PHNOM PENH – The real estate sector in 2025 is expected to grow this year, but slowly. 

Economist Hong Vannak from the Royal Academy of Cambodia says sluggishness is due to the ongoing effects of COVID-19, global economic shocks and banking sector restrictions issues. 

He said investment opportunities are also a factor in the sector’s recovery. In 2024, Cambodia received nearly $7 billion from domestic and foreign investors for 414 projects.  

Domestic investors play an essential role in reinvesting in the real estate sector. They can develop the housing market slowly.

The government’s support policy this year is helping the sector to recover better than in previous years. This includes a stamp duty exemption for first-time buyers of homes worth $210,000 or less. Meanwhile, a mechanism allows homeowners to transfer loans to banks with low interest rates.

The government’s urban expansion policy is another factor encouraging wealthy people to invest in target areas with potential economic benefits.

“The tourism sector is growing, which is driving some growth in the service sector. These trends are helping the real estate sector recover,” Vannak said.

He said that Cambodia’s increased exports to the United States and European markets are also contributing to the growth of the real estate sector. This has made old and new projects start and develop again.

“The real estate sector's recovery this year is incomplete. Growth is happening only in areas with strong potential,” he said.

Sales were expected to increase with the government’s support and investment from domestic and foreign investors. However, property prices will likely remain lower than they were before COVID-19.

According to the Ministry of Economy and Finance, the economy is expected to grow 6.3 percent in 2025, bringing the gross domestic product to $51.4 billion and $2,900 per capita.

The ministry also noted the construction sector is expected to grow below the usual trend due to the anticipated slow recovery of foreign investment flows, particularly in tourism and commercial construction. Residential construction is expected to maintain low growth compared to the pre-COVID-19 trend.

Demand in the medium term will drive this subsector, particularly in housing, because Cambodia's favorable demographic trends support it. Meanwhile, the real estate sector will continue to experience low growth. 

In the short to medium term, the construction of factories and other commercial activities will become a new trend and support the real estate sector.

On the other hand, the International Monetary Fund’s report provides a lower growth projection, increasing from 5.5 percent in 2024 to 5.8 percent in 2025. Inflation is expected to rise from 0.5 percent in 2024 to 2 percent in 2025 but will remain contained.  

The report also noted that external factors and domestic vulnerabilities have influenced economic growth. In addition to external factors, such as policy changes by major trading partners and geoeconomic fragmentation, weaknesses in the construction and real estate sectors played a significant role in slow growth.

 Originally written in Khmer for ThmeyThmey, this story was translated by Chhuon Kongieng for Cambodianess.