Peering out over the Tonle Sap River in Phnom Penh from a sixteenth-storey private balcony at the new Bellevue Apartments, one could watch for hours as cranes swing back in forth over all the new developments on the west side of the water.
With only about 50 or so buildings that reach 10 stories, the cityscape is still quite flat but here — from what feels like the top of the city — the view is fantastic.
Having its grand opening last month, inside is no less luxurious, an apartment full of plush leather furniture, beautiful wooden floors, a large flat-screen television, huge closet space and the all-important new apartment smell. For the price of rent, tenants even get access to a swimming pool, gym and housekeeping.
This is certainly not a luxury that Cambodians are accustomed to, but it is one that — at least for the country’s elite anyway — they can get used to.
“Phnom Penh has become very attractive for investors now and it is easy to open a business, unlike what many years ago. It’s a very different time,” said David Cordier, the sales and marketing manager for the 143-unit Bellevue.
“Serviced apartments are not what you are used to seeing in Phnom Penh, but we can already see there is a very strong demand in this market, full of people from all countries looking to sign on for long stays,” he said.
With a growing number of foreign businessmen moving to Cambodia and an emerging new class of “Khmer-riche” — wealthy Cambodians with plenty of disposable cash — new high-end apartment complexes are spreading in Phnom Penh like wildfire.
“I think that when we talk about serviced apartments here it’s important to note what developers are going for, offering what international standard hotels offer rather than the conventional idea of serviced apartments,” said Sunny Soo, Cambodia’s country head for the real estate services firm Knight Frank.
Mr Soo, whose firm recently signed on as the leasing agents to the $11-million Silvertown serviced apartment in Chamkar Mon district, said that a growing foreign presence in Cambodia had signalled to local developers that there is a need for western-style accommodations.
“The thinking is now, if developers want to capture the increasing market of foreigners here, they need to have these in-house services available, so that market is adjusting to meet that,” he said.
In fact, Phnom Penh’s total apartment supply grew 22% to 2,576 units in total through the first half of 2012 compared to the same time in 2011, according to Asia Real Estate Cambodia. Of those units, 2,423 represent Grade’s A and B level units, while at least another 30 apartment projects are set to bring in another 734 units before 2014.
New projects in Phnom Penh include high-end serviced apartments such as Hong Kong Land’s Colonial Mansion, with more than 100 units in Daun Penh district, the 29-unit 240 Phnom Penh and the $15 million, 18-story Mekong Gardens in Russei Keo district. The 14-storey Silvertown, meanwhile, is scheduled to come online in October.
Even with the influx of new apartments in Cambodia, demand is still high compared to other regional countries, with occupancies between 85% and 90%, said Sung Bonna, the CEO of Bonna Realty.
“At the moment, the lifestyle and culture of Cambodians is starting to change and are now moving away from villas, above shop-houses and bungalows and into apartments,” he said, adding that rents for high-end serviced apartments can go from anywhere between $1,000 to $2,000 a month for a two-bedroom unit, depending on location and what services are available.
“About three or four years ago, only about 5% or 10% of all apartments were occupied by local tenants, today that number is more like 25%,” he said.
Luxury apartments used to be almost exclusively for foreigners in Phnom Penh, but Cambodians now make up 25% of buyers at some projects.
Among the areas most inhabited by foreign tenants are in Daun Penh and Chamkar Mon districts, where locals prefer less centralised locations in Toul Kork and Russei Keo districts.
By comparison, vacancies in Bangkok’s more than 7,000 Grade A serviced apartment units are much higher, at 22.7%, while 16.8% of Ho Chi Minh’s nearly 1,000 Grade A serviced apartment units remain empty, according to data by the international property services firm CB Richard Ellis.
“If compared a place like to Thailand, the rents of serviced apartments and hotels here [in Cambodia] are seven to eight times more expensive,” said Bandith Say, owners’ representative at the 116-unit Mekong View Tower, a luxury condominium in Russei Keo district.
“There is also the benefit here of an improving economic situation and the coming Asean integration in 2015, that’s why we are building so many serviced apartments. ... I think that there is going to be a different style of living here soon enough.”
About the author
Writer: Philip Heijmans