Land prices in central Phnom Penh’s southernmost district have been rising on average 10 percent annually since 2013, with prices reaching as high as $6,000 per square meter for street corner locations in BKK 1, according to a report released yesterday by Vtrust Appraisal Co. Ltd. and Century 21 Mekong.
Prices rose the most in Tonle Bassac and BKK 2 communes during the period, rising at an annualized rate of 17 per cent, according to the report “Chamkarmon Market Review 2015.” Chamkarmon is the southernmost of the capital’s seven districts.
Surge in Tonle Bassac
Average prices in Tonle Bassac commune have risen from $1,900 per square meter in 2013 to $2,550 per square meter this year, the report said, adding that the most valuable land in the commune was selling for $5,000 per square meter.
In BKK 2 average land prices have risen from $2,100 to $2,800 per square meter over the period, the report said. Prices in BKK 1 have been rising at an annual rate of 13 per cent.
Four of the district’s 12 communes – Tuol Svay Prey Ti 1 and 2, Tumnob Tuek and Oulampic – saw prices rise just 1 or 2 percent annually over the period, according to the report.
Hoem Seiha, research director of Vtrust Appraisal, said price rises in these four communes were low because they had either already reached their peak, there was little space for residential or commercial development, or investors lacked interest.
Prices in the district will continue to rise, he said. “Land prices will keep increasing next year due to the steady flow of investors and increasing number of property developments,” Mr. Seiha said.
Chrek Soknim, CEO of Century21 Mekong, said prices were reaching their peak in the district. “The growth rate will decline a bit because land prices have nearly reached their peak,” he said.
He put the swift growth down to demand for both commercial and residential projects in the district.
Mr. Soknim also cast doubt on speculation of a property bubble, saying the increase was in line with economic growth and investors were still making profits.
Overpricing?
Sim Hoy Choung, acting CEO of Vtrust Appraisal, warned that some owners were attempting to sell land at prices that were above the market level, and said this could damage the growth of the real-estate market.
Mr. Choung said this practice could create a “stalemate” between sellers and buyers.
Realtors said the prices in Chamkarmon are reflective of those throughout the city, and that approvals for new residential and commercial projects will continue to drive prices higher.
According to the Ministry of Land Management, Urban Planning and Construction, a total of 1,532 construction projects worth $1.75 billion were approved in the first nine months of this year.
Compared to the same period last year this represents a 13.75 percent rise, the ministry said.
The Kingdom’s construction industry drew $2.5 billion in investment last year, according to official figures.