Cambodia Insights by Ross Wheble

The Cambodian economy remained surprisingly resilient in 2022, despite Chinese Mainland’s zero-COVID strategy, restricting travel from Cambodia’s key source market for Foreign Direct Investment (FDI).

It is expected that Cambodia's GDP growth in 2022 will be around 5%, and this momentum is likely to continue into 2023, driven largely by increasing domestic consumption. GDP growth is predicted to be around 6% in 2023, one of the highest rates in the region.

Here are some bright sparks we are anticipating.

Hospitality & Retail

Cambodia will host the Southeast Asian Games in May 2023. With the full reopening of the region and easing of travel restrictions in China, this event is expected to boost the country’s hospitality industry by bringing in more tourists and increasing demand for hotel rooms, especially during the low season. The influx of tourists is also expected to increase foot traffic at Phnom Penh's shopping malls and be good news for Cambodia's retailers.

Industrial & Logistics 

The recently completed Phnom Penh-Sihanoukville Expressway, Cambodia’s first expressway, has reduced travel time between the two cities from five hours to approximately two hours. This is a major development for the Cambodian real estate sector, with numerous other infrastructure developments in the pipeline including the Phnom Penh-Bavet Expressway and the upgrading of Cambodia’s rail network to high-speed trains.

The strategic location of Cambodia in the ASEAN and Mekong Delta Region has already led to increased demand from major manufacturers and logistics companies, creating opportunities for the development of international standard industrial and logistics hubs.

Agricultural sector

Cambodia won the World's Best Rice 2022 Award at the World Rice Conference, its fifth win since 2012. International recognition like this is expected to drive the demand for the country’s fertile agricultural land.

Recently, the Cambodian government, with support from Australia, completed a feasibility study for the development of an agri-food industrial hub, which would be the first of its kind in the country. Improved infrastructure projects that enhance both domestic and international connectivity, along with the use of advanced technologies and mechanization in the sector, are expected to increase yields.

There are also opportunities to develop international standard processing facilities to produce higher value-add products for export.

Trends for 2023

The Phnom Penh office supply has increased by over 100% since 2019, and there is a significant development pipeline expected to become available in the coming years. We expect the sector to experience additional downward pressure on both occupancy and rental rates.

It is advisable for clients to review their current lease terms and consider upgrading or relocating to new offices in light of the tenant-driven market and potential lease re-gearing opportunities, particularly if their lease is approaching expiration.