The global health crisis of COVID-19 brought various challenges worldwide and Cambodia is no exception to that crisis. This crisis has seen a global economic crash, and in Cambodia, the major sectors affected were particularly garment manufacturing, tourism, and real estate sector. The entire economy weakened under the outrage of the pandemic. However, certain watchers suggested investing in property, which was beyond the financial capacity of most residents and investors at that time.
The unemployment rate and debts scaled higher; fewer landlords could lower their rent which affected the whole rental market. This added businesses to shut down, and more people became unemployed. It turned out to be a cobweb for everyone at that time.
But before this catastrophic situation, Cambodia’s rental market continuously grew because of foreign investments, the manufacturing sector and the ever-increasing tourism sector. With a trusted real estate investment advisor in Cambodia, you can easily navigate and steer the rental market during these unprecedented times.
The Impact of the COVID-19 Pandemic on Cambodia’s Rental Market
Like many other countries, Cambodia enforced complete lockdowns and movement restraints to prevent the virus from spreading. These measures led to an immediate blow to the rental market. The property viewings and transactions came to a standstill.
The tenants and buyers looking to rent and lease property could not visit the properties, which led to a slowdown in the property sales. The tenants could also not pay their rent due to unemployment, zero cash flow in the country and no income, savings, or job, which positioned landlords in a tough situation.
Before the emergence of the pandemic crisis, Cambodia’s rental market was continuously roaring. Phnom Penh had the maximum number of rental projects in Cambodia. Foreign investors were interested in the country’s growing economy, beautiful climate, and, most importantly, huge returns.
Another prime reason is that the skyline is growing rapidly due to the construction of the country’s first towers and complexes, with great prices for apartment units in prime locations with more gated housing communities, townhouse complexes, and satellite cities are also being developed across the city’s distant and outer areas. This has increasingly raised the demand for rising residential and commercial properties driving up rental prices.
Rental Market Challenges During the Pandemic
When the pandemic began to limp Cambodia, it severely damaged many sectors, especially its economy, which is majorly driven by tourists and foreign investors in the capital city of Cambodia. According to a Real Estate Survey by Khmer Times, 70% of people suggested the city as their top rental location. Cambodia’s rental market is majorly governed by foreign investors and immigrants who play a crucial role.
However, the pandemic caused a downfall in foreign demand. It resulted in a conservative approach by the investors, which resulted in delayed investment decisions. Expatriates also encountered hesitation and chose to return to their home country, which resulted in lower demand in the rental business. This huge fallout had a serious impact on the rental market, which caused a surplus of rental properties to remain vacant in Cambodia.
The COVID-19 pandemic smashed Cambodia’s main economic growth drivers: tourism, manufacturing, and construction. Based on the World Bank Report, it altogether accounts for more than 70% of the country’s growth. Since most sectors were deeply affected, the tourism industry took a huge hit. The travel restrictions, the fall in the number of passengers, and the fear of catching the disease reduced tourism in Cambodia.
Due to this reason, the short-term rental market was automatically affected, just like the dominoes effect. Property owners in Cambodia who majorly counted on short-term rentals as their single source of income were left stumbling to cover expenses. Most of the property owners had to shift their business to long-term, which led to surged competition in Cambodia’s rental market.
Future Outlook for Cambodia’s Rental Market
Due to the onset of COVID-19, foreign investments took a toll and moved to a declining curve, disturbing the whole economy. After the relaxation of the lockdown situation and the rise of vaccinations, the situation in Cambodia’s rental market improved significantly with the old track record.
Before the huge spread of COVID-19, Cambodia was one of the fastest-growing economies globally. As observed by SCMP, its annual growth was near about 7.7% between 1998-2019. In 2022, Cambodia’s economy grew by 5.3% and was also predicted to go further by 6.5% in 2023, showing resilient growth in the rental market.
Cambodia’s rental market is growing, and more residents and investors are looking for properties. The offset of COVID resulted in more direct foreign investors looking for further investment in the properties and suggests more room for expansion.
The renters can now easily rent the property at the market rate with more flexibility on the lease agreements. The renters can now easily rent the property at an affordable rate offering more flexibility in the lease, which was quite unlikely during the pandemic.
Purchasing and renting properties in Cambodia has become affordable and convenient for investors looking for long-term investments and the rental market is expected to flourish in the coming times.
After the hard fallback, Cambodia’s rental market is set to stand strong. The rapid economic growth, foreign investment, and digital economy contribute to a headstrong long-term growth in the country’s rental market.
Cambodia’s rental market greatly impacted the country’s economy due to the COVID-19 pandemic. It was not only the loss and suffering of people but also huge losses and stagnation for landlords and tenants. But as the situation improved, so did the rental market. Cambodia’s rental market returned to a blossoming situation with more affordable rental options like housing, investment properties, etc.
Suppose you are looking for properties according to your needs, including specific locations and property types. In that case, our property agents can guide you regarding property rates and desired locations. They have a strong hold on their commitment to delivering the best, considering the timeframe and affordability.