SPECIAL REPORT
Sole proprietors such as mechanics, grocery shops, tailors, hardware traders, clothes, electrical shops, and furniture dealers that serve the locale are aware that with the gradual draining of their clientele, it is only a matter of time before they pack up shop due to slowing business.
Property firm CBRE Cambodia associate director James Hodge says when a city becomes more metropolitan, it is up to its businesses to survive and adapt to the environment and the changing way that consumers require their services.
He cites an example of a cobbler in central London, UK, who, in an effort to survive, might be able to provide an authentic experience which would cost a significantly greater amount of money.
“Therefore, it is about the authenticity and quality that they [the traders] are able to deliver. You can be more confident in that kind of supplier than you could with a mass-market brand. So people would go there for the experience.
“The same could happen here over time. Brands can grow their identity or modernise to become attuned to customers’ changing taste,” Hodge says.
Flanked by a fancy Japanese restaurant and dry cleaner, one can easily walk past a tuck shop, dwarfed by a condominium towering behind it. Back then, it had no immediate neighbours. Today, global coffee chain Starbucks and a posh nightclub are just a stone’s throw away.
“When my husband and I moved here in 1986, this land was just an open muddy space. The residential buildings in front of us were empty, abandoned during the Khmer Rouge,” says the 55-year-old shop operator, who declined being named.
As a civil servant – a technical officer with the Ministry of Commerce, she says her family could not afford a house, deciding instead to build a small place which saw little extensions over time.
“After I left the public service in 1993, I sold foodstuff from a pushcart near Olympic City before starting this shop in 2010. Initially, I thought I would set up a mart-like shop but changed my mind because it needed more capital,” the mother of two says.
She converted her porch into the tuck shop which now caters to construction workers, office staff and the odd passer-by in the BKK1 neighbourhood.
“I don’t earn as much as the retail chains in this area but I am pleased to be of service to my customers, who are mostly locals,” she says, while tending to a motorcyclist who came to buy ice cubes, and mobile credit.
But the pressure to sell and relocate is imminent. Soknim says many city folks have been selling their property for “good money” to developers or entrepreneurs in the hospitality industry and resorting to gated-community abodes in the capital’s nine outer districts, which cost less than condominium units.
“Older properties that remain in the city are mostly shop lots where families run their business on the ground floor and live upstairs. However, their numbers will reduce as time goes on,” he adds.
Currently, the average price of land on BKK1’s main roads is about $5,500 per sqm, making it the costliest in the city, while land on smaller streets in BKK1 and BKK2 can cost around $4,000 per sqm.
Northwest of the city centre, plots in Tuol Kork district cost between $1,800 and $2,500, which is the latest desirable development address for developers.
CBRE Cambodia data shows that nine condominium projects featuring 6,470 units were launched in Chamkarmon and BKK districts last year, the most compared to the other districts.
On the whole, 27 projects comprising more than 16,500 units were launched in Tuol Kork, Prampi Makara, Meanchey, Chroy Changvar and Sen Sok districts.
Condominium supply rose 27 per cent year-on-year last year with 18,000 affordable (23 per cent), mid-range (53 per cent) and affordable (24 per cent) units compared to 14,170 units in 2018.
By the end of this year, CBRE Cambodia forecasts that 28,000 units will enter the market – mid-range units priced around $2,500 per sqm accounting for 46 per cent, affordable units ($900-$1,950 per sqm) 30 per cent and high-end homes ($3,600psm to $4,000psm) 24 per cent.
“Condominium prices have been stable over the last year. We have seen some slight reductions in the mid-range sector while affordable pricing has crept up a little.
“The demand is very good for affordable and mid-range segments, driven by Cambodian millenials,” says Hodge.
However, developers are expected to face challenges in condominium development as the market becomes more competitive. Rental rates for condominiums could experience some downward pressure with increasing supply.
Former government clerical staff Sothea (not her real name) points to a space diagonally opposite her house which is being developed into a condominium by a local tycoon.
“There used to be a villa there,” she says, sipping iced tea at her sister-in-law’s stall in front of her house.
Off Sihanouk Boulevard (Street 274), Street 57 exudes a quiet but wealthy feel. Over the 30 years Sothea has been there, it has transformed from empty plots of land to commercial lots which now host chic cafes, hotels and plush residences.
Squashed in the middle of that opulence is her partwood-part-brick three-bedroom house, which has a moderate size driveway and courtyard.
Phnom Penh-born Sothea, whose parents worked for the royal family – her father a soldier and her mother a cook, settled there in 1989 due to its proximity to the palace.
“I have lived here for more than 30 years with my parents. My children were born here. This house holds a lot of memories for us. While everything else changed around us, we stayed put but I don’t know for how much longer,” says the 67-year-old.
Her son has been pleading with her to live closer to him and his family in the outskirts of town, which she is inclined to do, although with a heavy heart.
“I am going to miss this place when I leave, but I have to go soon. The tide is changing,” she says through tears.