Q1 21 = 1 MARKETVIEW Phnom Penh, Q1 216 International developers driving land price appreciation Average High-end Condominium Price $3,195/SQM Prime Apartment Rent $21.9/SQM Prime Office Rent $22.7/SQM Prime Retail Mall Rent $34.8/SQM *Arrows indicate change from previous quarter. HIGHLIGHTS OVERVIEW US$1.65bn invested in construction over Q1, compared to US$448m in Q1 215, representing a significant Y-o-Y increase of 267%. Hongkong Land s mixed-use development, Exchange Square, due to top out by Q2, with overall completion set for Q4 216. Average sales and rental prices broadly appreciated over Q1, with the exception of shopping mall rents, due to challenges faced by ageing retail stock in the context of upcoming supply. Sorya Shopping Center, one of Phnom Penh s first purpose built shopping malls, announces renovation and rebrand as Sorya Center Point. 4,158 condominium units, across 8 buildings, announced over Q1. Figure 1: Phnom Penh Land Price Index (21-Q1 216) 35 3 25 2 15 1 5 21 211 212 213 214 215 216 Q1 Chamkarmon Daun Penh 7 Makara Toul Kork Sen Sok Chroy Chang Va The Phnom Penh property market witnessed a significant increase in developer activity over the first quarter, with a total of US$1.65bn invested in construction, compared to US$448m in Q1 215, representing a notable Y-o-Y increase of 267%. Land prices across principal districts, while expected to stagnate towards the end of 216, appreciated by an average of 4.8% over the first quarter, with prices in Chroy Chang Va and 7 Makara districts rising by 8.8% and 8.3% Q-o-Q, respectively. A total of 4,158 condominium units, across 8 projects, were announced during Q1. This compares to 2,573 units, across 7 projects, in Q1 215, representing a Y-o-Y increase of 61.6%. Average condominium sales prices, across all grades, appreciated by 4.1% Q-o-Q, with off-plan high-end prices rising by 5.7% over the first quarter. Limited new supply came on-stream over Q1, with 3 office buildings collectively adding 17,26 sqm of leasable space to modern Phnom Penh stock. Overall occupancy dipped marginally by 1.5 PP Q-o-Q, with Grade B and C office rents rising by 1.3% and 2.6% Q-o-Q, respectively. While no new retail supply was delivered over the first quarter, Sorya Shopping Center, one of Phnom Penh s first purpose built shopping malls, announced renovation works, with the mall due to relaunch as Sorya Center Point. Parkson Phnom Penh City Center, currently under construction, is now scheduled to launch in Q4 216. Q1 216 CBRE Research CB Richard Ellis () Co., Ltd 216 1
MARKETVIEW PHNOM PENH CONDOMINIUM Q1 216 INTERNATIONAL DEVELOPERS DRIVING PHNOM PENH CONDOMINIUM SUPPLY Future Phnom Penh condominium supply is set to be principally driven by the arrival of international developers, with units delivered by companies from Taiwan and China (including Hong Kong) forecast to account for approximately 28.5% and 18.5% of total stock by the end of 218, respectively. The majority of planned condominium projects fall into either the mid-range or high-end categories, due to account for 44% and 36% of overall supply by the end of 218, respectively. Figure 2: Phnom Penh Condominium Supply by Origin of Developer (28-218F) 25, 2, 15, 1, 5, 28 29 21 211 212 213 214 215 216F 217F 218F South Korea Taiwan Malaysia Singapore China Japan UPLIFT IN FIRST QUARTER SALES PRICES ACROSS ALL GRADES Average sales prices continued to rise over the course of Q1, with high-end condominiums seeing the greatest appreciation, demonstrating growth of 5.7% Q-o-Q. Figure 3: Average Price Per Sqm of Phnom Penh Condominiums (Q1 215-Q1 216) $3,75 $3,25 $2,75 The average price of mid-range condominiums, both in terms of existing stock and off-plan sales, rose by 2.6%, with sales prices of affordable stock returning to growth, appreciating by 3.8% Q-o-Q, following a fall of 1.4% over the previous quarter. $2,25 $1,75 $1,25 Q1 215 Q2 215 Q3 215 Q4 215 Q1 216 Affordable Mid-Range High-End NOTABLE RISE IN PROJECT LAUNCHES IN BOTH PRIME AND SECONDARY DISTRICTS While the traditionally prime residential area of Chamkarmon saw the greatest volume of condominium units launched for sale off-plan, with a total of 2,9 units accounting for a 7% share, secondary locations, such as Chroy Chang Va and Mean Chey, accounted for 4.9% and 9.6% of total units announced, respectively, over Q1. Further significant condominium and mixed-use schemes are due to launch, across predominately secondary locations, over the course of 216 and 217. Figure 4: Number of Off-plan Condominium Units Announced by District (Q1 215-Q1 216) 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 - Q1 215 Q2 215 Q3 215 Q4 215 Q1 216 Chamkarmon Daun Penh 7 Makara Toul Kork Chroy Chang Va Sen Sok Por Sen Chey Mean Chey Q1 216 CBRE Research CB Richard Ellis () Co., Ltd 216 2
MARKETVIEW PHNOM PENH OFFICE Q1 216 Figure 5: Phnom Penh Office Supply by Grade (28-Q1 216) OCCUPANCY FALLS MARGINALLY IN SQM (NLA) CONTEXT OF RECENTLY DELIVERED STOCK 28, 24, 2, 16, 12, 8, 4, - 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % The overall occupancy rate for office space stands at 74.4%, representing a fall of 1.5 PP Q- o-q. A total of 17,26 sqm, predominately Grade C, leasable space was delivered over Q1, accounting for the slight drop in overall occupancy levels in a context of expanding demand from both domestic and international occupiers. Grade C Grade B Grade A Occupancy Rate As of Q1 216, over half of modern stock would be considered Grade C quality by regional levels, accounting for 56% of total leasable space. Figure 6: Average Quoting Rental Rates (USD/SQM/Month) 216 Q1 215 214 213 QUALITY PHNOM PENH OFFICE SPACE SEEING SUSTAINED RENTAL RATE GROWTH Average rents, across both CBD and non-cbd locations, appreciated over the first quarter, with Grade B and C rents rising by 1.3% and 2.6% Q- o-q, respectively. 212 Quoted rents for Grade A space remained stable 25 2 15 Grade B (CBD) 1 5 Grade B (Non-CBD) 5 1 15 2 25 Grade C (CBD) Grade C (Non-CBD) at approximately US$28 per sqm, exclusive of service charge. *Exclusive of service charge Figure 7: Strata-title Supply/ Average Price by District (Q1 216) SQM (Net) 35, $4, 3, $3,5 25, $3, $2,5 2, $2, 15, $1,5 1, $1, 5, $5 - $ Chamkarmon 7 Makara Toul Kork Grade A Grade B Average Price per Sqm STRATA-TITLE PROJECTS DRIVING OFFICE SUPPLY PIPELINE A total of 5 office projects, available for sale through long leasehold or strata-title tenure, are under construction as of Q1. All launched their off-plan sales over the course of 215 and are set to collectively deliver approximately 84, sqm of net space by 219. Average prices, across all projects, stand at US$3,475 per sqm, with Grade A and B space accounting for a 46% and 64% share of future supply, respectively. Q1 216 CBRE Research CB Richard Ellis () Co., Ltd 216 3
MARKETVIEW PHNOM PENH RETAIL Q1 216 FLAGSHIP RETAIL SCHEMES SET TO COMPLETE OVER COMING 12 MONTHS Retail supply in the capital is set to rise significantly by the end of 218, driven by a combination of new international shopping complexes and significant retail components within predominately residential and mixedused schemes. Parkson Phnom Penh City Center, comprising 57, sqm of leasable space, is now scheduled to launch in Q4 216, with Hongkong Land s Exchange Square on-track to deliver 8, sqm of leasable retail space in Q1 217. Figure 8: Retail Supply by Type (27-218F) SQM (NLA) 7, 6, 5, 4, 3, 2, 1, Shopping Mall Community Mall Retail Podium Other Retail AGEING RETAIL STOCK CHALLENGED IN CONTEXT OF UPCOMING SUPPLY Rents remained broadly stable over the course of Q1, with the exception of rents across purpose built retail malls, which declined marginally by 1.6% over the course of the first quarter. This trend will likely continue as retailers review their requirements in the context of upcoming developments due to be delivered over the course of the coming 12 months. Figure 9: Quoting Rental Rates by Type (Q1 216) $9. $8. $7. $6. $5. $4. $3. $2. $1. $- Prime Shopping Mall $3.8 Prime Retail Podium $48.3 Prime High Street $29.8 Prime Retail Arcade $52.5 Rental Rate Range Average Rental Rate Source: CBRE Research, Q1 215 INTERNATIONAL BRANDS EYE PRIME RETAIL LOCATIONS Financial and Professional Services uses, occupying 33.2% of prime high-street and 9.2% of prime mall space, continues to dominate prime retail locations, in addition to Food and Beverage uses, accounting for 25% of retail mall and 14.2% high-street retail space, respectively. 216 is set to welcome a wave of new international brands, with active requirements for both prime shopping mall and high-street locations driven principally by Food and Beverage/ Fashion and Accessories retailers. Figure 1: Prime Retail Uses (Q1 216) Financial & Professional Food Food & & Beverage Fashion & Accessories Entertainment & Leisure Electronics Electronics General General Store Store Automobile Automobile Health/Medical Book/Stationery Book/Stationary Hair Hair & Beauty & Beauty Other Other 4% 3% 2% 1% % % 1% 2% 3% 4% Shopping Mall High Street Q1 Q4 216 215 CBRE Research CB Richard Ellis () Co., Ltd 216 4
USD/SQM/Month MARKETVIEW PHNOM PENH SERVICED APARTMENT Q1 216 Figure 11: Serviced Apartment Supply by Grade (21-Q1 216) 5, 4, 3, GRADE C SERVICED APARTMENTS DRIVING NEW SUPPLY Serviced apartment supply increased by 5.6% over Q1, with an additional 246 Grade C serviced apartments bringing total stock to 4,645 units. 2, 1, 21 211 212 213 214 215 216 Q1 Below C Grade C Grade B Grade A The majority of serviced apartment stock is currently considered to be of Grade C or below standard, collectively accounting for 71.6% of all units, with Grade A and B quality apartments accounting for 19.9% and 8.5% of total units, respectively. Figure 12: Rental Rate Range by Bedrooms, Type / Grade (USD/Month Q1 216) PRIME SERVICED APARTMENT RENTS HOLD STABLE OVER FIRST QUARTER 25 2 15 1 5 Grade A USD Per Month 8, 6, 4, 2, Grade B 25 2 15 1 5 Rental rates across prime Phnom Penh serviced apartment stock range from US$5 Per Calendar Month (PCM), for a one-bedroom Grade B apartment, through to US$8, PCM for a flagship penthouse unit, as of Q1 216, with no significant change noted from the previous quarter. PH 3 2 1 Rental Range Per Month (Grade A) Average Rent Per Sqm 1 2 3 PH Rental Range Per Month (Grade B) Average rates per square meter range from US$13.3, based on Grade B penthouse units, through to US$21.8, based on Grade A onebedroom units. Figure 13: Supply and Occupancy by District (Q1 216) 3 1% 25 8% 2 6% 15 4% 1 5 2% % Below C Grade C Grade B Grade A Occupancy SERVICED APARTMENT STOCK LOCATED IN PRIME RESIDENTIAL DISTRICTS The overall occupancy rate of serviced apartments stands at 85.6%, as of Q1, across all grades and districts. The majority of Phnom Penh s existing serviced apartment stock is located in the capital s key districts of Chamkarmon and Daun Penh, collectively comprising 61.4% and 18.7% of total supply, respectively Q1 216 CBRE Research CB Richard Ellis () Co., Ltd 216 5
MARKETVIEW PHNOM PENH Q1 216 http://www.nationmultimedia.c om/aec/uk-japan-help-in- Myanmars-urban-planning- 328146.html For further information, please contact: Chris Hobden Manager +855 95 777 484 chris.hobden@cbre.com Muyngim Lim Analyst +855 98 331 771 muyngim.lim@cbre.com Sambath Phal Analyst +855 92 791 75 sambath.phal@cbre.com CBRE, 9 th Floor, Phnom Penh Tower #445 Monivong Blvd Boeung Prolet Quarter 7 Makara District Phnom Penh,. T+855 23 964 99 F+855 23 964 88 cambodia@cbre.com www.cbre.com.kh To learn more about CBRE Research, or to access additional research reports, please visit the Global Research Gateway at www.cbre.com/researchgateway. Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.