1

VTRUST Journal of Real Estate 26 January, 2016 Volume 1, Issue 4

VTRUST Appraisal Co., Ltd. | Tel: (+855)-23-220-098 / Email: vta@vtrustappraisal.com

Century 21 Mekong | Tel: (+855)23-966-577 / Email: info@c21mekong.com.kh

Market Summary Chrouy Changva peninsula has witnessed a surge in land prices thanks largely to the completion of the second Chrouy Changva Bridge and the Kingdom‟s largest Sokha Phnom Penh Hotel along with some other mid-rise devel-opments such as Bellevue Apartment, Yellow Tower, and three of the Mekong Apartments, just to name a few. The peninsula satellite city project known as “City of the Fu-ture”, which was mapped out five years ago, and the recent kickoffs of high-rise condominium projects such as the Bay and La Vie Residences have also pushed land prices in the areas to skyrocket in recent years. A recent survey by VTrust Appraisal indicates that the av-erage growth of land prices in Chrouy Changva district (khan in Khmer), which mainly covers the peninsula, hov-ers at 20 percent year-on-year, with the average price of the fastest growing zone in Chrouy Changva commune (sangkat in Khmer) standing at US$1,080 per sqm in the second half of 2015 as compared to US$670 per sqm in the same period of 2013. Despite the rapid growth in land prices in Chrouy Changva peninsula, the neighboring district of Ruessei Kaev, located west and opposite Tonle Sap River, has experienced only a slight jump for land prices within these two years, on aver-age hovering at 8 percent year-on-year. With some of the signs marked today, Chrouy Changva peninsula has quickly attracted the population and will continue to witness a rapid surge in land prices, especially driven by major residential and mixed-use developments, both complete and recently announced, and the peninsula city master plans mapped out by OCIC and L.Y.P Group.

Market Performance Due to some of the speculative demand in zones that were mapped out with satellite city master plans and other mega projects, land prices in the two studied districts have rapid-ly jumped although the real demand could not afford to absorb all the supplies as quickly as did the prices go up. A longitudinal survey by VTrust Appraisal finds out that out of the real properties listed for sales only 21 percent were successfully sold, while 31 percent of them remained unsold within the traced period of 15 months starting from the fourth quarter of 2013 until the first quarter of 2015. The findings indicate a lower real market demand in the two studied districts if compared to that of the central busi-ness districts, namely Chamkarmon, which achieved up to 42 percent of the sold-out rate in the same traced period with a shorter marketing time, five months on average. Given the fact, there is a slow market absorption rate in Chrouy Changva and Ruessei Kaev districts mainly proven by the fact that average marketing time spent for properties in those districts to be sold was as long as nine months, as compared to five months of average marketing time spent in Chamkarmon district.

The slow market absorption rate is the translation of the speculative demand slowed down by an excessive supply of many large portions of vacant land that has experienced a very slow pace of actual developments. Further, sale-to-list price ratio, an actual transacted price versus their initial list price, in the two studied districts seems to vary across the market, causing the standard devi-

Chrouy Changva Market Review 2015 With Sign of Promising Future, Chrouy Changva Sees Rapid Surge in Land Prices

An aerial view of Chrouy Changva peninsula; Source: Phnom Penh Sokha Hotel

Figure 1: Sale-list status in Chrouy Changva and Ruessei Kaev districts

2 VTRUST Journal of Real Estate| Volume 1, Issue 4| Land Market Review: Chrouy Changva, Ruessei Kaev Districts| Page 2

ation of the market discount to stand at 9 percent which is farther than the average – negatively 4 percent below the initial list prices. On the contrary, the median of the market discount rate drops down at 2 percent below the initial list prices. As a result, properties in the two districts on average could be sold 4 percent higher, while in some cases 2 per-cent lower, than their initial list prices, with a large gap be-tween listed and actual sold prices across the market. The large gap of the real transacted prices presented here is the result of mixed perspectives. First, it lacked concrete indicative land values in many parts of the market there and as a result most of the sellers offered for sales at the prices often unrealistic and versatile over the listing period. For example, among the total property subjects taken in the survey, the prices of 68 percent were raised up over the marketing period. Nevertheless, the prices of 12 percent were decreased, and 20 percent unchanged in the same pe-riod. Second, the market was mainly driven by speculative demand where buyers were anticipating future profits from the purchase and willing to seize the chance from the slow

pace of development where land market values were still comparatively lower than those in the central business dis-tricts. On the other hand, there was also a versatile behavior about the property market practices within the areas, given the fact that prices not only decreased in a sale-to-list manner but also increased in a last-to-initial list manner during the marketing time. For example, last-to-initial list price ratio, a change of prices from initial to last list prices subjected to the „remained‟ unsold properties, on average went up by 115 percent, meaning 15 percent being raised above the initial list prices, even though in some cases the last list prices could go down by 68 percent.

Land Prices Chrouy Changva District Situated east of Tonle Sap River and north of the capital, Chrouy Changva district covers five communes, namely

Key Property Market Performance Indicators: Chrouy Changva and Ruessei Kaev Districts (2013-2015)

Statistical Analysis

Sold, Market

Discount

Sale-to-List Price Ratio

Last-to-Initial List Price Ratio

Sold, Marketing

Time (months)

Avg -0.04 97% 115% 9

Min -0.19 84% 68% 4

Q1 (25%) -0.11 90% 100% 5

Median -0.02 98% 120% 9

Q3 (75%) 0.04 105% 129% 11

Max 0.09 110% 167% 18

Std. Dev. 0.09 0.08 22% 4

Note: -0.04*% = -4%; Avg. = average; Q1 = 1st quartile (25%); Q3 = 3rd quartile (75%); Std. Dev. = standard deviation; Source: VTrust Appraisal Research Department

Figure 3: Key property performance indicators in Chrouy Changva and Ruessei Kaev districts

Figure 2: Pricing changes for listed properties during marketing time (Sellers tend to update list prices throughout the course of listing period.

Figure 4: Land prices by communes in Chrouy Changva and Ruessei Kaev districts

Average Min Max

Chrouy Changva District 20%

Major

Street /

Road

Nat'l

Hwy 6

Nat'l Hwy

6 with

Corner

Inside /

Dead-End /

Gravelled

On Sub-

Street /

Small Road

Sub-Street

Corner

Chrouy Changva 670$ 31% 1,080$ 420$ 1,750$ 1,120$ 1,260$ 1,750$ 420$ 660$ 880$

Preaek Lieb 360$ 17% 480$ 120$ 1,030$ 400$ 670$ 1,030$ 120$ 230$ 310$

Preaek Ta Sek 150$ 33% 250$ 120$ 460$ 250$ n/a n/a 120$ 140$ 190$

Bak Khaeng 139$ 14% 179$ 70$ 310$ 170$ 260$ 310$ 70$ 80$ 110$

Kaoh Dach 40$ 6% 45$ 5$ 80$ 50$ n/a n/a 5$ 15$ 20$

Ruessei Kaev District 8%Major

Street

Nat'l

Hwy 5

Nat'l Hwy

5 with

Corner

Inside /

Dead-End /

Gravelled

On Street /

Small Road

Sub-Street

Corner

Tuol Sangkae 1,080$ 5% 1,180$ 670$ 2,000$ 1,580$ 1,750$ 2,000$ 670$ 740$ 990$

Svay Pak 280$ 5% 310$ 110$ 760$ 460$ 520$ 760$ 110$ 190$ 250$

Kilomaetr Lekh Prammuoy 650$ 6% 730$ 500$ 1,110$ 810$ 950$ 1,110$ 500$ 580$ 770$

Ruessei Kaev 810$ 4% 870$ 550$ 1,390$ 1,130$ 1,240$ 1,390$ 550$ 620$ 820$

Chrang Chamreh Ti Muoy 560$ 16% 740$ 490$ 1,170$ 800$ 930$ 1,170$ 490$ 530$ 710$

Chrang Chamreh Ti Pir 610$ 11% 750$ 450$ 1,360$ 730$ 1,010$ 1,360$ 450$ 500$ 650$

Source: VTrust Appraisal Research Department

Avg. Y-o-Y

Growth

Rate from

H2:2013 -

H2:2015

Avg. in H2

2013 (per

sqm) Market Prices Classified by

Major Streets (Approx.)

Market Prices Classified by Sub-

Streets (Approx.)

SECOND HALF OF 2015 (PRICE PER SQUARE METER)

Note: Avg = average; Min = minimum; Max = maximum; y-o-y = year on year; H2 = second half (from July to December); Nat'l Hwy = national highway

Source: VTrust Appraisal Research Department

3 VTRUST Journal of Real Estate| Volume 1, Issue 4| Land Market Review: Chrouy Changva, Ruessei Kaev Districts| Page 2 VTRUST Journal of Real Estate| Volume 1, Issue 4| Land Market Review: Chrouy Changva, Ruessei Kaev Districts| Page 3

Chrouy Changva, Preaek Lieb, Preaek Ta Sek, Kaoh Dach, and Bak Khaeng. The district is one of the promising top-tiered zones which have been mapped out with satellite city plans and mega development projects, thus pushing land prices to shoot up markedly since the last three years.

From 2013 to 2015, on average land prices in Chrouy Changva district grew by 20 percent year-on-year, a lot higher than those of its neighboring Ruessei Kaev district, 8 percent. With some major project completion and promis-ing future, average growth of land prices in Chrouy Changva commune grew by 31 percent year-on-year, with an average price per sqm of about US$1,080 during the se-cond half of 2015, up from US$670 per sqm during the se-cond half of 2013. In sum, land prices in the mentioned commune ranged from US$420 per sqm to US$1,750 per sqm depending on particular determinants such as signifi-cance of streets, zoning, and potentiality of development.

Other notable high growth communes in Chrouy Changva district were Preaek Ta Sek, 33 percent, and Preaek Lieb, 17 percent. The fast growing rate of land prices in those zones are pertaining to the promising future backed by two of the satellite city master plans by OCIC as well as L.Y.P Group and several other major completed projects such as Sokha Phnom Penh Hotel, Bellevue Apartment, and Young Commercial Center, just to name a few. Other factors af-fecting land prices in the areas are the existing gated hous-ing development projects currently under construction by

Borey Peng Huoth and the Mekong Royal, for instance, and the newly announced and under-construction projects such as the Bay and La Vie Residences. Ruessei Kaev District Situated west of Tonle Sap and just opposite Chrouy Changva, Ruessei Kaev district covers six communes, namely Tuol Sangkae, Svay Pak, Kilomaetr Lekh Pram-muoy, Ruessei Kaev, Chrang Chamreh Ti Muoy, and Chrang Chamreh Ti Pir. Looking back over 10 years ago, many parts of these areas were covered with water bodies and many large portions of vacant land with wild scrubs. But thanks to the quick pace of development, the areas are now a bustling residential district with the large, fast-growing population. This has ever since pushed land prices in the areas to rise every year, as in some communes the prices almost reach a peak.

A recent longitudinal survey by VTrust Appraisal indicates market prices of land in the areas still continues to go up, at least maintaining 8 percent of year-on-year growth within the last two years. With recent developments of gated hous-ing in Chrang Chamreh zones, the two communes had over 10 percent growth year-on-year, with market prices now averaging US$750 per sqm in general and peaking at US$1,300 per sqm in the most robust areas. And Tuol Sangkae, on the other hand, has already reached a price peak and therefore price growth has started to slowdown.

Outlook River culture, or river civilization, had taken a deep root back to thousands of years ago. While the model has been adopted throughout the world, Chrouy Changva peninsula is currently also under the planned map of so-called „river culture‟ that potentially creates a new civilization trend to be favored by effluent and elite population. While some signs of the announced master plans of satellite cities have been already marked with positive but slow progress, this concept will form a new shape of the city with a total dif-ference anticipated over the next 10 years, and 80 percent of landfill further appears to prove it real promising

Figure 7: Indicative map showing small-large scale housing concentrations

Figure 5: Indicative map showing major developments

Figure 6: Land being filled with sand in Preaek Ta Sek commune

4

Contact VTrust Appraisal Co., Ltd. Parkway Square, Mao Tse Tong Blvd., Phnom Penh, Cambodia Contact: (+855)23-220-098 Email: vta@vtrustappraisal.com Website: www.vtrustappraisal.com Century 21 Mekong Parkway Square, Mao Tse Tong Blvd., Phnom Penh, Cambodia Contact: (+855)23-966-577 Email: info@c21mekong.com.kh Website: www.c21mekong.com.kh

Author Hoem Seiha (Mr.) Director of Research | VTrust Appraisal Co., Ltd. Tel: +855-23-220-098 | H/p: +855-12-699-553 Email: seiha@vtrustappraisal.com Website: www.vtrustappraisal.com Advisory Research Committee Sim Hoy Chhoung | CEO | VTrust Appraisal Chrek Soknim | CEO | Century 21 Mekong In Sitha | Business Development | VTrust Appraisal Tarek Genena | Consultant | VTrust Appraisal Phin Sopthea |Valuation Manager| VTrust Appraisal

26 January, 2016 Volume 1, Issue 4

A Publication from In Partnership with

Disclaimer VTrust Appraisal Co., Ltd. informs that the information, including figures, statistics and opinions, is one gained from resources deemed reliable and expressed solely by the authors of this publication but does not necessarily reflect the viewpoints of VTrust Appraisal Co., Ltd. Therefore, VTrust Appraisal does not guarantee or bear any responsibility for any failures pertaining to the information contained herein.

Valuation Services

Property ● Asset ● Pre-IPO

Research & Consultancy

Market ● Feasibility

Contact: (+855)-23-220-098

Brokerage Services

Buy ● Sale ● Rent

Contact: (+855)-23-966-577