Three years after opening the country’s first large-scale modern shopping mall, Aeon Cambodia is planning to expand.
Again in Phnom Penh, the Japanese group will open Aeon 2 next year with 70,500 sqm of retail space.
Aeon Mall has helped shape standards for retail spaces in Cambodia, says Cambo-Sia CEO Daniel Li, whose company runs Sanrio Gift Gate, a retail store for Japanese characters such as Hello Kitty, and the Advanced Learning Academy, which runs after-school educational programs.
He says Aeon has set expectations for other malls in Cambodia. “The demand for entry into Aeon is very high, and there is a waiting list for brands wanting to make a debut in the mall.”
Li said he has seen steady sales growth for his business in Aeon Mall, noting that consumers are increasingly seeking to buy goods from quality international brands, leading to increased demand for retail space in the capital. He says more brands are entering the market using franchise and licensing options.
Meanwhile, Exchange Square Mall has opened in the city, offering 13,000 sqm of retail space, while after several delays Parkson Mall is set to open late this year with 36,000 sqm of retail.
To replicate the success of Aeon Mall, with its 66,000 sqm, other locations will need to focus on providing a good shopping experience, says Li. Each mall would need to carve out its own niche.
He foresees little growth in the high-end retail segment as it is out of reach for most Cambodians. “Retailing in Cambodia will always be a challenge in the mid- to high-end sectors.”
He says this is mainly because of a high import tariff. “Consumers in this range will usually travel to regional cities such as Bangkok, Hong Kong, Kuala Lumpur and Singapore where there are tax rebates for tourists.”
CBRE Cambodia associate director James Hodge says the retail sector in Cambodia should further evolve over the next three years as the total modern retail space catapults from the current 212,000 sqm to 582,000 sqm.
“This shift represents the first major re-adjustment of the kingdom’s retail space supply, which has not grown much since Aeon Mall opened in 2014,” he says.
“The country’s economy has continued to grow at a significant pace and the middle class has become increasingly established. This has created pent-up demand for retail space from several retailers, particularly those in the F&B and entertainment sectors.”
CBRE’s first-quarter real-estate report notes prime retail rents for malls have eased by 0.9 per cent compared to the previous quarter, reaching an average of US$31.1 a sqm per month, though prices increased by 1 per cent year-on-year.
Knight Frank’s latest Cambodia report, for the second half of last year, shows that prime rental prices ranged from $32 to $70 a sqm per month, with the high-end Vattanac Capital mall offering the highest leasing prices in the nation for its 5000 sqm of retail space.
“Supply risks outpacing demand in the short term, with current demand matching available supply,” the report says. “While the overall average occupancy rate remains high, there is a risk supply will outpace demand for purpose-built retail space in the short term, with nine projects expected to come on stream in the next three years.”