Retail space to triple, report says

The supply of shopping centre space in Phnom Penh will triple over the next five years, according to a CBRE Cambodia report, with an industry insider saying growth will be faster for high-end retail venues.

The Parkson Group Sdn Bhd shopping mall is one of the two major international retail developments in the country and will drive the increase in retail supply.

CBRE reported that if the planned developments come to fruition, the mall could have 312,000 square metres of retail space by 2017, up from about 105,000 square metres counted last month.

Song Bona, president of the Cambodian National Valuers Association, said yesterday that Malaysia’s Parkson Group has started building a shopping mall in Phnom Penh, but he declined to disclose specific details of the project.

Japanese retail developer Aeon Co Ltd is also developing one of the country’s largest retail malls on Sothearos Avenue in the capital.

Knight Frank country manager Sunny Soo said yesterday that Cambodia’s shopping malls lack world-class brand management, which is driving demand for internationally developed shopping projects.

“In malls here, you have two floors of people selling shoes — sometimes the same shoes. It’s not very profitable for the retailers or the mall owners,” he said.

“To this day, the city doesn’t have a first-rate shopping mall… All the malls here suffer from poor lease management.”

He said a lack of funds had led developers to sell off retail space, which limited their control over brand placement.

International developers such as Aeon and Parkson can alleviate layout issues that have hampered sales and prevented well-known brands from entering the country.

Sovereign Retail Group told the South China Morning Post in February that rising spending power among Cambodian urban residents continues to attract brands such as Mango and Axara to the country.

Ly Souden of Sovereign said at the time that brand awareness was largely non-existent five years ago, leading many working-class Cambodians to choose to buy designer shirts and shoes rather than imitations found in some traditional markets.

Cambodia’s per capita GDP was just over $900 in 2011, up 70 percent from 2006, according to the Ministry of Economy and Finance. That number could rise to $1,000 next year, CBRE said, citing data from the Cambodian Economic Institute. “That’s one of the main reasons for the growth of retail here: disposable income,” Soo said.

Song said CBRE expects retail space to triple by 2015 if the Aeon and Parkson projects, as well as other shopping malls such as Cambodia Plaza, are completed on time.

Although CBRE reports that the current occupancy rate of the mall is 78%, the large international retail venue will bring a surge in name brands.

“People are starting to go for name brands…but premium brands don’t want to be in small buildings. They’re waiting for Class A space,” said Sung Bonna.

The Aeon and Parkson projects will attract high-end brands, while well-known brands already in the country are also likely to move into the new stores, he said.