PHNOM  PENH OFFICE SECTOR

Overall supply for Grade B offices in Phnom Penh now surpasses Grade A whilst centrally-owned offices still remains dominant as strata-title office supply is increasingly coming online. 

Key findings

Four new office buildings (comprising 53,342 sq m of NLA) completed during H2 2019,
increased Phnom Penh’s overall office supply to 517,043 sq m of NLA, an 11.5% increase from H1 2019.

Of the four new buildings, Star City (Q3 2019) and The Fortune Tower (Q4 2019), pumped in 45,059 sq m of NLA to the strata-title office stock, totalling 79,636 sq m of NLA, a drastic increase of 130% from H1 2019.

However, supply growth for centrally owned office segment decelerated significantly with an increment of 2% from H1 2019. Chip Mong Bak Touk and Alpha Tower, both completed
during H2 2019, added 8,283 sq m of NLA; bringing the total stock count up to 437,407 sq m of NLA.

Office vacancy rate continues to rise to 18.2% (a 5.3 percentage point y-o-y increase from H2 2018) mainly due to the higher vacancy rates in suburban combined with low occupancy of stratified office space.

As the market faces a softening occupier market, downward adjustment for rental rates are expected as the building owners and individual investors of strata title offices compete for tenants.