The Phnom Penh property market is showing a clear split between the southern and northern parts of the city centre. In the south, especially around the riverside and luxury condominium zones, there is an oversupply of high‑end units—many purchased by Chinese investors—driving prices down. In contrast, the northern downtown area around the Central Market and the emerging financial district suffers a shortage of quality housing, creating a niche for older French‑colonial shophouse apartments.
Market dynamics
- Oversupply in the south – A large number of new condominium towers have been completed in the past three years, many of which remain vacant or are priced above market demand.
- Scarcity in the north – The area surrounding the Central Market and the financial district has few new residential projects. Existing shophouse apartments, built in the 1950s‑60s, are among the few available options for expatriates and well‑paid professionals working for multinational banks and regional offices.
- Developer interest – As land in the city centre becomes increasingly scarce, developers are beginning to acquire older shophouse properties at premiums of 200‑300 % over their appraised values, anticipating future redevelopment into larger office or mixed‑use projects.
A case study: 112 m² shophouse apartment
- Purchase price (2017): US $80,000 for 112 m², equivalent to roughly $714 per square metre—well below global urban averages.
- Renovation: The unit was gutted and refitted over three months, adding new doors, granite countertops, modern bathrooms, and full furnishing to meet expatriate standards.
- Location advantages:
- Direct view of a tree‑lined street in the financial district.
- Proximity to multiple bank towers, the Department of Excise headquarters, and other government offices, providing a steady pool of potential tenants.
- Limited competition from condominiums, which are generally situated 3–4 km away from the core business area.
- Rental performance: The property has been consistently rented since renovation, contributing to its status as one of the investor’s best‑performing assets in Cambodia.
Investment considerations
- Appreciation potential – With urban land becoming scarce, older shophouse apartments may be bought out by developers at a premium, especially if they occupy prime streets near the financial district.
- Structural lifespan – While the buildings are solid, they were originally constructed in the mid‑20th century. Investors should assess the long‑term structural integrity and factor possible future redevelopment costs.
- Price comparison – Shophouse apartments can cost one‑third to one‑quarter of comparable condominium units in the same area, offering a lower entry barrier for investors seeking exposure to Phnom Penh’s growth.
- Risk of oversupply – The southern oversupply of luxury condos suggests that market sentiment can shift quickly; investors should monitor new construction pipelines to avoid overexposure to any single segment.
Practical steps for prospective buyers
- Identify properties in the northern downtown corridor – Focus on streets adjacent to the Central Market and the financial district where residential supply is limited.
- Conduct a thorough structural survey – Verify the condition of foundations, roofing, and load‑bearing walls, especially for buildings dating from the 1950s‑60s.
- Calculate renovation costs – Budget for interior upgrades (e.g., plumbing, electrical, finishes) to meet expatriate expectations and achieve competitive rental rates.
- Assess redevelopment risk – Research any planned large‑scale projects or zoning changes that could affect the property’s future use or value.
- Compare rental yields – Benchmark expected monthly rent against the total acquisition and renovation cost to ensure a satisfactory return on investment.
The current imbalance between oversupplied luxury condos in the south and undersupplied shophouse apartments in the north creates a distinct opportunity for investors willing to acquire and upgrade older properties in Phnom Penh’s financial heart. Proper due diligence on structural condition and market trends can unlock significant upside as the city’s land becomes ever more valuable.
