Construction prices are on the rise but the developers of some of Phnom Penh’s biggest building projects insist higher costs will not prevent a dramatic shift to high-rise living in the capital.
Property developers are trumpeting the impending transformation of Phnom Penh’s skyline, despite fears the sharp rise in the price of construction materials could bring the capital’s skyward march up short.
Huy Sophanna, construction site supervisor for the Ieng Group, a local contractor, said the prices of building materials have increased across the board since last year, with the price of scaffolding ballooning from around $400 per ton to $1,035 per ton, and bricks stabilizing at $600 per 100,000 after reaching a high of $1,200 earlier in the year.
“In previous years, our flats sold well after construction, but now we are not selling as many,” he said. “Some construction companies postponed their construction when the price of construction materials jumped up, but the number of buyers is still lower.”
The costs of oil, electricity and specialty metals are also on the rise.
However, spokesmen for the 42-story Gold Tower 42 residential high-rise claimed the project would proceed as planned, dismissing rumors that construction has been halted at its site on Monivong Boulevard.
“This is a worldwide tendency at the moment, not just in Cambodia. Contractors are suffering from high prices,” said Kim Kyo-Won, project director of Hanil Engineering & Construction, the Korean contractor that is building Gold Tower 42 and the Camko City satellite city project.
“No alterations shall be made, and the projects will go ahead as planned.”
Michael Kim, chief consultant for Yon Woo Cambodia Co., Ltd, the project’s developer, said costs were still within manageable levels and would not have much effect on the construction.
“We are losing some of our profit margin, [but] we’re fixing the price right now, even though the cost of all the materials is rising, so it’s a real benefit for customers,” Kim said.
Sixty percent of Gold Tower 42’s condominiums, 70 percent of its office space and all its commercial space have already been sold off the plan, indicating sustained demand for space in the building.
Kim said Gold Tower 42’s symbolic status as the country’s first skyscraper would ensure it was completed on schedule, whatever the challenges.
“This is a very important project for Cambodia, and if it doesn’t succeed it will cause a lot of problems for a whole lot of other projects,” he said.
Kuoy Aphireach, site engineer of GS Engineering & Construction, which last month broke ground on its 52-story International Finance Complex (IFC) development, said the IFC project would not be impacted by rising costs, although smaller operations would feel the pinch.
“High inflation of construction materials will have an impact on small local companies and some other foreign companies are cutting costs, but not our company. We have planned ahead to avoid the problem,” he said.
“We are not worried about the shortage of buyers or renters, because our projects have been successful in many places, including Kuwait and Vietnam,” he said, adding that apartments and office space in the IFC would go on sale once the project was 30-50 percent completed.
Bonna Realty Group CEO Sung Bonna said rising costs would likely result in delays or cancellation of construction projects across Phnom Penh, but was unsure whether or not the capital’s skyscraper projects would be affected.