Cambodia: Phnom Penh’s serviced apartment market saw a surge in supply during H2 2020, in parallel with a Covid-induced decline in demand.
According to a recent Knight Frank report analysing Cambodian real estate during H2 2020, 273 mid-tier apartment units in five new buildings were completed, bringing the total supply of serviced apartment units to 6,850 at the end of last year.
The five new apartment buildings offering additional units were the SOHO Residence, LH Residence, Vira Apartment, Provence Apartment and Trulip Apartment. The new units are situated in Boeung Keng Kang District (53 per cent) and Chamkarmon District (47 per cent).
Of the serviced apartment total units in the capital, 58 per cent were labelled as mid-tier, 22 per cent as high-tier and 20 per cent as affordable.
Most of the units are located in Boeung Keng Kang district (36 per cent), followed by Chamkarmon (18 per cent), Daun Penh (16 per cent), Toul Kork (10 per cent), 7 Makara (10 per cent), Chroy Chongva (six per cent), Sen Sok (three per cent) and Mean Chey (1 per cent).
Knight Frank said in the report that 1,236 more serviced apartment units will be completed during the next two years if they remain on schedule.
While rates did not drop dramatically because of landlords offering discounts to entice longer-term tenants, occupancy rates have fallen to 59 per cent, a year-on-year decline of 20 per cent, and the lowest recorded by Knight Frank since it started analysing the sector in 2008.
James Hodge, managing director of CBRE Cambodia, said operators may be able earn more business by offering unique incentives besides cheaper rents: “Creativity might also help some. For example in some other markets we have seen serviced apartments and hotels starting to offer packages to people who are working from home and looking for a private, affordable office space they can use during work hours,” Hodge said.
“The serviced apartment sector will continue to remain subdued over the short term and both market rents and occupancy rates will face downwards pressure whilst travel restrictions remain in place,” the report said.
Hodge said he expects weaker development activity over the medium-term, but expects short and long-term changes in the dynamics of the sector: “Over the short and long-term I expect it will diversify further. We could see more branded operators enter the market as developers and investors look for ways to bring in new tenants, many of whom have affinity with branded operators, or we could see new formats like co-living starting to crop up,” he said.
