Office rental rates plummet by one third

Soeun Say
Bangkok Post

PHNOM PENH : Office rental prices in Cambodia's capital continue to tumble, dropping by as much as one-third in the first quarter of the year, according to the National Valuers Association.

"Prices have continued to fall because the supply of office space for rent is much higher than the demand," said Keuk Narin, general manger of the Bonna Realty Group and secretary of the National Valuers Association.

The prices are likely to continue to fall throughout the rest of the year, he said.

The NVA estimates that the best Grade A office space now rents for US$20 to $25 (650-800 baht) per square metre per month, down $10 from the final quarter of last year. Grade B rentals now go for $7 to $11 (230-350 baht) per sq m a month, a drop of about $3. Figures for Grade C offices are hard to compile as most of the properties are independently owned and operated.

Khoun Davy, finance manager for the Delano Business Centre, said it was charging $15 per sq m a month, but that the centre was considering lowering the price due to a lack of interest.

"It's so quiet," he said. "It's hard to attract clients to rent our space. We've had 70% of our renters from early 2009 until now. We've still got 30% [empty].

"We're preparing next month to decrease the price from $15 to $8 per square metre per month," he said. "The location is good. It's probably the best location in Phnom Penh."

Office space at many new developments remained empty in the first quarter of the year.

According to NVA figures, the Icon Professional Centre on Norodom Boulevard had rented only 26% of its space. The Delano Business Centre, on streets 134 and 169, filled 70% at $15 per sq m a month. And the Attwood Business centre, near Phnom Penh airport, was reporting 61% occupancy.

Other companies reporting occupancy to NVA included: Canadia Tower at 28%; Bo Retra, 78%; Paragon Office Building, 25%; and Premier Office Centre, 68%.

However, more established properties reported higher occupancies, such as the Intelligence Office Centre, which is 89% full, Hong Kong Centre at 91%, the Phnom Penh Centre with 96% and B-Ray Tower, which was also nearly fully occupied.

Despite the falling prices, Daniel Parkes, country manager for CB Richard Ellis (CBRE), on Tuesday said the company was optimistic demand would grow in the longer term.

"Demand will continue to grow in coming years from existing occupiers within the Phnom Penh market looking to upgrade their premises and business image, and also from new entrants from abroad," he said.

Grade A office space is likely to continue to decline, Mr Parkes added, as demand over the next five years increases.

CBRE previously estimated office-space demand would nearly double to 18,580 sq m by 2013, as businesses look to upgrade their offices and new firms open.