Knight Frank’s Ross Wheble on Cambodia’s turbulent property market development and the recovery period ahead
As country head for independent real-estate consultancy Knight Frank Cambodia, Ross Wheble oversees the operational business, focusing on investment transactions, valuation, research and corporate advisory. Wheble started his career in the real-estate sector in 2005 and gained extensive experience in London and Kuala Lumpur before taking over the Cambodian business for Knight Frank. He is also Vice Chairman of the EuroCham Cambodia Real Estate and Construction Committee.
What do you think will be the key trends and driving forces shaping the real estate and construction industry in 2024, and beyond?
It’s obviously been a crazy four years, COVID in 2020, then coming out of that, the geopolitical situation with Russia and Ukraine and then rising interest rates in the US as well. So 2023 was a challenging year, not just in Cambodia, but around the world.
For 2024, we are much more optimistic about the market. The National Bank of Cambodia is projecting that GDP growth will be driven by tourism, which has bounced back massively in December and January. Also in manufacturing; Cambodia is diversifying away from garment and textiles, which historically have been the main drivers of the sector. Lots of infrastructure development is happening as well, which drives demand for real estate and real-estate pricing. There’s no two ways about that.
The new international airport is open in Siem Reap, the new international airport in Phnom Penh is set to open in 2025, and the highway from Phnom Penh to Sihanoukville has been a true game changer.
What do you see as the key challenges and opportunities in the real-estate sector?
There is oversupply across all sectors. That’s residential, condos, land, housing, boreys, offices, and hotels as well. More recently, there has been a price correction, especially for land. What we’re seeing now is a true reflection of what we believe is market value.
Before, there was a lot of speculation, similar to the situation in Vietnam and other countries in the region. After the pricing correction, there are much more realistic prices. That in itself represents opportunities for people with cash, that have liquidity and are looking for investment opportunities.
So, I’d say 2024 is the year for people being able to buy good-valued properties, particularly around the end of 2024. My personal view is that there will be a period of stagnation for three to five years as the current oversupply is absorbed into the market. We are seeing some of that now, but it will take a few years more. Then we will see the market rebounding.
Given the uncertainty surrounding China’s domestic market, what role do you see the country playing in Cambodia’s real-estate landscape in the coming years?
As a whole I don’t see Chinese real estate uncertainty as having a huge impact, in that the Chinese real-estate developers here are relatively few in number. Chinese FDI has been much more focused on government-to-government contracts in agriculture, manufacturing and infrastructure and not so dependent on the real-estate sector.
The majority of real estate development has been focused around Phnom Penh and Sihanoukville. Are there any parts of the country that you see as having potential in the coming years?
Kampong Speu without a doubt. With the new expressway between Phnom Penh and Sihanoukville, Kampong Speu has been the province that has received the most attention. It is a major investment area, particularly for industrial and logistics. Agriculture also has massive potential and we have seen some big groups coming in. There are a lot of opportunities there.
Closer to the capital, across the Mekong River in Arey Ksat where they will be building bridges, there will be huge potential. We call it the “Southern growth corridor,” from Hun Sen Boulevard towards the new international airport, and now Chbar Ampov with the new bridge connecting Diamond Island to Koh Norea. Our view is that the key growth areas in the future will be to the south and to the east.
If you had a message for someone entering the market, what would you say?
After the sharp drop in 2023, I think 2024 represents really good value for investors to come in and acquire assets that are much more aligned with what market value should be, and for Cambodia to become a platform for manufacturing and agriculture reaching the wider Mekong Delta market. For example, there was recently an inauguration at a cold storage facility at the Phnom Penh Port. All of this type of infrastructure will benefit the market and is a key factor in terms of supporting growth in Cambodia. There are many windows of opportunity, but they need to be opened the right way.
