CBRE Cambodia MarketView Q3 2014

1. 1
Global Research and Consulting
Quick Stats
Retail Market, Phnom Penh
Market View
ECONOMIC INDICATORS BODE WELL FOR FUTURE RETAIL AS
NEW SUPPLY IS MET BY DEMAND
Introduction
June of this year saw the opening of
Aeon Mall adding 66,000 Sq.m of
space and 173 units to Phnom Penh’s
retail sector. Foreign brands and
franchises dominate in each category
and the mall has Cambodia’s largest
food court with 1,200 seats. Opening
with a reported zero vacancy rate has
been a great success story for Aeon
when compared to the market average
rate of approximately 22%. This can be
attributed to factors such as new
market entrants, expansion of existing
operators and a lack of quality
leasehold management at existing
centers constraining returns for owners
and occupiers.
Parkson is set to open a retail center in
Q4 2015 adding retail space of
36,000 Sq.m mall anchored by
department store as part of the
70,000 Sq.m Phnom Penh City Centre
development also incorporating a
supermarket, multiscreen cinema and
IT/Electronics mall. This will continue
the transition of Phnom Penh’s retail
sector from existing traditional markets
towards International quality, purpose
built retail centers that in turn will draw
more International brands to this
developing market.
Supply
2014 has seen some of the city’s
biggest developments come to fruition
with Vattanac Capital and Aeon mall
completing in the first half of the year
adding a combined 71,000 Sq.m of
prime retail space to Phnom Penh’s
retail sector. 2015 will see Parkson
mall and department store open
adding a further 70,000 Sq.m. This will
see total retail supply more than
double from 105,000 Sq.m in 2012 to
more than 300,000 Sq.m by 2016.
Q2 2014 also saw the soft launch of
Vattanac Capital’s retail offering
including international brands such as
Hugo Boss, Longchamp, TWG and
Rimowa.
Demand
Speaking at the opening launch of
Aeon mall, Managing Director,
Shinobu Washizawa said the mall
target customer group was aged 20 –
30 years old; a sign of Cambodia’s
young demographic and fledgling
middle class with increasing disposable
income. Economic indicators are
encouraging with GDP growth at 7.2%;
one of the fastest rates in the world.
With purpose built, International quality
retail space now available many
foreign brands, including 43 Japanese
retailers have opened outlets in
Cambodia for the first time. Aeon has
seen a much lower vacancy rate than
the market average with demand
coming from local and international
players.
Rent
Average rent* across the shopping
centers stands at $27.30 per Sq.M
ranging from $20 to $32 per Sq.M, the
arrival of International operators such
as Aeon and Parkson has seen the
introduction of modern rental practices
such as turnover rents.*(Average market
rents calculated on Ground floor & 1st floor basis)
Brands
A range of new brands have entered
the market for the 1st time including:
F&B: Breadtalk, Kenny Rodgers
Roasters, Beard Papa’s, S&P, Pepper
Lunch and Lotteria.
Fashion: Giordano, Clarks, H.E. by
Mango, Penshoppe, Lowrys Farm,
Bonia, Carlo Rino, Flaxus Tokyo and
Wacoal.
Other: Toni & Guy, L’Occitane,
Rimowa, Daiso Major Cineplex and
Future World (Apple).
A number of key car bands are set to
establish stand-alone units in Phnom
Penh, with BMW arriving last year and
Audi and Land Rover set to open units.
September 2014
GDP PER CAPITA GROWTH
6.6%
INFLATION
2.5%
RETAIL VACANCY RATE
22%
Phnom Penh’s Future
Retail Supply (2014-2016)
Highlights
• Aeon Mall opened 66,000
Sq.m of retail space with
100% occupancy rate in Q2,
2014.
• Average rents set to increase
due to higher quality of new
retail developments
• Supply set to increase by
142% by the end of 2015
with the launch of Aeon and
Parkson.
• A number of International
brands will enter Cambodia
market for 1st time in 2014.
CPI
4.9 Y-o-Y
CBRE
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
2008
2009
2010
2011
2012
2013
2014
2015
2016
2015 (F)
2016 (F)
Sq.m

2. 2
2013 CBRE Cambodia |MarketView
overthecourseof2014.TheLuckyDepartmentStoreclosedonMonrieth,Levi’srelocatedtoCityMallontheothersideofthestreet,CamporeGroupopenedmultibrandCentralMallatCentralMarket.
FutureSupply
PhnomPenhwillseemajorincreasesinsupplyofretailspaceoverthenexttwoyearswithgrossfloorareaforpurposebuiltmulti-tenantedretailsettoincreasebymorethan150%bytheendof2014withanadditionalsupplyinthepipelinethroughto2017withdevelopmentsOlympiabyOCICandTheBridgebyOxleyunderconstructionwithasecondAeonmallnowinearlystagesofdiscussion.Parksonconfirmed2additionalprojects,LionCityandabovementionedTheBridgebyOxleywheretheywillmanagetheretailcomponent.WithestablishedretaildevelopersAeon,ParksonandHongkongLandresponsibleforthisnewsupplythequalityofspaceandmanagementissettoincreasepromptinganupliftinaveragerents; competitionfromtheseestablishedshoppingcenteroperatorsislikelytoweighfurtheronperformanceofoldercentersalreadywitnessingloweroccupancyandcustomerfootfallintheircenters.
Overview
Cambodiahasayoungpopulationwithover30%undertheageof15andafurther21%aged15-24.GDPpercapitagrowthwaslastrecordedat6.6%andalthoughlargelyaruralpopulationthereisanurbanizationrateof3.25%perannum.Thisisademographicpicturethatbodeswellforfutureretaildemandwithayouthfulworkforce,andgrowingurbanpopulation.Incomesarerisingfast;albeitfromalowbasebutdiscretionaryincomeisbecomingachievableformanyfamiliesforthefirsttime.ArecentreportcalculatedtheCambodiaGNIat$950percapita;fastapproachingtheWorldBankdefinitionofamiddleincome-economyat$1,045.
RetailsupplyissettogrowincomingyearsbutCBREfeelthiswillbemetbydemandduetoimprovedqualityofretailspace, internationalmanagementandthesectorsgrowthpotential.2014hasseenanumberofInternationalbrandsenterCambodiaforthefirsttimeandthisisatrendsettocontinueasthecountryenjoysimprovedpoliticalstabilityand,increasedlocaldemand.
CONTACTS
For more information about this MarketView, please contact:
www.cbre.com.kh +855 97 230 0000 cambodia@cbre.com
GlobalResearchandConsulting
ThisreportwaspreparedbytheCBRECambodiaResearchTeamwhichformspartofCBREGlobalResearchandConsulting–anetworkofpreeminentresearchersandconsultantswhocollaboratetoproviderealestatemarketresearch, econometricforecastingandconsultingsolutionstorealestateinvestorsandoccupiersaroundtheglobe.
Disclaimer
CBRELimitedconfirmsthatinformationcontainedherein,includingprojections,hasbeenobtainedfromsourcesbelievedtobereliable.Whilewedonotdoubttheiraccuracy,wehavenotverifiedthemandmakenoguarantee,warrantyorrepresentationaboutthem.Itisyourresponsibilitytoconfirmindependentlytheiraccuracyandcompleteness.ThisinformationispresentedexclusivelyforusebyCBREclientsandprofessionalsandallrightstothematerialarereservedandcannotbereproducedwithoutpriorwrittenpermissionofCBRE.
CBRE Cambodia Research
Thida Ann
Associate Director
CBRE Cambodia
9thFloor Phnom Penh Tower,
#445 Monivong Boulevard,
Boeung Prolet Quarter,
7 Makara District, Phnom Penh
t:+855 89 777 308
e:thida.ann@cbre.com
Laszlo Fulop
Senior Retail Consultant
CBRE Cambodia
9thFloor Phnom Penh Tower,
#445 Monivong Boulevard,
Boeung Prolet Quarter,
7 Makara District, Phnom Penh
t:+84 972 058 444
e:laszlo.fulop@cbre.com
CBREGroup,Inc.(NYSE:CBG),aFortune500andS&P500companyheadquarteredinLosAngeles,istheworld’slargestcommercialrealestateservicesfirm.TheCompanyhasapproximately31,000employees(excludingaffiliates),andservesrealestateowners,investorsandoccupiersthroughmorethan300offices(excludingaffiliates)worldwide.
CBREhasundertakenworkinCambodiasince1993andestablishedapermanentofficein2008.CBREiscurrentlyCambodia’sindependentmarketleaderinrealestatesales,lettings,research,valuationandpropertymanagementwithproventrackrecords.WehaveateamofdedicatedpropertyprofessionalslocatedinPhnomPenh,withregionalofficesprovidingsupportandexpertise.Formoreinformation,visitthecompany'swebsiteatwww.cbre.com.kh.
Chris Hobden
Surveyor
CBRE Cambodia
9thFloor Phnom Penh Tower,
#445 Monivong Boulevard,
Boeung Prolet Quarter,
7 Makara District, Phnom Penh
t:+855 95 777 484
e:chris.hobden@cbre.com