houses with price between $150,000 and $300,000 dollars per unit.