is cambodia’s residential market a · pdf fileis cambodia’s residential market a...

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


* 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


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


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


ONE BELT, ONE ROAD INITIATIVE - MARITIME SEA ROUTES

Chinese-built & financed road Due 2020


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


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


PHNOM PENH CONDOMINIUM MARKET

H2 2016


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


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)


-

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


PHNOM PENH CONDOMINIUM ANNOUNCED/UNDER

CONSTRUCTION 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


PHNOM PENH CONDOMINIUM DEVELOPMENTS DRIVEN BY

SPECULATORS AND FOREIGN BUYERS


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


10%

30-40%

50-60%


AVERAGE CONDOMINIUM PRICE BROADLY STABLE OVER Q3


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%


PRIME NEW LAUNCH CONDOMINIUM PRICE AND YIELD IN

SOUTHEAST ASIAN CITIES

Average Prime Condominium Price and Estimated

Yield in the Southeast Asia (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



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


REGIONAL MARKETS - MIXED MESSAGES


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


CAMBODIA SECOND HOME MARKET

H2 2016


SECOND HOME MARKET ON RISE


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


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


Sunshine Bay (2018)900 Condo Units(1 – 2 Bedroom)

Blue Bay (2019)1,400 Condo Units



CAMBODIA RESORT PROPERTY IN REGIONAL CONTEXT

Luxury Resort Villa Price in Southeast Asia


$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


CAMBODIA RESORT PROPERTY IN REGIONAL CONTEXT

High-End Resort Condominium Price in Southeast Asia


$0

$2,000

$4,000

$6,000

$8,000

Sale Price Range (USD/SQM) Average Sale Price (USD/SQM)

Sunshine Bay

Blue Bay


CAMBODIA MARKET OUTLOOK &

TRENDS

H2 2016


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



Regional Benchmarking

against Australian costs



Healthcare Improving

Growing Tourism



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


ALTERNATIVE LONG TERM TOURISTS

Digital Nomads, a growing trend?


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.

CBRE Cambodia | +855 23 964 099 | [email protected] | www.cbre.com.kh

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