Demand for retail space sees decline amid Covid-19 fears
DEMAND for retail outlets in malls and shopping centres has seen gradual decline amid the Covid-19 outbreak, while prices have remained relatively stable, real estate experts have said.
An average annual economic growth of around seven per cent over the past two decades has brought about rapid changes in Cambodia as large, modern commercial centres continue to grow in number, especially in Phnom Penh.
As of the end of the first quarter of this year, there are 23 shopping malls in the capital which cover about 38ha, said a recent research report from real estate agency CBRE Cambodia.
With the completion of planned projects, it said, shopping malls will cover 50ha by the end of this year.
Keller Williams (KW) Sen Sok regional operation principal and Sam Sn Realty Co Ltd president Sam Soknoeun told The Post on Wednesday that a sharp drop in shoppers had paralysed demand for retail space.
As their customers dwindle, tenants are postponing payment of rents as they wait and see what new developments the pandemic brings, he said.
“Though retail demand has been steadily weakening during the outbreak of Covid-19, prices have not yet seen a considerable drop,” said Soknoeun.
He said retail businesses have been rethinking their marketing strategies in response to the crisis – offering more discounts and special offers.
Three more months of the pandemic would have a crippling effect on the retail market, he said. “As of now, the impact has not been too severe, but if the situation persists for the next three month, I believe that rents fee will drop significantly, between 20 and 30 per cent.”
The CBRE Cambodia report lists the first-quarter per-month average prices at $32.25 per square metre at prime shopping mall units, $26.69 at prime retail podium units, $20.93 at community mall units and $26.50 at prime high-street units.
CBRE Cambodia director
Ann Sothida said retail is the segment most affected by Covid-19 in the real estate market, as fear grips the Kingdom and the government implements more measures to stop the public from gathering.
However, the situation has seen marginal improvement compared to the end of the first quarter, she said. “Due to the extensive shock felt by the sector, I think it will take at least six months to a year for the retail market to recover.”
As of the first quarter of this year, the retail consumption rate in Phnom Penh was around 89.9 per cent, down 0.5 percentage points from the fourth quarter of last year, said the report. Rental prices were down 10 per cent.