Connect with James Hodge:
Email: [email protected]
In recent years, there are a lot of talks with the Cambodia real estate market. We want to give an introductory video to allow overseas investors to know about it and discover where the opportunities are.
In today’s episode, James Hodge introduces the Cambodian real estate industry, which is possibly one of the least popular markets in Southeast Asia.
- How does the Cambodian property market differ from its neighbouring states?
- Which areas are the main magnetism to attract investors?
- What difference does a young population make?
- What are the impacts of dollarization?
- How is the market going to be in the upcoming years?
As it can be difficult to catch some minor errors, transcripts may contain a few typos or inaccuracies.
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Alright, let’s get back to the transcript of the show. Enjoy!
Darren: So hey, James, welcome to the show.
James: Hi. Great to be here.
Darren: Yeah. So I think it was Tom Parker from Colliers that suggested me to reach out to you, because I’m trying to find someone from Cambodia
James: to be speaking today.
Darren: Well, actually, I think he’s getting on the show next week. And you know, it’s a pleasure because I told you before the phone, I’ve never been to Cambodia before. I don’t know what it’s like so it’s very easy for me to come up with questions that all the audience might be wondering as well. So before we go into the questions, right, would you mind telling the audience about yourself and your work?
James: Yeah, sure. So I’ve been here now in Cambodia for four years. I’m originally from the UK. I have a commercial real estate degree. And I was working in commercial real estates in just north of London for several years before coming out to Cambodia. So I’ve been here with CBRE now since 2016. I lead the advisory and transaction services team. So the commercial brokerage side of our business, as well as looking after research, consulting, and the property management departments, so quite a broad range of different skills that sit under me. And I get a pretty good overview of the market, different projects, different clients get to see a lot of Cambodia. So it’s very exciting role. And what we find generally with Cambodia is that there’s huge amount of opportunity, just finding it, understanding it in depth, and then really delivering it in this market.
Darren: So, you know, like some audience and myself, as I mentioned before, may not know much about the different regions in Cambodia. Would you mind if you could briefly describe the city and how is it made up, and what are some few areas that overseas investors tend to look into?
James: So Phnom Penh it’s the capital of Cambodia. Phnom Penh itself has got a number of different districts within it, but really would characterize these four districts, which are the traditional residential and commercial heart of the city. So we have the CBD location, which is around the Dawn Penn District, which is also the tourist hub of the city. And then we have residential districts which are clustered close to that, and they are quite high rise in nature. So we’ve got a number of condominium projects. And those traditionally have been where international investors have focused their attention to the condominium sector here in Cambodia is quite accessible for foreigners. They’re allowed to own them on an effective freehold as it’s called a strata title. And then now what we’re seeing as a bit of diversification in terms of geography and asset types, which are available to foreigners here, so the secondary data streaks on the edge of the city are becoming more popular. We see more affordable and mid range projects out on the edge of Phnom Penh. And you can find some really attractive projects with great pricing in those locations and the amenities and facilities are also improving in those districts. They’re becoming quite attractive to both investors and to Cambodian buyers. And we’re also seeing diversification in the asset classes. So we’ve seen a couple of strata title retail projects which are available to foreign buyers. And we’re also seeing quite a number of what we call strata title office, which is like a condo FIDE office building where you can buy sections of the building principally for investment purposes, but increasingly also for own occupation here.
Darren: So you know, the market has become a very hot topic, even among my circles, a lot of people would keep telling me that they have bought something from Cambodia, and then a lot of people look into it. And what’s the reason behind this trend? And how do you think it’s gonna evolve during this couple years?
James: Sure. So I think when we look across Asia now you look at Cambodia’s neighboring countries, Vietnam and Thailand in particular, you see that those markets have developed significantly and are heading towards more of a developed nation status similar to what we see in Hong Kong and Singapore and Malaysia, where the pricing and the development status of those cities has already got quite some way beyond where we are in Cambodia. So here we’re more of an emerging market. That presents a number of opportunities. So the cities still growing very rapidly. The supply of condominiums in actuality is not too great. So there are still opportunities in terms of the way that people are living and how they occupy residential buildings. They’re still very much tied to landed property and villas shophouse format. But that is changing. Though as young generations come through, and their spending power grows, their lifestyle aspirations change, then they are starting to look at renting or even buying condominium units or living in serviced apartment blocks, as well as that the commercial aspects of the city are growing very rapidly. And Cambodia has been growing at 7% a year, on average since the global financial crisis. So a decade of very sustained very high growth. And that has really caused quite a big change, both in terms of the way that people are living as locals, but also in the economy of the country and the businesses that are here and the type of people that are attracting from overseas to live and invest in Cambodia. So number of different drivers behind these trends, you can still pick up apartments here for less than 100,000 US dollars. Their pricing is pretty reasonable. The offering is becoming more and more competitive from the developers and the quality with what is being built and designed here is definitely improving quite rapidly. So I think investors are seeing something which is a little bit untapped, a little bit different as a way of diversifying and just doing something a little bit different and the risk is for most other Asian investors is not too high because the the price of accessing this market is quite low. All the assets here, every real estate transaction is done in US dollars, which can also be quite an attractive proposition for many.
Darren: So even for the locals, right when they’re doing transactions, are they also using US dollars or their local dollars currency?
James: Yeah, the economy here is incredibly, highly dollarized. So about 85% 90% of transactions occur in US dollars. So if we go to Starbucks on the street, I pay in US dollars and the prices is usually quoted in all shops in US dollars, there is a bit of a push towards D dollarization but that’s going to take some time. And certainly for now, every price that you see whether it’s rent or buy, will be in US dollars, and most bank accounts will be in US dollars as well.
Darren: So what’s the relationship like among countries because Cambodia’s situated in the middle? And then how does Cambodia set for potential growth in terms of like relationship among the different countries?
James: Sure. So Cambodia is incredibly well aligned with China at the moment. They’re very good as allies and we see a lot of investment flow between the two, so Cambodia is an important ally of China and vice versa. So that has been the mainstay of investment moving over the last last three years, but also there’s a huge amount of diversification. We have a lot of Singaporean projects. We have a number of high profile projects from developers in Hong Kong. We see a number of Korean, Japanese, Malaysian investment too as well as from Europe and the US. So it’s quite diverse. Cambodia is typically pragmatic in the way that it looks at attracting foreign investment and likes to go out and try and draw it in from multiple different sources and is very welcoming to overseas investment from various countries.
Darren: So to give a better idea to the audience regarding tendency, how’s it like to live in Cambodia since you’ve been there for a couple couple years now? And then how’s the culture like for both local and expats? Like would you mind painting a picture for us on that regard?
James: Sure. It’s a great place to be living. The opportunities out here are vast. All of the markets are growing very quickly and largely untapped with a lot of innovation. And the population is very young. So there’s a lot of new technology adoption, which is helping Cambodia to leapfrog certain steps in development. For example, things like cashless payment and blockchain are quite common here. Now as part of everyday life, you do see these things coming to the fore more and more and it changes every six months, with the new innovation which is coming and being adopted by the by the local youth. They surprise me all the time. I feel like a bit of a dinosaur sometimes. And in terms of lifestyle, the number of things to do, shopping malls to go to, places to hang out with friends, the cow phase bars, restaurants, that scene really is improving and growing over time so it’s a really good amenities now for anyone who’s living here. The apartments that we’ve got in the city generally have good facilities as well. And work opportunities are huge. There’s a whole range of different things to look at doing here. Yeah, so lifestyle is, I would say work hard, play hard.
Darren: That’s good. How would you suggest differently to an investor that are, you know, planning to self use or investment only?
James: Typically the foreign investors have stayed in the core central districts, and they will generally go from the grange or high end. And that has been driven by the fact that expatriates who live and occupy the majority of high rise residential as to be condominium format, they have lived close to their place of work in the center of the city. We do see some changes to that now, as transport solutions get better; roads, in particular improving, we are seeing some diversification of wax patches would choose to live and that really is because of the proliferation as well as as road transporters. The amenities are available on their doorstep, and particularly in the north of the city and in the future. We think also to the South where there are a number of retail amenities they are coming up. But typically so far for investors it’s really been the core center of the city. For those looking to buy to live so they would be occupying themselves I think location is generally less of a concern for them, they may be more tied to how quickly is it for me to get to my specific place of work, but they are more likely to be looking at things like the amenities and the property management side of the asset and really getting into the depths of the developers track record, which is something for everyone that we would say is a key thing to be looking at here.
Darren: I see like, what kind of suggestions or tips do you have for the audience? Is there anything they should be aware of when investing in the Cambodian real estate market?
James: Yeah, so like I just mentioned, property management is critical. So the market here is really young. And it’s important to make sure that the person who’s building your future home or your investment, understands and really has thought about and looked at how they’re going to manage that building for the long term. As well as that, just checking up on the developers dry record, what have they built before? Are you satisfied with the quality of that? Is there any additional assurances that you need? One thing to note here in particular is regarding funding. So the majority of foreign purchases, they would be looking at spending with cash. And often that would be tied to the construction progress of the project. Funding for foreign based investors from banks in Cambodia can be a little bit difficult to obtain. It’s not very common to see the banks are really only just getting into lending into the high rise, residential market. So that can be a little bit challenging to obtain if you do need to mortgage financing for a purchase.
Darren: I see. So you know, like obviously COVID is a big topic. And then how did the COVID-19 impact the market? And where are the opportunities for investor during times like this?
James: Yep. So COVID-19 has certainly had some impacts. And we’ve been very lucky here in Cambodia. So far we’ve only had 141 cases today. I’m sure that will have changed by the time this comes out, but it has been very well contained and controlled to date by the government so their policies have worked. In regards to restricting inflow of tablets, however, it has caused some disruption to the market. Of course, we’ve seen quite a large number of proportion of expatriates leave the country to go back home during this period of time, and that has weakened the rental market. So we’ve seen quite steep falls over the last three months in terms of rent somewhere between five but more in the service department sector. So that has placed some pressure on the pricing of condominium units because of the obviously the function between the the rent and the price. But we have seen some developers in particular responding with some quite attractive deal. So it’s a good time to be looking. There are a number of projects that have launched new phases over the last three months or launched new projects and they have been able to offer quite nice attractive pricing options. But over all the condominium sector pricing has not adjusted significantly yet. We’re just waiting to see over the next three months, how things transpired so far and things look to be relatively robust compared to some of our neighboring markets.
Darren: I see so for the interview so far we covered a lot about residential so what are some other asset types, investment strategies, and areas that have shown potential so far?
James: Yeah, so in terms of locations, CM Reap and Scenic Villa other locations which are looked at, principally for investment here, and Centreville, over the last few years has been a favorite of Chinese investors. CM Reap is more of an emerging investment location. And that has heavily in the past focused on the hospitality because of its proximity to Angkor Wat. So we’re seeing some diversification of the offering in terms of the asset types. Few developers here are offering types like condotel. There’s a couple of condotel projects here in Phnom Penh. And some of them have got attracted branded operators, or like citadines behind them, which is quite an interesting difference that someone might look at if they’re purely looking for investment rather than own occupation. There’s a few projects down in smaller towns on the coast as well. So there’s a town to the south of Cambodia, it’s called Kampot. And there are some hospitality focused projects which are available for foreign purchases in that location, which look amazing, very attractive design and good quality is kind of an emerging investment type. Typically for Cambodians, they love to invest in land, so we do see quite a lot of strength in the land market. Still, despite the impacts of COVID-19 and the returns on land prices here in Phnom Penh can be significant. So that has been a very lucrative market for many over the last few years. Beyond that we- and I touched on a little bit earlier, there are a few strata title, retail and strata title office markets, if someone is looking to diversify into the commercial sector. In terms of largest scale commercial investment opportunities, hotels dominate that sector here in Cambodia, we see a few branded operators and the owner looking to dispose. However, in the other sectors, a lot of transactions happen off market. So it’s good to have a chat with someone who understands the Phnom Penh real estate market and has good connections. They will be able to source opportunities that maybe are not so apparent to someone who’s looking for a larger opportunity.
Darren: That’s good. What kind of, you know, like well, obviously we can go on with more and more questions, but what kind of take away would you want the audience to have from this video?
James: I think Cambodia is one of those countries that is creeping up people’s radars at the moment. There’s a huge amount of opportunity here, it’s a little bit different to some of our neighboring countries. So perhaps as overseas investor, Vietnam and Thailand, Malaysia, Singapore, in the past would have caught more attention. But the dynamics and the demographics of Cambodia has strengthened GDP growth. The political stability that we’ve had here for such a long time, creates some quite interesting dynamics for the future, and might be an appealing option for diversification and the pricing structures. The general asset pricing is quite affordable generally, so can be quite an accessible market as well.
Darren: I see, and, you know, for people who want to maybe know more about the Cambodia real estate market or, you know, talk more about different work, how would we suggest people to reach out to you and talk to you more about that?
James: Yeah, sure. So you can reach out to me on LinkedIn. Otherwise do email at CBRE so [email protected] Those are probably the best ways. I’m sure that they can reach out to you as well, Darren, and you’ll put them in touch. Yeah, very happy to have a chat as are my team here at CBRE in Cambodia, and our website has got lots of resources on there around investments and some opportunities, of course. So CBRE.com.kh is our web address. We do lots of research work and we put out a lot of webinar content too so if someone’s interested in a certain topic, there will usually be an opportunity over the coming weeks or months to find out more about that if we haven’t already. We have quite an extensive YouTube channel. So there’s lots of webinar content on there as well.
Darren: Oh, for sure. I’ll put everything in the show notes. And even the YouTube because I didn’t know that CBRE has a YouTube channel so that is kind of cool. And then I want to say thanks for your time, because I think this interview is very, like condensed and very precise. So I really like that and I’m sure the audience will learn a lot from you for this whole video.
James: Thank you. It’s been a great opportunity to chat to you and talk to you more about this market, which I’m so passionate about.
Darren: That’s good. Anyway, thanks a lot for your time, and then hopefully there is part two next time then. Thank you.
James: Great. Thanks, Darren bye.
Darren: Talk to you later, bye bye.
Darren ：是的。我想是Colliers的Tom parker 建議我聯系你，因為我想找一個在柬埔寨的人。
James：是的，當然。所以你可以在LinkedIn上聯系我。否則請發郵件至世邦魏理仕[email protected] 網站.這些可能是最好的方法。我相信他們也能聯系到你，Darren ，你會讓他們聯系上的。是的，很高興和我在高棉世邦魏理仕的團隊聊天，我們的網站有很多關於投資的資源，當然還有一些機會。所以CBRE.com.kh是我們的網址。我們做了大量的研究工作，我們也發佈了很多網絡研討會的內容，所以如果有人對某個主題感興趣，那麼在接下來的幾周或幾個月裏，我們通常會有機會瞭解更多關於這個話題的資訊。我們有相當廣泛的YouTube頻道。還有很多網絡研討會的內容。
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