Why the first Malaysian project marketed in Cambodia will not be the last
As the trend of cross-border investment grows in Asia, agents are looking to explore new markets, and one interesting indication of this is that Cambodian investors are being courted by Malaysian developers for the first time.
Rather than just sticking to domestic markets, ASEAN investors are often open to projects with strong returns across the region, says Ann Thida, Senior Associate Director of CBRE Cambodia, which is why it is marketing the Damansara Cityproject, which is unveiled today (11 July).
She is convinced that there are Cambodian buyers who want to invest in overseas property, with residential and resort property being most in demand. “We have seen there is a market, some Cambodia investors are seeking overseas investment opportunities. They have invested in some countries before such as Australia, UK, Singapore, Thailand and United States.
“Asian countries seem to be their target, we have similar culture, living, food and also the cost of the property is cheaper than Europe, Australia or America. Cambodians have invested in other countries such as Singapore, Thailand, Australia and the United Kingdom before, but are yet to invest in Malaysia.
“CBRE is going to introduce this project and hope we will have the positive outcome. Foreigners can own freehold property in Malaysia for both building and landed; this is the key attractive point.”
But given that it is more expensive, why is Malaysian property of particular interest? “Malaysia property market is mature, the risk of investment is low, in addition there is a consistency appreciated rate over the last 40 years (from 8% to 12%), another factor to buy the property in Malaysia right now is the currency rate (there is a depreciation rate in Malaysia at the moment).”
CBRE is targeting Malaysians who are based in Cambodia, plus domestic and foreign overseas investors, wealthy families who have children studying in Malaysia, those with businesses in Malaysia, and wealthy Khmer people, the predominant ethnic group in Cambodia.
Damansara City is a $700million flagship project from leading developer GuocoLand, a Singaporean listed company, which has been made available to Cambodian investors in a pre-launch sale. The two high-rise residences contain 370 units, a high end gourmet and retail complex and a five-star international hotel by Clermont.
Located five kilometres from Kuala Lumpur, the luxury homes are currently valued at $4,600 per square metre, more than twice the average condo value in Phnom Penh at an average of $1,900 per square metre, according to data from global agent, Century 21.
Cambodia itself offers strong potential for property investors, with land prices alone in the capital rising by up to 30% from January-May 2015, according to a World Trust Estate report. Couple that with Cambodia’s steady economic growth averaging 7.5%for the last five years, putting it 21st in worldwide growth and the regional leader, and it presents a strong case, although foreigners are effectively banned from becoming landowners, as they cannot buy ground-floor property.
But with ASEAN integration coming by the end of the year and acting as a single market, real estate markets in Southeast Asia are expected to receive a big boost in international property demand and it will be interesting to see how cross-border demand will fare.
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