Recent years have been particularly challenging, with dampened expenditure, and the 2024 outlook appears initially not bucking this trend with some suggesting it will bring challenges and some interesting opportunities.

Concrete jetty at Kep Beach Cambodia

Cambodia – recent challenges

In Cambodia, the property market is coloured by an oversupply of projects and changing trends, albeit within a macro environment of strong GDP growth and decreasing inflation. Phnom Penh and Sihanoukville particularly have had too much happen, and way too quickly. It is not surprising, therefore, that after years of hot growth, the residential sector eventually encountered strong headwinds in 2023 with a combination of intense competition and weak demand.

Other global factors, such as the Ukraine war, the Israel-Hamas conflict and China’s faltering property market are indirectly affecting Foreign Direct Investment (FDI) into Cambodia. Exports from Cambodia to the U.S. and Europe have also declined, as have the tourism, garment and manufacturing sectors, all of which impact domestic disposable incomes. So, while a few projects did well, most developers were forced to offer discounts and flexible payment terms to attract buyers.

By the end of 2023, condominium supply topped over 50,000 units in the capital, representing a 15% YoY increase and average occupancy rates for office/retail spaces stagnated, which now sit at around 65% with rents averaging $25/sqm/month. Oversupply caused a shift away from new projects to existing inventory and, combined with the rising rate of loan defaults since COVID-19 (6% for personal finance and 4% for mortgages), prices have flattened.

Collectively, these factors are having a dampening effect on internal demand for the entire property sector which is reducing not just prices, but expectations. We are now seeing an increase in the number of local buyers either seeking “under market” properties or extending offers well under the asking prices.


Cambodia 2024 and beyond

Yet, despite this doom and gloom, the government continues to invest in large infrastructure projects, such as new and upgraded roads, port expansions and new airports. This is certainly helping the economy in these difficult times along with an increased focus on agriculture, eco-tourism and value-add manufacturing.

All being said, the local economy remains generally robust with GDP growth in 2023 of 5.8% and inflation at 3% which are expected to remain as such into 2024. Therefore, despite the challenges (or perhaps even because of) some opportunities are available that could support sustainable economic growth that can improve domestic spending capacity within the Kingdom.

Strategies could include improved zoning and urban planning to better manage urban growth, traffic congestion, and intra-city mobility to enhance Phnom Penh’s liveability. This would involve making urban centres greener, more climate resilient, and ensuring the built environment suits the climate. Better parking options, more public parks, and pedestrian-only areas, and improved public transport are also low-hanging fruit that would make the capital better whilst addressing the increase in road traffic (both vehicle size and numbers) that could potentially strangle the city. Other opportunities include nurturing future-focused industries like science, manufacturing, medicine, and alternative power generation. This would need continued investment in infrastructure, vocational training, easier access to trade, and government-to-government partnerships, such as Special Economic Zones.

It seems clear to me that Cambodia more broadly and Phnom Penh especially are at a crossroads, requiring strategic and innovative policy decisions. Without which, this little nation may not adequately capitalize on the opportunities 2024’s evolving economic and social landscapes has to offer.

Cambodia outlook 2024
Sisowath Boulevard on Water Festival – car, motorbike and car soup


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Cambodia faces real estate oversupply in 2023 amidst powerful global shifts

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