Phnom Penh 2025: A changing property sector between challenges and opportunities

In 2025, Phnom Penh is experiencing a major turning point in its real estate and construction sector. After several years of turbulence driven by the global economic situation, inflation and credit adjustments, the city is gradually regaining momentum, driven by infrastructure renewal and stabilising demand for real estate.

Phnom Penh

Economic context and sector dynamics

The Phnom Penh property market suffered a sharp slowdown in 2023-2024, with a decline in activity due to investor caution in the face of global and regional economic uncertainties. However, encouraging signs of recovery were seen from early 2025 onwards. According to reports from leading real estate organisations and local experts, this recovery is far from uniform. The residential segment is seeing stable demand, particularly in certain sought-after neighbourhoods, while the commercial and tertiary sectors remain under pressure, with a slight decline in occupancy rates and a slight decrease in rents in office buildings and shopping centres.

The construction sector, meanwhile, is benefiting from an influx of public and private projects, particularly as part of ambitious urban development and transport infrastructure improvement plans, such as the new Techo airport, widened roads and bridges, and modern logistics zones designed to support growing industrial dynamism.

The residential market: stabilisation and targeted opportunities

Iconic neighbourhoods such as Boeung Keng Kang 1 (BKK1), Tuol Tom Poung (TTP) and Tuol Kouk stand out as hot spots for real estate investment. BKK1, recognised as the heart of high-end expatriate and local life, offers high rental demand with properties that retain their value well despite relatively high entry prices. Tuol Tom Poung attracts a younger, more dynamic crowd, with strong demand for studio or one-bedroom flats, particularly suited to short-term rentals and Airbnb, offering rental yields of between 6% and 8%. Tuol Kouk, quieter and more family-oriented, appeals to more conservative investors seeking long-term stability.

The condominium market is showing a slight recovery, with a moderate increase in transactions on the primary market, supported by incentives such as payment facilities and temporary discounts offered by developers.

On the other hand, serviced apartments, often aimed at expatriate clients, remain under pressure, with occupancy rates falling due to the departure of some foreign nationals.

The construction sector: a pillar of urban development

The construction sector in Phnom Penh remains a driving force in the context of urban modernisation. More than 1,000 construction projects are underway or planned, ranging from collective housing, shopping centres and public infrastructure to industrial and logistics parks. The government and private investors are counting on these projects to strengthen Phnom Penh's strategic position as a regional hub, particularly in the context of the rebalancing of global supply chains.

However, construction also faces challenges, including volatile material costs, a shortage of skilled labour and economic uncertainties that are prompting some developers to delay or revise their plans. Despite this, the sector is holding up well thanks to sustained public support and foreign direct investment, particularly from China and the region.

Challenges and prospects for 2025 and beyond

The year 2025 looks set to be a year of consolidation and adaptation for real estate and construction in Phnom Penh. The market remains sensitive to economic fluctuations, but benefits from an attractive investment environment, with favourable taxation, relative political stability and economic growth that, although slowing, remains positive.

Infrastructure projects nearing completion are expected to boost the accessibility and attractiveness of outlying areas, offering investors opportunities in still-emerging sectors, particularly in the south and east of the capital. These areas are expected to benefit from their proximity to the future international airport, enhancing their potential for housing, commerce and logistics.

Finally, growing demand for sustainable real estate and innovative solutions could reshape the construction landscape, encouraging the adoption of new technologies and environmental standards in line with global trends.