The Buyer's Barbell
Ask a buyer in a cooling market what they want, and the answer is usually one thing: the single building, at the single price, that proves they were right to wait. It is a natural instinct and a fragile way to own property. The position worth holding is not the cleverest purchase but the one that can survive being early, because almost everyone who buys well in a soft market buys a little before the turn.
There is a steadier way to build it, borrowed from how careful investors hold anything through a full cycle. Construct the position like a barbell: load the ends with assets that do different jobs, leave the vulnerable middle light, and size each piece to its task rather than to the excitement it generates. In Phnom Penh today that means three sleeves rather than one wager: a ballast of prime central property, an income sleeve in the affordable high-yield pockets, and one patient bet in the path of new infrastructure. Each behaves differently, which is the reason to hold all three.
Why one bet is the fragile one
A single concentrated purchase has to be right about three things at once: the price, the timing and the direction of demand. Get two right and the third can still undo the position, and a soft market is unforgiving because the exits are thin. A seller who must move meets fewer buyers and gives back in a discount what they thought they had saved.
The barbell spreads the outcome across jobs, a more useful diversification than a longer list of similar units. Five versions of the same overbuilt mid-market unit is not a portfolio; it is one bet made five times. One asset for liquidity, one for income and one for upside is three bets that fail for different reasons and in different conditions, so no single turn takes all three down together. That is what lets a buyer act while the window is open without staking everything on a forecast that may take years to settle.
The ballast: prime central
The first sleeve is the prime central core, the parts of Chamkarmon, BKK, the Daun Penh riverside and Tonle Bassac where values held up best while the rest of the market repriced. Its job is not to make anyone rich; its job is to be sellable in any weather. Prime central barely moved through the cooling, an adjustment in low single digits rather than the deeper falls seen further out, because the demand beneath it comes from several directions.
Which leads to the first gotcha. Buyers arrive in prime central hunting a bargain, and there usually is not one, because the discount on offer elsewhere is the reward for risk the core does not carry. This sleeve is bought for liquidity and resale depth, not for the deepest headline number. Buy only where the unit already rents today, at a yield that is modest by local standards, around six to seven percent gross before costs, and where a light remodel can lift the rent rather than where a recovery has to arrive first.
The income that pays you to wait
The second sleeve does the work the ballast cannot: it pays the owner to hold. The affordable pockets away from the core carry materially higher gross yields, in the high single digits and in places into double figures on an indicative basis, and that cash flow funds the wait. A position that services itself on today's rent is never forced to sell into the softness that created the opening.
Two gotchas sit inside this sleeve. The first is underwriting to a hoped for rent rather than the rent on the lease now. Rents in the outer districts fell much further than prime rents did, so a yield built on a peak rent that no longer clears the market has nothing behind it. Underwrite to what the unit commands today, after service charge, vacancy, management and the withholding on rent, which takes a point or two off the gross. The second is confusing yield with growth. A high income now is not a promise of appreciation later; some of these pockets are income stories and will stay income stories, a fine reason to own them so long as the buyer is not quietly expecting capital growth the location was never going to deliver.
The patient bet in the path of growth
The third sleeve generates the excitement, which is exactly why it is the smallest. One patient position in the path of new infrastructure carries the upside: the ground along the axis the city is now extending south, toward the new Techo airport and the transit lines still under study. The principle is easy to state. Buy in the path of the infrastructure, not behind it.
The gotchas here are the costly ones, because this is the sleeve where a story can outrun the facts. A line under study is not a line running, and any date attached to it is indicative, not a commitment. A price that has merely stopped falling is not a price worth paying: the test is whether real demand exists at that level and whether it sits in the path of growth, because a leveled off price with neither is a trap wearing the costume of a bargain. An area served by a single road in and out carries more risk than its price admits. Hold this sleeve small, on a patient horizon, with any recovery treated as upside if and when it comes.
Sizing the bar, and the mistake almost everyone makes
Through a cycle the three sleeves move out of step, which is the feature, not a flaw. The ballast holds its value and stays liquid, and tends to recover first, since recovery radiates from the centre outward. The income sleeve pays steadily almost regardless of sentiment, which makes the holding period survivable. The patient bet does little for a long time and then, if the infrastructure arrives, does a great deal at once. Held together, they let a buyer be early without being overexposed to any one way of being wrong.
And here is the mistake almost everyone makes. Buyers overweight the exciting sleeve and starve the dull one. The airport corridor and the metro map are easy to fall for, so the upside bet quietly grows into half the book while the income meant to fund the wait is trimmed to pay for it. Then the slow market does what slow markets do, the upside takes longer than hoped, and the owner who skimped on income cannot afford to wait for the growth they were right about. The boring sleeve is the one that keeps you in long enough for the interesting one to pay. Size the income first. Size the bet last.
A barbell is not a hedge against having a view. It is what lets a view survive a market that takes its time proving you right. Take any single sleeve away and the structure stops standing.
What none of this settles is the part that decides the result: which assets, in which pockets, and above all in what proportion. The right weighting of ballast to income to upside is specific to a buyer's budget, horizon and appetite for a patient hold, and it is a view of the market rather than personalised investment advice until we have sat down with the numbers. The three sleeves are the easy part. The sizing is the decision.
At My First Corner, this is the work we do with a client before a soft market tempts anyone into loading the wrong end of the bar: setting each sleeve to the job it is there to do, and the weights to the person who has to hold them. That conversation is independent, it costs nothing, and it is open whenever you want to have it.
By Samuel Doe, MFC Invests.