Cambodia Real Estate Mid-Year Review 2025: Is the Market Rebounding?

Phnom Penh’s real estate market in the first half of 2025 presented a mixed performance across key sectors, with commercial properties continuing to correct, while residential and industrial segments show signs of renewed activity.

Presenting findings from a mid-year review of the market on July 10, 2025, CBRE Cambodia stated that real estate developers and investors appear to be adjusting to a shifting landscape defined by cautious buyers, firm sellers, and ongoing global economic pressures.

Economic and Investment Backdrop

In June 2025, the World Bank revised its economic growth forecast for Cambodia to 4 per cent GDP growth for this year, down from the 5.5 per cent projected at the end of 2024. Despite the softer outlook, the Council for the Development of Cambodia (CDC) believes investment momentum still remains strong, having reached USD 5.8 billion by June 2025, with Phnom Penh and surrounding provinces capturing a significant share.

Official government numbers also show a rebound in tourism, with 2.9 million international arrivals recorded between January to May 2025, mainly from Thailand and Vietnam. Construction activity has also held steady, with around USD 3 billion in approvals made during the first half of the year. However, lingering trade uncertainties, most notably the 36 per cent U.S. tariff on Cambodian exports, are casting a shadow.

Commercial Market Sees Continued Correction

CBRE Cambodia’s findings show that office and retail sectors continued their downward trend in both rental rates and occupancy. Office occupancy stood at approximately 64 per cent, while prime rents were recorded at USD 24 per square metre per month. New completions included Chief Tower, with upcoming projects like The Pinnacle Building One, GDT Tower, and FTB Tower set to add further supply.

Kinkesa Kim, Managing Director of CBRE Cambodia, noted that the commercial market remained under pressure but showed signs of stabilising:

We have seen the commercial market, including the office and retail market, experience continued corrections in both occupancy and rental rate. Although the rate of this correction has slowed down compared to previous year, I think we can expect to see this trend persist for the remaining part of 2025 as well.

Retail performance was similarly subdued. Occupancy rates fell to 58.6 per cent, with prime retail rents averaging USD 20.9 per square metre per month. Recent additions, such as The Commons Community Mall and the upcoming retail podium at GDT Tower, illustrate that developers are still cautiously adding supply, mostly through mixed-use projects.

Residential Segment Gains Momentum

In contrast, the residential sector saw a resurgence in activity, particularly in the affordable and mid-range segments. Over 3,900 new condominium units were launched in H1 2025, with high-end projects averaging USD 2,746 per square metre. 

Leasing activity picked up pace, especially in larger two-bedroom and other spacious unit types, while the affordable segment continued to dominate new supply.

“We have seen quite an adjustment in the market, but on the positive side,” said Kimsea Chea, Research and Consulting Manager at CBRE Cambodia. “Compared to the commercial [segment], there have been a lot of new launches. However, it's shifted from high-end to affordable and mid-range, which is a good sign, because it can translate to existing consumption.”

He noted that prior to the COVID-19 pandemic, most residential projects were designed for international investors, with many developments positioned in the mid- to high-end price range.

“[Back then], the market targeted international buyers with a lot of cash in hand,” he explained. “Now that international investors have pulled back and returned to their countries, it has created more space for affordability—especially for local Cambodians who are now showing greater interest in the sector.”

Chea added that current market interest is not just limited to domestic buyers. “There are also a lot of inquiries, the majority coming from Southeast Asia. This is a good sign too,” he said.

However, CBRE’s report also emphasised that some developers are now pushing smaller unit sizes to reach lower total prices—a move that could impact long-term brand reputation.

Landed Property and Serviced Apartments

Landed property projects also gained traction, with three high-end developments showing strong early performance in H1 2025. Developers are expanding their offerings to reach broader segments of the market, though some projects remain delayed due to ongoing stakeholder disputes.

Serviced apartments continued to face competition from condominiums, particularly in the leasing market. Still, Grade A serviced apartments held their ground by offering superior amenities and services. While enquiries and transactions have picked up, unit sizes remain smaller than pre-COVID averages.

Industrial Sector Positioned for Growth, but Uncertainty Lingers

A new Special Economic Zone (SEZ) push continued in H1 2025 despite the lingering effects of U.S. tariffs, with 955 hectares expected to come into operation, driven in part by optimism surrounding the Funan Techo Canal project. The two SEZ developments include Kampot Funan SEZ (721 ha) and Cambodia Binhai SEZ (234 ha).

“The first half of the year saw strong interest in industrial zones,” said Chea. “But with the 36 percent U.S. tariff still in effect, the outlook remains uncertain. My expectation for the second half of the year, and the next 3.5 years, is that the industrial sector will adopt a wait-and-see approach.”

The government is continuing its push for industrial diversification beyond garment production. However, skill mismatches in the workforce remain a key challenge compared to regional competitors like Vietnam and Thailand.

Liquidity, Lending, and Market Sentiment

CBRE also highlighted key financial trends shaping the market. Bank deposits are rising, and while deposit rates have come down in an effort to unlock liquidity, buyers remain cautious and sellers are holding firm on prices. Real estate and construction credit continue to grow, even as transaction volumes lag behind.

Despite reduced term deposit rates, liquidity remains locked in the banking sector. Kim added that there are now early signs of movement. Buyer sentiment has improved slightly, and lower interest rates could help spur some activity.

Construction activity spiked in Q1 2025 but eased in Q2. Overall, the past five years have seen a slowdown compared to the pre-pandemic peak in 2019, when Cambodia approved 4,793 projects worth over USD 9 billion. In comparison, only 1,605 projects worth approximately USD 3 billion had been approved as of May 2025.

Should Investors Remain Positive About Cambodia’s Real Estate Industry in 2025?

Chea said he believes investors should remain cautious about the sectors they are investing in, however, highlighted land banking as a strong area to consider in the current market where buyers have more leverage.

“The seller is still very uptight or very firm with pricing, however, there's still more room for buyers in this market to get below-market priced land for future capital gain,” he said.

Looking ahead, CBRE Cambodia’s Managing Director advises investors to proceed with caution but stay alert for opportunities. When it comes to personal use, such as buying a personal home, she noted that demand still exists and now may be a good time to explore options. 

“I think we have reason to be cautiously optimistic,” said Kinkesa. 

There's still a lot of cash reserves in the banking sector in general, and as the interest rate has come down in the last six months, and buyer sentiment has improved, I think we could expect to see some more movement in terms of transactions. But proceed cautiously. I would still advise that investors purchase according to their needs and demand.

“For investment purposes, I would advise to still stick to prime locations or central locations that are future-proofed in regard to the future real estate cycle. Regardless of whether the market is going up or down, I think well-located properties will still uphold their prices,” she concluded.