Phnom Penh serviced apartment rates and occupancy decline

George Sell George Sell Uploaded 05 August 2020

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Cambodia: Phnom Penh serviced apartment rates declined in Q2 2020, due to the pandemic and new hotel supply, according to CBRE Cambodia.

A downward adjustment was seen across the Grade A and B tiers of the market - rental quotations (price per square metre) were down by 13 and 10 per cent respectively for the Grade A and B segments, compared to figures in H2 2019.

CBRE said that while many tenants, especially expats, have vacated their rental properties, some agreements of three to six months have been signed within the recent few months.

The report said no new serviced apartment projects were opened and launched during Q2 2020. CBRE says the current supply of serviced apartments number 2,725 units, most of which are located in the highly commercialised areas of BKK1 (42 per cent) and Daun Penh (24 per cent).

Hotel units are the primary competitor of serviced apartments, says CBRE. New hotel supply is applying additional pressure to the serviced apartment sector on top of the pressure caused by the dwindling tourist/expatriate market.

In June 2020, the government introduced a $3,000 deposit and $50,000 insurance requirement from tourists and businessmen entering the country. The measure was designed to minimise the risk of infected people from causing a second outbreak in Cambodia. Both the deposit and insurance requirements were eventually waived in principle by the Cambodian government to help ease the burden on its tourist sector.

The relaxation of entry requirements, coupled with the announced reopening of schools starting in August, is expected to attract expatriates back. though it is unlikely that a quick recovery will be seen while most countries still have travel restrictions in place, says CBRE.

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