The growth of the Cambodian economy will create a need for more office space, insiders told the Post yesterday.
According to estimates of the Economic Institute of Cambodia, the Kingdom’s economic growth reached 6.2 per cent in 2012.
While no high-quality buildings were completed last year, the demand for offices rose.
Still, corporate real estate needed to recover from the global economic crisis in 2009 and 2010, when many projects were paused or not even started.
“In 2012, no Grade-A or Grade-B building was completed, but several projects were started or continued. The future Vattanac Tower will be the first building on the Grade-A market, with 285,000 square metres in 2013, and the Gold Tower 42 would add 15,000 square metres on the A-Grade market,” CB Richard Ellis Cambodia Country Manager David George said.
However, the Post reported at the end of December that cranes have been removed from the $240 million Gold Tower 42 project in central Phnom Penh.
Construction halted on the project in September 2010 due to poor unit sales and cost overruns, an official involved in the process said.
Grade-A office space is the most prized and sought-after classification of real estate. It refers to brand new or recently redeveloped buildings in prime locations, with high-quality furnishings, state-of-the-art facilities, and excellent accessibility. Grade B falls below Grade A, typically in terms of location, facilities and maintenance.
Grade-C offices provide functional space for tenants looking for low rents.
“The majority of the market is still the Grade-C standard office, with a 57 per cent share of the current supply. Grade A and B currently have a 43 per cent share,” George said.
However, the quality of new constructions will rise in 2013. “This increase is not driven by the government though, but by developers,” George said.
With rising demand, the prices will increase slightly, according to George. While one square metre in Ho Chi Minh costs $35 on average, the current prices in Phnom Penh are at $28 per square metre.
According to Sung Bonna, president of the Natural Valuers Association Cambodia, the price range for A-Grade offices lies between $35 and $70 per square metre.
The new Vattanac Tower will open a new category, the A+ Grade.
Meanwhile, customers will pay $10 to $20 per square metre for Grade B and $5 to $10 per square metre for Grade C.
“We will see how Grade A+ buildings like the Vattanac Tower develop. We don’t expect any price increase yet, as the projects have just started,” Bonna said.
Currently, there is a wide range of local, regional and international companies investing in offices of all price sectors, according to Bonna.
“The biggest investors at the moment come from China and Japan, planning garment factories or working in the explorative industry,” George said.