IS CAMBODIA’S RESIDENTIAL MARKET A · PDF fileis cambodia’s residential market a...
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IS CAMBODIA’S RESIDENTIAL MARKET A
TARGET FOR INVESTMENT?
Presented by Marc Townsend
Managing Director – CBRE Vietnam & Cambodia
08 NOVEMBER 2016
ELECTION DAY IN THE U.S.
TRUMP• TPP – likely to be
scrapped
• Foreign policy
towards China likely
to be less
collaborative.
• Lack of clear
direction on the
South China Sea.
• Stock market shock
possible.
CLINTON• TPP Lite? Watered
down
• Foreign policy
towards China likely
to be pragmatic, but
possibly more
confrontational.
• Seen as the ‘stable’
option, stock
markets unlikely to
be affected.
3 IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?CBRE CAMBODIA
CAMBODIA DASHBOARD
Economic Indicators 2012 2013 2014 2015 2016F 2017F 2018F
GDP (Bn USD) 14.054 15.251 16.734 18.219 20.231 21.627 23.119
GDP Growth (%) 7.3 7.4 7.1 7.0 7.0 6.9 6.9
GDP Per Capita (USD) 973 1,042 1,135 1,216 1,301 1391 1487
Inflation (%) 2.9 2.9 3.9 3 3.5 - -
FDI (Bn USD) 1.7 1.6 1.4 1.4 - - -
Source: National Bank of Cambodia, Ministry of Economy and Finance, World Bank & Cambodia Investment Board
Banking and Finance 2014 Q1 2015 Q1 2016 Q2 2016 Q3 To Date
KHR/USD (Official) 4,015 4,010 4,100 4,100 4,070
1-Year USD Lending rate (%)* 11.18 11.35 11.50 11.50 11.50
1-Year USD Deposit rate (%)* 4.27 4.30 4.25 4.25 4.25
Source: National Bank of Cambodia, 08 August, 2016 & CBRE Research
Real Estate Indicators 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3
Prime Condo Price (USD/SQM) 2,952 2,952 2,969 3,024 3,195 3,180 3,190
Prime Office Rent (USD/SQM/Month) 21.40 21.40 21.87 22.20 22.67 22.85 22.85
New Launched Projects 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3
Condominiums (Units) 2,573 702 3,060 689 4,158 2,796 1,022
Office with Strata-tile (SQM) 7,920 0 31,371 26,050 17,260 0 0
Source: CBRE Research, Q3 2016
Source: CBRE Research, Q3 2016
* Average rate of Aceleda, UCB, Canadia, Vattanac, Maybank, Bank of China, CIMB, & ABA
IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?
OVERVIEW OF CAMBODIA
H2 2016
5 IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?CBRE CAMBODIA
ECONOMIC OVERVIEW
Source: World Bank & IMF, 2016 October
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
Myanmar Lao PDR Cambodia Vietnam Philippines Malaysia Indonesia Thailand Singapore Brunei
Darussalam
Annual GDP Growth in ASEAN
2015 2016F 2017F
6 IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?CBRE CAMBODIA
ECONOMIC OVERVIEW
Investments by Sector– 4.6 Billion USD (2015)
Source: Cambodian Investment Board
FDI by Investor’s Origin – 1.4 Billion USD (2015)
60.6%9.8%
7.1%
6.3%
5.2%
4.2%3.8%
0.7% 0.6% 1.7% China
UK
Singapore
Vietnam
Malaysia
Japan
Thailand
Korea
Canada
Other
Source: Cambodian Investment Board
10%
20%
67%
3%
Agriculture
Industries
Infrastructure
Tourism
7 IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?CBRE CAMBODIA
ONE BELT, ONE ROAD INITIATIVE - MARITIME SEA ROUTES
Chinese-built & financed road Due 2020
8 IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?CBRE CAMBODIA
INFRASTRUCTURE DEVELOPMENTS HIGHLIGHTS
Four-Lane
Express Way
Between Phnom
Penh and
Sihanoukville
National
Highway 11
(96km)
Connecting
Preyveng to
Kampong
Cham Province
The Bridge
Crossing the
Mekong River from
Steung Trang to
Kruoch Chmar
District (Kampong
Cham)
Infrastructure Projects due to begin in 2017:
Funded by China’s Concessional Loans
(2 Billion USD)
Source: Khmer Times / CBRE Cambodia
9 IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?CBRE CAMBODIA
INFRASTRUCTURE DEVELOPMENTS HIGHLIGHTS
New infrastructure due to complete in three years:
2016 2019
Koh Thom
Bridge
(Q1 2017)
National
Road 55
(Q3 2018)
National
Road 58
(Q4 2018)
Chrey Thom
Bridge
(Q3 2019)
Sak Sampov
Bridge
(Q4 2016)
National
Road 21a
(Q2 2017)
Source: Ministry of Public Works and Transport / CBRE Cambodia
IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?
PHNOM PENH CONDOMINIUM MARKET
H2 2016
11 IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?CBRE CAMBODIA
CAMBODIA DEMOGRAPHIC OVERVIEW
Source: CIA / CBRE Cambodia
Demographic Fundamentals
0 10 20 30 40 50 60 70 80
Malaysia
Thailand
Philippines
Lao PDR
Myanmar
Vietnam
Cambodia
Urban Population 2015 (% of Total Population)
Source: World Bank / CBRE
-2
0
2
4
6
8
10
12
14
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
Cambodia
Vietnam
Thailand
Annual Household Expenditure Growth (%)
Source: World Bank / CBRE
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PHNOM PENH CONDOMINIUM MARKET
Number of Condominium Launched by Districts (Q1 2015-
Q3 2016)
Source: CBRE Cambodia, Q3 2016
Phnom Penh Condominium Supply by Developer’s
Origins (2008-2018F)
Source: CBRE Cambodia, Q3 2016
-
1,000
2,000
3,000
4,000
5,000
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
Chamkarmon Daun Penh 7 Makara
Toul Kork Chroy Chang Va Sen Sok
Por Sen Chey Mean Chey Russey Keo
0
5,000
10,000
15,000
20,000
25,000
2008 2009 2010 2011 2012 2013 2014 2015 2016F 2017F 2018F
Cambodia South Korea Taiwan Malaysia Singapore China Japan
3,016 units at
Q3 2016
13 IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?CBRE CAMBODIA
PHNOM PENH CONDOMINIUM ANNOUNCED/UNDER
CONSTRUCTION Q3 2016
Source: CBRE Cambodia, Q3 2016
7 Makara
3,058 Units
(4 Projects)
Sen Sok
3,794 Units
(6 Projects)
Chamkarmon
13,488 Units
(35 Projects)
Daun Penh
1,880 Units
(3 Projects)
Toul Kork
2,453 Units
(11 Projects)
Chbar Ampov
133 Units
(1 Project)
Mean Chey
520 Units
(2 Projects)
Por Sen Chey
928 Units
(1 Project)
Russey Keo
1,664 Units
(3 Projects)Chroy Changvar
2,212 Units
(8 Projects)
30,130 Units
across 74
Projects
14 IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?CBRE CAMBODIA
PHNOM PENH CONDOMINIUM DEVELOPMENTS DRIVEN BY
SPECULATORS AND FOREIGN BUYERS
Source: CBRE Cambodia, Q3 2016
CBRE estimates take-up stands at approximately 47% as of Q3 2017
Origins of the Buyers
Foreign buyers
60~70%Owner-occupier
Buy-to-let Investors
Buy-to-gain Investors
Buyers Profile
Source: CBRE Cambodia, Q3 2016
10%
30-40%
50-60%
15 IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?CBRE CAMBODIA
AVERAGE CONDOMINIUM PRICE BROADLY STABLE OVER Q3
Source: CBRE Cambodia, Q3 2016
Average Phnom Penh Condominium Price per Sqm
$1,250
$1,750
$2,250
$2,750
$3,250
$3,750
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
Affordable Mid-Range High-End
Average price
being broadly
stable
Average affordable
category showing
a 2.8% decrease
Resales prices at
secondary market
depreciating by
2%
16 IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?CBRE CAMBODIA
PRIME NEW LAUNCH CONDOMINIUM PRICE AND YIELD IN
SOUTHEAST ASIAN CITIES
Average Prime Condominium Price and Estimated
Yield in the Southeast Asia (Q3, 2016)
Source: CBRE Research, Q3 2016
Phnom Penh
7-10%
Ho Chi Minh
5-8%
Bangkok
2-5%
Singapore
2-3%
Gross Rental Yields in South East Asian
Cities
0%
1%
2%
3%
4%
5%
6%
7%
8%
$0
$4,000
$8,000
$12,000
$16,000
$20,000
Phnom Penh Ho Chi Minh Bangkok Singapore
Prime New Launch Condominium Price Estimated Prime Yield
Source: CBRE Research, Q3 2016
17 IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?CBRE CAMBODIA
PHNOM PENH CONDOMINIUM MARKET – BENCHMARKING
Source: CBRE Cambodia
Phnom Penh HCMC Bangkok Singapore
Foreign
Ownership
Up to 70% of a
condominium project,
above ground floor
levels only.
Foreign ownership
permitted since 2015,
to those with a Visa.
Foreign ownership of
condominiums
capped at 49%.
Prior approval usually
required, unless
condominium less
than 6 storeys.
Freehold
Transfer Taxes
Transfer Tax 4%
VAT – 10%
(Profit Tax – 20%,
applicable to
companies only)
2% of capital value
(sometimes 25% of
capital gain)
VAT – 10%
Registration Tax –
0.5%
Notary Fee - $1-
$458
Transfer Fee 2%
Stamp Duty 0.5%
Sellers Stamp Duty
4-16%
Buyers Stamp Duty
1-3% + additional 3-
15%
Goods and Services
Tax 7%
Mortgage Duty 0.2-
0.4%
Property Taxes 0.1% of 80% of
properties value over
$25,000.
Withholding Tax –
10%
0.03-0.15% of
assessed value
Household tax 12.5% 4-20% based on
estimated annual
rental value
Investment LTV
Ratio
70% LTV 70% LTV 50-70% LTV <75% LTV
Interest Rates 8-12% VNIBOR + risk
premium
Difficult to foreign
investors to obtain
funding in Thailand.
3 month SIBOR +
100-150bps spread
18 IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?CBRE CAMBODIA
REGIONAL MARKETS - MIXED MESSAGES
19 IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?CBRE CAMBODIA
Domesticownership only
Quota of foreign
ownership up to 70%
CONDOMINIUM DEVELOPMENT/INVESTMENT HIGHLIGHTS
Source: CBRE Cambodia
Foreign Ownership of
Condominium BuildingsResidential Developer’s Licensing
Requirements – Prokas No. 965
A minimum registered capital of two billion KHR or US$500,000
A housing development account A certificate of project capital 2% business guarantee deposit of
the total investment capital A detailed business plan of each
period of the project Person on the license to be the
chairman of the BOD Construction site responsibility
IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?
CAMBODIA SECOND HOME MARKET
H2 2016
21 IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?CBRE CAMBODIA
SECOND HOME MARKET ON RISE
22 IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?CBRE CAMBODIA
INFRASTRUCTURE IMPROVEMENTS FUEL SIHANOUKVILLE
SECOND HOME MARKETS
MOU with the
Chinese
Government –
Expressway
between Phnom
Penh and
Sihanoukville
More direct flights fuel int’l arrivals
23 IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?CBRE CAMBODIA
EXISTING AND UNDER CONSTRUCTION PROJECTS IN
SIHANOUKVILLE
Song Saa Private Island (2014)27 Luxury Villas
(1Bedroom – 2Bedroom)
Alila Villas Koh Russey (2017)227 Luxury Villas
(1Bedroom – 4Bedroom)
D’Seaview (2018)735 Condo Units
(Studio – 3 Bedroom)
Royal Bay View (2019)1,344 Condo Units
(Studio – 2 Bedroom)
Sunshine Bay (2018)900 Condo Units(1 – 2 Bedroom)
Blue Bay (2019)1,400 Condo Units
(Studio – 2 Bedroom)
24 IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?CBRE CAMBODIA
CAMBODIA RESORT PROPERTY IN REGIONAL CONTEXT
Luxury Resort Villa Price in Southeast Asia
Source: CBRE Cambodia, Q3 2016
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
Sale Price Range (USD/SQM) Average Sale Price (USD/SQM)
Alila Villas Koh Russey
Song Saa Private Island
25 IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?CBRE CAMBODIA
CAMBODIA RESORT PROPERTY IN REGIONAL CONTEXT
High-End Resort Condominium Price in Southeast Asia
Source: CBRE Cambodia, Q3 2016
$0
$2,000
$4,000
$6,000
$8,000
Sale Price Range (USD/SQM) Average Sale Price (USD/SQM)
Sunshine Bay
Blue Bay
IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?
CAMBODIA MARKET OUTLOOK &
TRENDS
H2 2016
27 IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?CBRE CAMBODIA
CAMBODIA AS A POTENTIAL RETIREE MARKET FOR FOREIGNERS
“As Asians Age
Faster, More of
The Cash Heading
Offshore
In the next two
decades, aging in
Asian emerging
markets will
outpace that of
developed nations
for the first time
since 1950”
Source: OECD / CBRE
28 IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?CBRE CAMBODIA
CAMBODIA AS A POTENTIAL RETIREE MARKET FOR FOREIGNERS
Regional Benchmarking
against Australian costs
29 IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?CBRE CAMBODIA
CAMBODIA AS A POTENTIAL RETIREE MARKET FOR FOREIGNERS
Healthcare Improving
Growing Tourism
30 IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?CBRE CAMBODIA
CAMBODIA AS A POTENTIAL RETIREE MARKET FOR FOREIGNERS
Source: International Living, 2016
The 2016 Annual Global Retirement Index—Final Scores
RANK COUNTRYBUYING &
RENTING
BENEFITS &
DISCOUNTS
VISAS &
RESIDENCE
COST OF
LIVINGFITTING IN
ENTERTAINMEN
T & AMENITIESHEALTHCARE
HEALTHY
LIFESTYLE
INFRASTRUC
TURECLIMATE
FINAL
SCORES
1 PANAMA 86 100 100 89 97 100 89 95 90 89 93.5
2 ECUADOR 100 99 83 90 92 95 85 95 85 100 92.4
3 MEXICO 89 88 90 88 91 96 87 86 90 88 89.3
4 COSTA RICA 88 79 87 86 95 88 92 98 88 83 88.4
5 MALAYSIA 94 67 87 90 95 100 94 90 87 74 87.8
6 COLOMBIA 88 65 80 92 89 94 94 95 90 90 87.7
7 THAILAND 90 72 70 90 90 96 88 80 89 83 84.8
8 NICARAGUA 96 72 77 98 88 84 80 97 70 80 84.2
9 SPAIN 82 69 77 82 81 90 86 88 93 88 83.6
10 PORTUGAL 82 75 77 85 81 81 81 88 93 86 82.9
11 MALTA 80 75 78 83 94 82 83 75 85 85 82.8
12 HONDURAS
(ROATAN)77 72 87 78 100 76 79 75 87 82 81.3
13 FRANCE 63 75 77 57 88 96 88 80 93 83 80.0
14 BELIZE 74 83 80 78 98 70 83 8572 67 78 79.6
15 PERU 87 57 75 95 85 74 84 72 80 85 79.4
16 ITALY 62 70 70 74 82 90 80 85 92 83 78.8
17 PHILIPPINES 63 75 67 85 92 90 88 67 89 69 78.5
18 URUGUAY 67 63 67 65 90 98 88 73 90 83 78.4
19 DOMINICAN
REPUBLIC92 72 63 85 88 78 80 77 80 67 78.2
20 IRELAND 80 75 77 65 98 84 72 72 93 65 78.1
21 CAMBODIA 76 57 80 100 83 89 75 83 63 74 78.0
22 GUATEMALA 82 63 77 91 75 78 75 70 76 85 77.2
23 VIETNAM 70 63 60 90 65 58 74 72 57 76 68.5
31 IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?CBRE CAMBODIA
ALTERNATIVE LONG TERM TOURISTS
Digital Nomads, a growing trend?
32 IS CAMBODIA’S RESIDENTIAL MARKET A TARGET FOR INVESTMENT?CBRE CAMBODIA
AT CBRE, WE LIVE AND BREATHE THE BUSINESS OF REAL ESTATE
Upcoming Research To Look Out For
MARKETVIEW
Industrial & Logistics Sector
MARKETVIEW
2017 Market Outlook
Recent Research Outputs CBRE APAC Research
Asia Pacific Millennials Survey
© 2016 CB Richard Ellis (Cambodia) Co., Ltd. All materials presented in this report, unless specifically indicated otherwise, is under copyright and proprietary to CBRE. Information contained herein, including projections, has been obtained from materials and sources believed to be reliable at the date of publication. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. Readers are responsible for independently assessing the relevance, accuracy,completeness and currency of the information of this publication. This report is presented for information purposes only, exclusively for CBRE clients and professionals, andis not to be used or considered as an offer or the solicitation of an offer to sell or buy or subscribe for securities or other financial instruments. All rights to the material arereserved and none of the material, nor its content, nor any copy of it, may be altered in any way, transmitted to, copied or distributed to any other party without prior expresswritten permission of CBRE. Any unauthorized publication or redistribution of CBRE research reports is prohibited. CBRE will not be liable for any loss, damage, cost orexpense incurred or arising by reason of any person using or relying on information in this publication.
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