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The Cambodian real estate market in the first half of 2025 has been a story of contrasts. On one hand, infrastructure development, government tax incentives, and strong domestic demand for affordable housing continue to provide momentum. On the other, external risks such as U.S. tariffs, regional tensions with Thailand, and an oversupply in certain property segments are creating headwinds.
Offices and Retail Under Pressure
Phnom Penh’s office and retail sectors are still struggling to find balance. High vacancy in prime office towers and falling occupancy in shopping centers highlight a clear mismatch between supply and actual demand. While landlords have resisted lowering rents significantly, tenants have become more selective, focusing on accessibility, amenities, and cost efficiency.
This suggests that the commercial market is entering a “consolidation phase,” where only well-positioned assets will perform, while speculative developments may struggle without a repositioning strategy.
Residential Market: Two Very Different Stories
The condominium sector has seen prices bottom out, with developers pushing smaller, more affordable units backed by attractive payment plans. Local buyers — particularly first-time homeowners — are becoming the main driving force, replacing the foreign speculative wave that once dominated the market.
By contrast, landed housing projects have faced slow absorption, especially in higher-end segments. Shop houses along major roads remain in demand due to their mixed-use appeal, but large villas and overpriced projects are finding it hard to attract buyers. This reflects a broader market shift toward practicality and affordability, where end-user needs outweigh pure investment speculation.
Tourism and Hospitality: Recovery with Caveats
Tourism has been rebounding, particularly in Siem Reap, but remains below pre-pandemic levels. New international hotel brands are entering the Phnom Penh market, betting on the long-term benefits of the new airport and infrastructure projects. However, recent border closures reminded investors how fragile the sector can be.
Industrial and SEZs: A Bright Spot
One of the most encouraging trends lies in the industrial and logistics sector. Special Economic Zones (SEZs) continue to attract foreign investment, particularly from China and Singapore, and diversification into automotive and electronics manufacturing is accelerating. This not only brings jobs but also creates demand for housing in emerging districts outside the city center — a factor developers should not ignore.
Our View
The first half of 2025 confirms that Cambodia’s property market is moving away from speculative growth and toward a more sustainable, end-user-driven model. Developers who adjust to affordability, integrate community-focused planning, and align with the country’s industrial growth corridors will be best placed to succeed.
For investors, the key opportunities lie in affordable residential housing, mixed-use shop houses, and industrial-linked developments, while caution is advised in oversupplied office towers and high-end residential projects.
This analysis is based in part on data and insights from the Knight Frank Cambodia report “Cambodia Real Estate Highlights H1 2025,” combined with our independent market observations.
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