Cambodia's Property Market Diverges: Industrial Growth vs. Residential Struggles

Cambodia's real estate market is showing a marked divergence in performance as of the third quarter of 2026, according to the latest report from APS Research. While industrial properties are thriving due to robust manufacturing investments, segments tied to household spending and tourism, such as residential and retail, are facing significant challenges.

The APS Market Pulse report highlights that high-end condominium prices have dropped by 6.7% from the previous quarter, with Grade A serviced apartment rents declining by 13.5%. In Phnom Penh, average office occupancy is reported at 63.9%, while retail occupancy lags at 57.1%. This trend indicates a widening gap between sectors linked to export production and those reliant on domestic consumption.

In contrast, industrial properties are experiencing growth. Ready-built factory rents have risen by 3.6% to $2.90 per square meter per month, while long-term special economic zone (SEZ) land lease prices have increased by 1.96% to $67.60 per square meter. The report also notes that seven new SEZ projects were announced in the third quarter, with approximately 1,400 hectares receiving approval from the Council for the Development of Cambodia, and another 800 hectares under review.

“Knight Frank noted that heightened geopolitical uncertainty and weaker external demand have weighed on sales performance in both the high-end and mid-tier condominium segments.”Knight Frank, real estate consultancy

Investment approvals in the manufacturing sector have also been robust, with $5.45 billion in qualified projects reported from January to August 2026. Cambodian investors accounted for 43.9% of this investment, followed by Chinese and Singaporean investors at 35.9% and 13.7%, respectively.

Despite the industrial sector's success, the residential market remains under pressure. Developers launched 990 condominium units in Q3 2026, a 37.5% increase from the previous quarter. However, landed property launches fell by about 46%. The average price for high-end condominiums is now $2,599 per square meter, reflecting a continuing trend of price declines. Mid-range and affordable unit prices were also noted in the report but are not detailed here.

Rental competition in the residential sector has intensified, with Grade A serviced apartments now averaging $17.30 per square meter per month. Grade B rents were also reported but are not included here. This pressure is attributed to weaker occupancy rates and a growing selection of competitively priced apartments. Landlords are increasingly willing to negotiate below advertised rates, indicating a potential softening of effective rents.

In the commercial sector, the office market is also favoring tenants, with an estimated total office stock of about 1.3 million square meters. More than 160,000 square meters of additional supply is expected throughout 2026, further increasing competition. The average occupancy rate stands at 63.9%, with new Grade C supply contributing to this figure.

“Kinkesa Kim, Managing Director of APS Research, said the recovery will depend increasingly on individual locations, tenant requirements and developers’ ability to match supply with demand.”Kinkesa Kim, Managing Director, APS Research

Retail developers are adapting by focusing on community malls and standalone locations, which require lower investments. Phnom Penh's retail supply is estimated at around 882,000 square meters, with an additional 42,000 square meters expected in 2026, about 65% of which was completed by the third quarter. However, average occupancy remains subdued at 57.1%, despite some high-street locations benefiting from better visibility and accessibility.

The hospitality sector is also feeling the impact of reduced international arrivals, with approximately 2.25 million arrivals reported from January to August 2026, a decrease of 44.4% from the previous year according to Ministry of Tourism data. This decline has led to lower hotel occupancy rates and reduced cash flow for developers, potentially delaying construction and hotel handovers.

Overall, while the industrial property market in Cambodia is thriving, the residential and commercial sectors are grappling with significant challenges. Analysts suggest that recovery in these segments will depend on location, tenant requirements, and the ability of developers to align supply with demand.