A Market at a Crossroads: Challenges and Opportunities
The Cambodian real estate sector in 2025 is at a critical juncture, with experts highlighting both the persistent challenges and emerging opportunities. While the market closely mirrors the trends of the previous year, industry leaders emphasize the need for strategic adaptations to align pricing strategies with market realities. A recent ‘Fearless Forecast’ report by CBRE Cambodia outlines key issues, particularly in the retail and office sectors, where occupancy rates fall significantly below global benchmarks. However, experts also identify strong potential in specific niches, such as serviced apartments and centrally located developments, which continue to attract buyers and tenants despite broader market uncertainties.
Pricing Strategies vs. Market Realities: A Critical Misalignment
One of the main concerns raised by industry analysts is the disconnect between pricing strategies and actual market conditions. While Cambodia’s economic growth remains steady, demand for commercial spaces has not kept pace with the supply, leading to lower occupancy rates. According to CBRE Cambodia, retail space occupancy stands at just 61.8%, well below the global standard of 90-95%. Despite this, premium retail spaces still command high rental prices, averaging $22.6 per square meter. Similarly, office space occupancy rates are at 65.1%, compared to the global benchmark of 85-90%, yet premium office rents remain at $27 per square meter.
This discrepancy suggests that landlords and developers may need to reconsider their pricing models. The high rental prices, combined with the oversupply of commercial properties, create a challenging environment for businesses looking to lease space. Experts recommend strategic adjustments, such as flexible lease terms, incentive packages, and targeted marketing campaigns, to attract tenants and stimulate demand.
Condominium Sector: Competitive but Cautious Growth
Despite challenges in the commercial sector, Cambodia’s condominium market remains competitive on a regional scale. According to CBRE Cambodia’s report, luxury condominiums in Bangkok average $6,500 per square meter, while mid-range units in Phnom Penh are priced at approximately $2,200 per square meter. This pricing places Phnom Penh’s market in a favorable position for investors seeking affordability in Southeast Asia.
However, the sector faces upcoming supply pressures, with over 3,200 new units expected to enter the market in 2025. While demand for high-quality and well-located properties remains steady, developers must navigate an increasingly competitive landscape. Buyers are becoming more selective, prioritizing projects with reputable developers, prime locations, and comprehensive amenities.
Kim Kinkesa, Managing Director of CBRE Cambodia, noted that many existing projects continue to attract buyers, especially those developed by experienced and trusted companies. However, new developers entering the market face significant challenges. “Building trust and establishing a strong presence in such a competitive environment requires both experience and a proven track record,” Kinkesa said.
Serviced Apartments: A Promising Investment Opportunity
One of the brighter spots in Cambodia’s real estate sector is the serviced apartment market. With 240-plus new units entering the market in 2025, this segment appears to be expanding in a measured and strategic manner. The demand for serviced apartments is growing, especially among expatriates, business travelers, and long-term corporate tenants.
According to CBRE Cambodia’s research, successful serviced apartments in major Asian cities achieve occupancy rates of 88-92%. While Cambodia’s current market still has room for growth, these numbers suggest that well-managed and well-located serviced apartment projects could become highly profitable investments. Grade A serviced apartments in Phnom Penh currently command rents of $19.3 per square meter, indicating a strong rental yield potential for investors who can cater to the preferences of high-income tenants.
Key Factors Influencing the Real Estate Market in 2025
1. Economic Stability and Growth Prospects
Cambodia’s GDP growth remains steady at 5-6%, driven by strong exports, foreign direct investment (FDI), and infrastructure development. However, global economic uncertainties, including inflation and rising interest rates, could impact investor confidence. Stability in government policies and continued investment in public infrastructure will be crucial for sustaining market growth.
2. Urbanization and Infrastructure Development
The Cambodian government continues to invest in major infrastructure projects, including roads, bridges, and mass transit systems. These developments improve accessibility and enhance the value of real estate in key areas. Upcoming projects, such as the Techo International Airport and the Funan Techo Canal, are expected to boost property demand in their surrounding regions.
3. Foreign Investment and Policy Reforms
Cambodia remains an attractive destination for foreign investors due to its liberal property ownership laws for foreigners. However, challenges such as bureaucratic hurdles and regulatory inconsistencies must be addressed to further enhance investor confidence. The government’s efforts to streamline investment procedures and improve transparency in the real estate sector will play a vital role in attracting long-term investment.
4. Demand for Affordable and Sustainable Housing
As Cambodia’s middle class grows, so does the demand for affordable and sustainable housing options. Developers who focus on eco-friendly designs, energy-efficient buildings, and affordable financing solutions will likely gain a competitive edge in the market.
The Road Ahead: Strategic Adjustments for a Stronger Market
To ensure the long-term sustainability of Cambodia’s real estate sector, industry stakeholders must take proactive measures to address market challenges. Some of the key strategies that can help revitalize the sector include:
1. Adjusting Pricing Strategies
- Developers and landlords should reconsider pricing models to reflect current demand trends.
- Offering discounted leasing rates, flexible payment plans, and bundled incentives can help attract tenants and buyers.
2. Enhancing Market Transparency
- Increasing access to reliable market data will help investors and homebuyers make informed decisions.
- Implementing stronger regulatory frameworks and clearer guidelines on property transactions can improve investor confidence.
3. Investing in Quality and Innovation
- Developers should focus on delivering high-quality projects with modern amenities, sustainable designs, and smart-home technologies.
- Mixed-use developments that combine residential, retail, and office spaces can enhance convenience and increase property value.
4. Strengthening Public-Private Partnerships
- Collaboration between the government and private sector can accelerate infrastructure development and urban planning.
- Policies that support foreign investment while safeguarding local interests can create a more balanced and resilient market.
A Resilient Yet Evolving Market
Cambodia’s real estate sector in 2025 presents a mix of challenges and opportunities. While concerns over pricing misalignment and oversupply persist, certain segments—particularly serviced apartments and well-located condominium projects—show strong growth potential. Experts urge developers and investors to adopt a strategic, data-driven approach to navigate market uncertainties and unlock new opportunities.
As the market matures, adaptability and innovation will be key drivers of success. Stakeholders who prioritize affordability, sustainability, and quality will be well-positioned to thrive in Cambodia’s evolving real estate landscape. For investors, the key takeaway is clear: while challenges exist, those who understand market dynamics and make strategic adjustments can still achieve strong returns in Cambodia’s real estate sector.