Phnom Penh has always had a transient expat population, even more so than its Southeast Asian neighbours. With NGOs, embassy’s and multilateral organizations employing such a large proportion of the workforce, typical employment contracts lasted one to two years at most. A twelve-month lease contract gave tenants the security for the term of their stay in Phnom Penh and landlords were able to increase prices with ease, as the next round of workers entered the country.
The rental market in Phnom Penh has changed dramatically over the past three years with a number of high-quality developments coming to market. This has coincided with the reduction in aid spending around the world. As a result, the employees at NGOs and other Aid organizations have less job security; shorter contracts and their living allowances have not kept pace with inflation.
Landlords have to adjust to this change and we are seeing more competition between landlords to secure long-term tenants. We are also starting to see more flexibility and sophistication in lease contracts to match the uncertainty in employment. It is taking some time for this adjustment, but the landlords that provide flexibility in the terms of contracts are seeing far lower vacancy rates.
Two years ago, when I started working in Phnom Penh I lamented at the lack of suitable rental options. As the market transitions at a time where there is plenty of new supply, we are likely to see further competition for tenants. It’s a renters market for now.
KH