2024-09-02-莱坊-Prime_Phnom_Penh_Development_Land_Index_Q2_2024_3页_615kb

Prime Phenom Penh Development Land Index Summary (Q2 2024 Edition)

Core Content

Knight Frank's Prime Phnom Penh Development Land Index offers a quarterly analysis of prime residential and office land prices in the five central districts of Phnom Penh. The report highlights the ongoing market correction and its impact on land prices, as well as the potential for future recovery and investment opportunities.

Key Trends and Findings

• Price Correction Stabilizing: The price correction that began in 2020 showed signs of stabilizing during the first half of 2024, although prices continued to decline on a quarterly basis.
• Residential Land Prices:
  • The Prime Residential Development Land Index recorded a 1.4% quarterly decline in Q2 2024 compared to Q1 2024.
  • Annual prices declined by 5.8% from Q2 2023.
• Office Land Prices:
  • The Prime Office Development Land Index experienced a 2.9% quarterly decline in Q2 2024.
  • Annual prices declined by 2.4% from Q2 2023.
• Long-Term Decline:
  • As of Q2 2024, prime residential land prices have declined by 34.5% compared to Q2 2020.
  • Prime office land prices have declined by 35.7% since Q2 2020.
• Market Activity:
  • Transaction activity remained low throughout 2023 and continued into H1 2024.
  • Despite higher GDP growth projections for 2024, market activity did not meet expectations.
• Market Outlook:
  • There is an expectation of increased investment activity in the second half of 2024, driven by growth in exports, international tourist arrivals, and foreign direct investment (FDI).
  • Land prices are nearing the bottom of the downward cycle, offering discounted opportunities for developers.
  • However, uncertain macroeconomic and geopolitical conditions, along with high interest rates, are expected to continue affecting investor sentiment in the short term.

Investment Opportunities

• The market correction presents affordable land acquisition opportunities for developers.
• Land prices are significantly lower than pre-pandemic levels, making them attractive for development.
• The residential sector dominates the real estate market in Cambodia, accounting for 92.3% of market volume, with a projected annual growth rate of 1.6% between 2024 and 2028.

Methodology

• The land prices are calculated using the repeat residual valuation methodology, which estimates what a reasonable developer would pay for development land.
• This methodology factors in:
  • Potential scheme's gross development value.
  • Construction, professional, and financial costs.
  • Required profit margin.
  • Acquisition costs and relevant taxes.
• The index is based on prime sites within the city's five central districts, selected for recent transactions or market availability.
• Planning parameters such as plot ratios, height restrictions, and site coverage are used as a basis for valuation, with adjustments made if these parameters change over time.
• Residential developments are assumed to be 100% apartment (condominium) with car parking in accordance with local guidelines.
• Office developments are assumed to be 100% commercial with a small retail component on the ground floor or podium, depending on local conditions.
• Data sources include proprietary databases tracking prices, rents, and yields (cap rates), as well as internal construction cost data and prevailing finance costs.

Conclusion

While the Phnom Penh development land market has seen persistent price declines and low transaction activity, the market is showing signs of stabilization. The long-term outlook suggests a potential recovery, especially with anticipated growth in key economic sectors. Investors are advised to consider the current discounted land prices as an opportunity for development, although short-term uncertainties remain a challenge.

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Contact Information

• Country Head: Ross Wheble
  Email: ross.wheble@kh.knightfrank.com
  Phone: +85515 532075

• Executive Director, Valuation & Advisory: Law Kheng Fong
  Email: khengfong.law@kh.knightfrank.com
  Phone: +8551555957

• Associate Director, Research & Consultancy: Ly Hakim
  Email: hakim.ly@kh.knightfrank.com
  Phone: +85510557568

• Assistant Manager, Research & Consultancy: Huor Victor
  Email: victor.huor@kh.knightfrank.com
  Phone: +855 11 999 197