Shifting Housing Market Dynamics Due to Urbanization and Population Growth in Cambodia.
The new-home market in Cambodia, and the capital city of Phnom Penh in particular, are making notable shifts due to the steady population growth rate in Cambodia. For decades after the Khmer Rouge years, the general consensus and even verbage among locals in regards to where people live had been referred to as either countryside or city. For years there had never been any middle ground. The concept of a suburb, believe it or not, is actually a new concept in Cambodia. Over the last 10 or so years, the emergence of the suburb has hit mainstream in Cambodia and is making big waves in housing trends, largely because of the large swaths of people moving to the cities year after year. Here are some of the most notable changes happening due to population growth in Cambodia and urbanization, and how they are affecting the housing market.
Selling the farm… literally
Cambodia had been a predominantly agrarian society for its whole national history up until the early 2000’s when economic growth had started to kick into high gear. Stability in the government spurned on a wave of economic investment from outside players, largely in the textile sector, with the opening of factories across the nation. Now manufacturing is the largest sector in the Cambodian economy with some of the largest worldwide players opening or expanding operations here including Ford Motor Company, Walmart, and Nestle. Approximately 26% of the country’s economy is still tied to the agriculture sector (ODC, 2019). However, large numbers of smaller farmers across the nation cannot compete with larger agribusiness companies or do not have the leverage to demand high enough prices from wholesale buyers for their crops. This coupled with higher paying steady jobs in the cities or factories have caused many to sell their farmland in the provinces and move to Phnom Penh or other urban centers.
The nation is heavily skewed to the young demographic. It is estimated that 74% of the nation’s population of 17.1 million is under the age of 40 (CIR, 2022). This huge young demographic is also in the typical marrying age. This, coupled with strong family values towards getting married is producing a steady increase of married couples. Cambodian families also traditionally have large families. This large demographic of Millennial, Gen Y, and Gen X customers starting new families and having children (contributing to population growth) are the perfect age for entering into the housing market as first-time home buyers.
Cambodia’s Housing gap
Due to the rapid population growth in the capital city, there is a gap in available affordable and mid-priced housing for sale. For years, there were many high-end premium home builders that middle-income earners couldn’t afford. The UNDP has estimated that there will be a 1.1 million home gap in the affordable housing market by 2030, of which 800,000 homes will be needed in Phnom Penh alone to fill demand (Construction and Property, 2018). This is equal to 50,000 more new homes needed on the market per year just to meet demands (CIR, 2022). These converging economic factors have created the ideal climate for sustained rapid growth in the housing market, increasing number of real estate developers launching new projects to meet demands, and increased choices and benefits for home shoppers in the market.
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- Cambodia Investment Review, (2022, January 26). Developers must shift to affordable priced units: CBRE. Retrieved from the Cambodia Investment Review website: https://cambodiainvestmentreview.com/2022/01/26/developers-must-shift-to-affordable-priced-units-cbre/.
- Construction and Property. (2018, May 25). Cambodia to demand extra 1.1 million houses by 2030. Retrieved from the Construction and Property website: https://construction-property.com/cambodia-to-demand-extra-1-1-million-houses-by-2030/.
- Open Development Cambodia, (2019, January, 27). Industries. Retrieved from the Open Development Cambodia website: https://opendevelopmentcambodia.net/topics/industries/