It would be better for some people to buy a property rather than pay the hotel rooms if they visit the same destination time after time. Buying a property allow them to have more space than a hotel room and for personal enjoyment – at the same time there is also an opportunity to take the advantage of the benefits to a property investment with the possibility of rental income, or the capital gain if they resell.
In the last few years, developers have been active in selling resort properties in Sihanoukville. This market is popular not only to foreign buyers, but also the local Cambodian buyers. Majority of these buyers are looking to rent their properties out for capital gain on their rental income. For the domestic buyers, very few will use as their primary residence or their holiday home and the rental market is not attractive enough for individual investors to get decent returns.
For any home buyers looking to rent their units out, their goal is to achieve a decent rate of rental income and capital gain after purchasing a property. To be fair, long rental yield potential is very limited in most of resort markets, whether it is in Cambodia or aboard. Owners often find that achieving rental income yields they are hoping for is harder than expected. Some of the investors are also frustrated in finding tenants due to the oversupply of condominium units in the market and the people choice of staying in the new hotels. Furthermore, it can also be a challenge to find a professional agent in Sihanoukville that will check the tenant in and out, collect rent, market the property and maintain the property etc.
Many developers have promoted their properties by offering “guaranteed yields”, but purchasers should remember the selling price of these units has been inflated. After the expiry of the “guaranteed yields” period, buyers should also be concerned about the sustainability of any potential rental income and see if the rental yield can be sustained. Aside from the propose of buying properties for primary residence, buying any property for investment purpose first priority is to ensure that the rental yield can be sustain.
Furthermore, the key to rental income in a holiday home is amenities, facilities, location and view, the level of management services and availability of restaurants, supermarkets around the properties etc. In terms of room specifications, tenants would have the same expectations from a property same as they would stay in a hotel room. In Sihanoukville, the proportion of purchase is more investment orientates buyers than own-use buyers. For the investment buyers, they should have a clear understanding of their primary reasons for buying a resort property before making a purchase - understand the market of the property they purchase beforehand. A holiday home in Sihanoukville is less liquid than an essential home in bigger cities such as Phnom Penh. As most people come to Sihanoukville are short stay visitors and prefer to stay in the hotels, therefore the possibility of capital gain can be much more varied. There have been examples in holiday destinations such as Phuket or Pattaya where sellers have had to discount below purchase price to find a buyer.
In Sihnaoukville, the primary market is local Cambodian and foreign buyers who buyer condominiums as resort homes, with a particular focus on beachfront projects. Mainland Chinese tourists make up a significant portion of tourist arrivals to Cambodia and it is forecasted these group of people has the potential to develop into purchasers. Afterall, Sihanoukville attracts a combination of Cambodian and foreign tourists year-round. The main draw of Sihanoukville includes the ease of access, availability of amenities which is the most popular resort in Cambodia, but lack of boutique hotels.
While it is already relatively accessible by car to Sihanoukville, there is room for improvement. For example, the expressway would extend 190 kilometers which will connect Phnom Penh in the Kov Srov area extending along National Road 4, move towards Kampong Speu province before ending in Sihanoukville. So far, a construction team from China has arrived in the Kingdom to begin work on an expressway, with the groundbreaking ceremony expected before the end of March this year. Currently, the issue that needs to be solved is the compensation to those affected by construction work.
In addition, the existing airport could be upgraded to handle more chartered international flights from different Asian cities. Other seaside destinations such as Kep and Kampot, there are not too many permanent residents other than the local community as infrastructure and amenities are limited. It does, however have the potential to develop in the same pattern as Sihanoukville once the infrastructure and amenities are in place.
Koh Kong has a true resort island feel and its main draw is quality beaches that surpass those in Sihanoukville. It is a great location to offer top-end luxury villas where buyers driven by lifestyle. The island has also grown consistently in terms of tourist arrivals and new infrastructures such as the new international airport to keep up with growth levels.
In the end, if a holiday home buyer wants to achieve a decent rental income, they must look carefully at how this will be achieved and how sustainable this income will be once the developer has sold all the units.