PHNOM PENH POWERS UP

from PropertyGuru Property Report No.173 (August - September 2022)

TANGLING WITH TANGLIN

Dispatch

Down, but not out

The pandemic was poison for Phnom Penh as it checked the city’s supercharged property boom. But there are signs that the market is gradually turning a corner

By Liam Aran Barnes

The impact of the global financial crisis on Phnom Penh’s then-fledgling property market loomed large over the city for years. Literally.

In the heart of the Cambodian capital’s central business district, the abandoned Gold Tower 42—set to be the country’s tallest building by a margin when construction started in 2008—stands both as a reminder of the city’s ambitions and just how quickly fortunes can change.

When construction eventually resumed in 2018, the skyline was almost unrecognisable

PHNOM PENH’S REAL ESTATE FRENZY WAS SLOWED DURING THE PANDEMIC, BUT THE CITY’S SKYLINE LOOKS CERTAIN TO EVOLVE FURTHER IN FUTURE

from the low-rise sprawl surrounding the 31-storey concrete husk a decade earlier. Phnom Penh had gone vertical.

Fuelled by overseas investment and Cambodia’s average annual growth rate of 7.7% between 1998 and 2019 — making it one of the fastest-growing economies in the world — the city is now home to roughly 40 buildings with 40 or more floors. Many of these monoliths are mixed-use projects, featuring a series of firsts for the country: luxury retail outlets, five-star hotel brands, and high-end condos.

Dispatch

WE WON’T BE ABLE TO FULLY ASSESS THE EFFECT OF THE PANDEMIC ON THE RETAIL SECTOR UNTIL THE END OF 2022, AND A FULL RECOVERY IS UNLIKELY UNTIL THE FIRST HALF OF NEXT YEAR

Even before the pandemic struck, there was a sense that these shiny new offerings were juxtaposed in a country where an estimated one in five lives below the poverty line. Still, Phnom Penh’s rapidly emerging middle class and its popularity amongst tourists and foreign investors have long been used to justify the construction boom. Unsurprisingly, the sector, especially the retail segment, was hit hardest when Covid-19 closed the kingdom’s borders in March 2020. “The lockdown and bans on public gatherings led to a drastic decrease in footfall, with retail stores experiencing significant sales losses as a result,” says Thida Ann, managing director of real estate agency PropNex Cambodia. “Although many landlords offered a short-term discount of up to 50% to retain tenants, they also reported facing serious debt problems because of failures to pay the rent.”

A recent survey by local commercial real estate firm The Mall Company estimated that the pandemic caused the volume of retail stores in central Phnom Penh to plummet by 28% between Q1 2019 and Q2 2022. Larger F&B and fashion retail groups fared slightly better and stabilised their businesses after the upheaval. Some even recorded profits in 2021 through careful cost management. According to Simon Griffiths, The Mall Company’s managing director, teams were slimmed down for greater cost efficiency, and supply change efficiencies were introduced, as well as rental discounts with landlords. But many small- and medium-sized retailers and ‘mom-and-pop stores’ did not survive. “In some cases, rent exemptions were triggered. But you must remember that it is not the only cost, and cash reserves had to be used to keep these retail businesses afloat,” he says. “Once these cash reserves were depleted, retail businesses closed. And many will never reopen.

“We won’t be able to fully assess the effect of the pandemic on the retail sector until the end of 2022, and a full recovery is unlikely until the first half of next year.” Positives were few and far between in the city’s other real estate sectors. Office tenants renegotiated rents, lease terms, and structures to reflect the market disruptions. Condominium buyers, meanwhile, postponed purchases, leading to a decline in transactions and prices. In 2022, only 5% of the expected supply of new condominium units was completed in the first quarter, according to The World Bank. New residential launches, meanwhile, have ebbed as the market attempts to absorb the remaining stock. The excess supply also tapered overseas investor appetite, with World Bank data reflecting a drastic decline in approved foreign direct investment financing for real estate development from USD1.78 billion in 2019 to USD142 million in 2020. With international borders closed, developers were compelled to re-evaluate their sales and marketing strategies to meet the preferences of the local buyers, including lowering prices.

Dispatch

“Cambodian buyers replaced overseas investors, taking advantage of undermarket-value properties, particularly landed properties in boreys [gated communities],” says Malay Nop, Phnom Penh branch manager of agency IPS Cambodia. Indeed, it looks like the city’s markets are gradually turning a corner. Leading developers have already disclosed plans to increase prices over the next 12 months, with the economy recovering and businesses again operating full-time. In another indication that the sector is overcoming the challenges of the past two years, PropertyGuru will launch its 2022 awards calendar in Phnom Penh this August — its first physical gala event in the country since 2019. “The landed property market in Phnom Penh bounced back quickly thanks to the significant existing demand,” PropNex Cambodia’s Ann says. “The condominium prices are back to where they were before the pandemic. We’re even seeing a high volume

THE LANDED PROPERTY MARKET IN PHNOM PENH HAS BOUNCED BACK QUICKLY THANKS TO SIGNIFICANT EXISTING DEMAND

of real estate transactions again, especially in condominiums, landed property, and land investments.”

Despite the price hike, Nop believes the market is still on the buyer’s side. He points out that, as with any emerging market, it is critical to invest with a reliable developer that boasts solid property management and pricing record — advice investors at Gold Tower 42 would do well to heed. In June 2019, South Korean developer Yon Woo eventually launched sales at the controversial property. As of mid-2022, the structural work and eponymous garish exterior are at least complete, if only to mask any real progress beyond the facade. But 14 years on, Gold Tower 42 remains an ill-fated symbol of the damage global crises can afflict. This time around, at least, there appear to be several silver linings surrounding Phnom Penh’s robust property market.

Tanakayu @ BSD City

Tangerang, Indonesia

Tanakayu at BSD City is a community of Japanese-inspired two-storey homes in BSD City, a planned township south of Jakarta.

Set over an area of 13.1 hectares, Tanakayu at BSD City is strategically located three minutes from the QBIG Shopping Center and only five minutes from the toll exit. The development is also a five-minute drive from BSD City’s Theme Park. The homes at Tanakayu at BSD City are conceived in tropical modern resort style, with smart interiors that exhibit the Japanese Scandinavian or Japandi design.

The units come equipped with advanced technology and superior features to support the modern lifestyle of their residents. Intelligent features unique to the homes include smart door locks, voice commands, and smart lighting, making everyday life more convenient for occupants. The homes are also protected by CCTV, putting the safety and security of the units’ occupants first.

Tanakayu is part of BSD City, one of the first urban planning schemes in Indonesia. The ambitious planned community combines housing, business and commercial uses on 6,000 hectares of land, an area half the size of Paris, with plenty of exciting future developments at hand.

BEST GREEN DEVELOPMENT (INDONESIA)

BSD City by Sinar Mas Land

FACT BOX

Developer: Sinar Mas Land Product type: Housing Architect: Nataneka Launch date: March 2022 Completion date: June 2024 Total land area: 13.1 ha Number of units: 938 Average unit size: 86 sqm Price range: USD1.5-2.6 million

Monthly maintenance fees (est.):

IDR15,000 per sqm Facilities: Sports club, working pod, public WiFi, and more

Contact:

Tel: 021-5315 9000

Email:

promotion.resibsd1@sinarmasland.com Address: Marketing Office, BSD City, BSD Green Office Park, Jl. Grand Boulevard BSD City, Sampora, Kec. Cisauk, Tangerang, Banten 15345, Indonesia

Rini Homes 8

Skudai, Johor

Rini Homes 8 is a community of terraced homes in Mutiara Rini, an integrated township built on over 1,438 acres of a former oil palm estate in Johor.

The community benefits from a host of facilities and public amenities that have been developed to integrate nature into modern living. Residents enjoy extensive greenery, especially the Urban Forest & Recreational Centre, a 64-acre landscaped area with fruit trees, palms and eco ponds. Opportunities for physical activity abound in 32 kilometres of bicycle and jogging tracks within the vicinity. The township also hosts an international-standard cricket pitch, Johor Cricket Academy. Rini Homes 8 is accessible to Mutiara Rini’s commercial district, bustling with shops, banks and petrol kiosks. Families can send their children to primary and secondary schools right within Mutiara Rini such as the Thorburn Chinese Primary Schools and Tamil Primary School, apart from national schools. A mosque serves local worshipers. The community is made as safe as can be with a guardhouse and 24-hour security, as well as a police station.

Rini Homes 8 is accessible to Skudai Highway and other major thouroughares. The township itself boasts a 6-kilometre frontage onto Jalan Skudai-Gelang Patah. Located just 13 kilometres northwest of Johor Bahru City Centre, Mutiara Rini has become the top choice for generations of property seekers. Rini Homes 8 is part of the more than 11,000 houses and commercial units launched in Mutiara Rini since 1996.

BEST TOWNSHIP DEVELOPMENT (MALAYSIA)

Mutiara Rini Skudai by Boustead Properties Berhad

FACT BOX

Developer: Boustead Properties Berhad (Mutiara Rini Sdn Bhd) Product type: Two-storey terrace house Architect: Saadon Architect Launch date: October 2020 Completion date: October 2022 Total land area: 34 acres Number of units: 216 Average unit size: 2,280 sq ft Facilities: Urban Forest & Recreational Centre, commercial district, bicycle track, jogging tracks, primary and secondary schools, police station, mosque, and more Price range: MYR571,200-935,000

Contact:

Tel: +607 558 6080 Email: salesjb.mrini@boustead.com.my Address: No. 21, Jalan Jasa 25, Mutiara Rini, 81300 Skudai, Johor Darul Takzim, Malaysia

Urban Deca Homes Banilad

Mandaue City, Philippines

Urban Deca Homes Banilad is the first high-rise project of 8990 Holdings Inc. in Cebu. The development comprises 3,264 condominium units, including twobedroom and three-bedroom homes, spread across three towers.

The condominium development is situated in Oakridge Business Park, a hub of retail establishments, offices, event spaces, and meeting venues in the bustling Banilad area of Mandaue City, part of Metro Cebu. Strategically located along Elias V. Espina St., Urban Deca Homes Banilad is accessible to major thoroughfares such as H. Cortes and A.S. Fortuna. Public transport is easily available around the vicinity. Urban Deca Homes Banilad is set close to shopping centres, healthcare facilities, and other landmarks in Cebu. The development is adjacent to the Pink Sisters Adoration chapel and only 1.3 kilometres from Gaisano Country Mall. It is also just 1.6 km from Vicente Gullas hospital, a tertiary-level medical facility, and 2.5 km from the University of San Carlos, one of the premier higher education institutions in Visayas.

FACT BOX

Developer: 8990 Housing Development Corporation Product type: Condominium Architect: Scheirman Construction Consolidated Inc. Launch date: October 2022 Completion date: December 2026 Total land area: 18,880 sqm Number of units: 3,264 Average unit size: 30.6 sqm Facilities: Children’s playground, clubhouse, covered basketball court Monthly maintenance fees: PHP50 per sqm Price range: As low as PHP98,000 per sqm

Contact:

Tel: +63 999 8878 820 Email: 8990docs@gmail.com Address: 8990 Bldg., Negros St., Cebu Business Park, Cebu City

Dharma Niseko （ダーマニセコ）

Hokkaido, Japan

The Dharma Niseko Hotel consists of eight deluxe rooms in the famed Hirafu village of Niseko. The hotel also contains a restaurant on the ground floor, part of Hirafu’s Restaurant Row, a popular street characterised by eclectic F&B options and various building styles that have arisen since the rise of domestic ski tourism and the subsequent construction boom in the 1970s. Dharma Niseko Hotel stands out as a new landmark in Hirafu with its simple, contemporary, organic architecture: essentially a platonic cube punctuated with bay windows looking out to views of Mount Yotei, the Grand Hirafu Ski fields, and Momiji Street. The building is distinguishable for its understated hotel signage, an inviting café terrace, and modern interiors. The interior concept appears fresh with an abundance of natural materials, taking inspiration from the atmosphere and aesthetic of resort minimalism.

The living, dining and main suite rooms in the hotel feature large bay window seating. The bay windows maximise daylight and frame the spectacular, ever-changing views outside as living art, giving guests a place to relax and unwind after a day of skiing, sightseeing and dining.

WINNER

BEST RESORT ARCHITECTURAL DESIGN

Dharma Niseko (達磨ニセコ) by Parry (Group) Property Investment & Development Company Ltd

WINNER

BEST RESORT DEVELOPMENT

Dharma Niseko

(達磨ニセコ) by Parry (Group) Property Investment & Development Company Ltd

WINNER

BEST RESORT INTERIOR DESIGN

Dharma Niseko

(達磨ニセコ) by Parry (Group) Property Investment & Development Company Ltd

FACT BOX

Developer: Parry (Group) Property Investment & Development Company Ltd. Product type: Hotel Architect: Riccardo Tossani Architecture Inc. Launch date: December 2022 Total land area: 396.71 sqm Number of units: 8 Average unit size: 29.25-95.5 sqm Facilities: Roof terrace, ski room, direct access to restaurant