Supply drives office rentals to highest in region

Demand for top-quality workspace in Phnom Penh is increasing, so much so that property firm Knight Frank has labelled the capital as the fastest-growing city for rented prime office space in the entire Asia Pacific region.

The firms June 3 quarterly report, which marks the first time Phnom Penh has been included in the study, shows that monthly prime office rent prices in the capital reached more than $27 per square metre (after services, taxes and charges) in the first quarter of this year.

The figure represents a jump of 18 per cent compared with the first quarter in 2013 the highest of the 20 nations included in the report.

Tokyo and Singapore, two of the worlds largest business centres, recorded a 6.2 per cent and a 3.6 per cent increase respectively in office space rentals.

Vacancy rates in the Phnom Penhs prime office market, meanwhile, dropped 5.5 per cent during the first quarter of 2014, according to the Knight Frank report.

Ross Wheble, the country manager at Knight Frank, said the only two prime offices in the city included in the analysis Canadia Tower and Phnom Penh Tower provide more than 40,000 square metres of rental space.

The reason for the big increase [in Phnom Penh] is that the two buildings are with occupancy rates of around 93 per cent, he said, adding that total supply of office space in Phnom Penh is currently 183,000 square metres.

So the landlords have been able to [negotiate] higher rents due to the limited supply of prime office space.

Wheble said with ASEAN integration due in 2015, more and more international companies would be scouring the Kingdoms capital for Grade-A office space.

Prime office space is graded by a number of factors, principally location, but also according to the quality of the construction and the amenities the building offers, such as parking, maintenance and office management.

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Supply drives office rentals to highest in region