What Factors cause Property prices to Fluctuate in Cambodia?
What Factors cause Property prices to Fluctuate in Cambodia?
In recent years, considering the economic growth of the country and the gradual increase of GDP, investing in Cambodia has become an investment opportunity that should not be looked over. Among the many ways to invest in Cambodia, most citizens find themselves investing in the real property sector more so than other methods. This is due to the development plan and the continuous rise of real property prices especially in and around the Phnom Penh area. However, even if real property investment provides a high return of investment rate, it does not initially mean that every investment in real estate will provide the same return of investment. Are you curious to know why? That is because of the factors affecting property prices fluctuate in Cambodia.
The return of investment rate on any real property investment varies from case to case depending on a few factors. These factors combined together determine the value of the property and will also be a guide for you to decide whether or not to invest in a certain property. Here is the list of those factors that affect property valuation:
Economic Factor
The economic factor refers to not only the GDP growth of one country but also other macroeconomic factors involved. Real property is also valued based on the high or low rate of income levels of the citizens, the employment rate within the country, both the poverty and human development index, and also labor conditions and manufacturing activities. However, these indicators are some of the main indicators when evaluating the country’s economic outlook. The higher the growth rate or increase of economic stability, the higher the positive influence it is on real property investment. As Cambodia’s GDP gradually grows each year, it serves as a great opportunity to start investing in real property.
Location
Location matters greatly when it comes to real property investment. Depending on the type of property you are looking to invest in, its importance in location also matters. For instance, if you are looking to invest in property for business purposes, you are encouraged to look for property that is easy to locate and with space available depending on your business. Moreover, if you really want to invest in property on the main road with four intersections, this will require you to pay a larger sum of investment but also receive a higher return on investment as well. The location of each property will serve a different purpose but bring values accordingly as well. One more thing that will help to influence the valuation of a property is whether it is located in a development area or within an area the government plans to develop.
Political Factor
Despite it not always being raised during the process of investment, it is also quite important to consider the political environment of a country. Naturally, if the country is safe and without any major turbulence then the country’s political stability will also be a factor in creating economic stability. It is wise to examine the political environment before making any big investment decision. Nonetheless, there are few cases when investing in real estate during turbulent times will result in a higher return of investment in the long or short term depending on when the country’s political status is back to being stabilized. However still, this case is more than not a major risk to consider so therefore unless you are able and willing to take on this risk, it is definitely advised to invest when the political environment is safe, secure, and stable.
The Dynamics of Supply and Demand
Even if the dynamics of supply and demand are included in the economic factors, it is worth considering this factor on its own. The dynamics of supply and demand refer to the needs or wants of something and how it is being addressed to meet the needs of that particular object of interest. If the demand for the property is on the rise and the supply is less then, therefore, will make the price of the property be higher. Vice versa, if the demand is low but the supply is overwhelming in the comparison, this will make the prices drop. As explained, it is important to take into account the dynamics of supply and demand to help with your decision to invest in property in Cambodia.
Condition of Property
Another important factor that dictates the value of a property is the condition of the property itself. This refers to the age of the property, the repairs required for the property, the size, and type of the property as well as the structure of the property too. All these smaller factors also add up to the market value of the property.
Property investment in Cambodia is on an all-time rise and will continue to grow even more in the years to come. If you are looking to invest for the future in the long-term with a high return of investment rate then property investment is the right choice for you. However still, you should also consider the factors affecting those property valuations to make the best investment possible for yourself.
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