KEP, (AP) - Two decades ago, Kep was a resort town dotted with luxurious villas and

hotels, where Cambodians and foreigners flocked on weekends to go water skiing ,

skin diving, fishing and boating.

Villagers say Prince Norodom Sihanouk, then Head of State, came often to his elaborate,

two-story villa overlooking the palm-tree lined, warm, blue sea resort once called

Asia's French Riviera, located about 140 kilometers south of Phnom Penh.

Today the royal seaside residence, like the villas around it, is a skeleton of its

former self. Thick forest fills the grounds, bullet holes circle the space in the

wall that was once the front door and the high walls surrounding the compound are

rubble.

But for the first time since the Khmer Rouge's 1975-1978 reign, villagers are starting

to believe the town might actually be given a chance to return to its glorious past.

Residents say government and military officials, as well as wealthy businessmen and

women from Phnom Penh, have been flocking to the town buy property with the hopes

of renovating the decrepit villas as weekend getaways. A new hotel is half built.

"If the government can end the war, may be this place can be like before,"

says Seng Vouch Bay, a 38-year-old native of Kep who sells cigarettes and candies

for a living. "Before it was a superb city."

U.N. peacekeepers based near the shore say the Khmer Rouge, now a guerrilla group

which operates just seven kilometers (four miles) from town, has been unusually quiet

in the area since the U.N.-organized elections in may ushered in the group's former

battlefield allies as leaders. The peacekeepers suspect the guerrilla group is laying

low so it can negotiate its way into the new administration.

At the prince's former villa, soldiers' uniforms now hang in the high-ceilinged entranceway

and a string of B-40 rockets and AK-47S line the wall under what remains of the winding

staircase. Nothing has been spared from the looting and destruction of the Khmer

Rouge and thieves.

Wire hangs from the living room ceiling where chandeliers appear to have once hung.

Most of the colorful tiles that once adorned the floors have been systematically

chipped away. Piles of charcoal and wood sit in both upstairs bathrooms-now makeshift

kitchens, where not even a trace of the metal plumbing can be seen.

"I was very surprised that this place is in such bad condition. It shouldn't

be like this because this is the prince's place,: said 1st lt. Chev Chea, one of

the government soldiers based in the residence. "I'm really sorry that all these

houses are destroyed. They will not be easy to rebuild."

The Khmer Rouge demolished the resort town as part of an attempt to systematically

destroy what it considered bourgeois excesses. The town had a much-frequented casino

around which rampant corruption swirled.

At other villas, sometimes all that's left among thick forest is ornate front gates

and carved pillars.

Sihanouk, who was reinstated as Head of State after the poll, has been holding talks

with the Khmer Rouge aimed at giving the government power over the 20 percent of

the country the Khmer Rouge controls as well as its 10,000-strong fighting force.

Now Seng Vouch Bay, the cigarette and candy saleswoman, lives across the street from

the wrecked primary school that she was attending when the Khmer Rouge emptied the

town at gun point. Hundreds of thousands of Cambodians were killed during the group's

reign, including one of her brothers and many of her cousins.

By the time Vietnam seized control in late 1978, there was no school left to which

she could return. The teachers had been murdered, charged by the Khmer Rouge with

espousing western ideas. Her childhood home had been burned to the ground. She never

finished her education.

"After the Khmer Rouge, (Kep) became an empty place, filled only with forest.

All the houses were broken and empty," says her mother, 78-year-old Horng Hun.

"It still is not a happy place, like it was before. People still fear the Khmer

Rouge. But I believe that when the war ends it can be as nice as before."