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Continued Growth Expected in Cambodia, India To Pick Up Steam

Knight Frank provides rosy outlook for certain Southeast Asia real estate markets in 2017

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The first half of 2017, the residential markets in India is expected to recover slowly after being hit by the government's demonetization move.

Knight Frank
The first half of 2017, the residential markets in India is expected to recover slowly after being hit by the government's demonetization move.
Knight Frank

Cambodia’s soaring economy will continue to fuel demand for both commercial and residential real estate in 2017, according to a report released Thursday.

In 2016, Cambodia outperformed all Southeast Asian countries except Myanmar, according to Knight Frank’s "Asia Pacific 2016 Round-up and 2017 Outlook." The report didn’t provide specific 2016 data.

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Come 2017, Cambodia’s GDP is forecast to grow at 7.1% over the next year, the report stated,  citing projections from Asian Development Bank.

Some major new developments in the country also are slated to be marketed in various international cities in 2017, "elevating Cambodia to compete in the global arena," said Ross Wheble, country manager at Knight Frank Cambodia, in the report.

As part of its 2017 outlook on Asia released earlier in the week, Knight Frank said that real estate markets in the Asia Pacific region will depend on two key factors—the wider economic environment and policymakers’ actions.

Overall, while global political and economic uncertainties will directly hurt demands for residential properties, uncertainties also tend to drive money from stock markets into real estate, Knight Frank said.

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In the fourth section of Knight Frank’s Asia outlook released Thursday, the real estate service firm focused on Cambodia, India and Australia.

For India, Knight Frank predicted that residential markets in major cities are likely to recover slowly in the first half of 2017.

The growth momentum in India during the first half of 2016 hit a snag in November, when Prime Minister Narendra Modi announced a move toward demonetization. The Indian government abruptly ceased the usage of all banknotes with a face value of INR 500 (US$7.35) and INR 1,000 (US$14.7). In exchange, the government issued new large-value banknotes.

"The recent demonetization move by the government is expected to substantially hit transactions during the last quarter of 2016," said Samantak Das, chief economist & national research director at Knight Frank India. "The resale market is expected to be hit harder than the primary market in the residential sector."

More:What Homebuyers From India Look for When Shopping in the U.S.

From mid-2017 onwards, the Indian real estate market is expected to gain steam in both sales volume and price, according to Mr. Das, due to a falling interest rate, higher liquidity and regulations put in place in the first half of 2016 that straightened out the tax code on the national level and revised provisions having to do with developers' reporting requirements and protection of buyers, among other measures.

As for Australia, Knight Frank forecasted a continued flow of foreign investment into both the residential and commercial markets, especially in Sydney, Melbourne and Brisbane.

In 2016, home prices in Australia saw strong growth, leading some states to introduce foreign buyers’ taxes to curb demands.

Write to Fang Block at fang.block@dowjones.com