As investment in Cambodia’s real estate construction continues to skyrocket, some commentators suggest the property sector has reached its peak.
Lao Tip Seiha, undersecretary of state of the Ministry of Land Management, Urban Planning, and Construction (MLMUPC), told Post Property that in the last seven months, the ministry had approved 1,500 projects around Cambodia. Investment is reported to currently total $7.1 billion, representing a 719 per cent increase over the amount of investment in the same period last year.
In the previous corresponding period, total construction investment was valued at $899 million.
“The increase of investment in construction and real estate property this year is due to the increase of the construction of co-residential buildings, mansions, flats, office spaces, malls, commercial centres, and industrial centres,” Seiha said.
“Furthermore, it is also due to the stability of economy growth, political stability, increased income, and confidence in the quality and security of buildings.”
He also cited banking support as another contributor to attracting investment dollars to the Kingdom.
Seiha explained that at present, there are more than 800 construction and planning firms from 20 different countries working in the local sector.
Kim Heang, president of the Cambodian Valuers and Estate Agents Association (CVEA) was doubtful of the validity of the investment growth figure, questioning what the $7.1 billion was dependent on.
“The question is whether the projects have borrowed money from the banks, or if each project had their own capital, or if they were waiting for money from their customers to start construction,” Heang said.
Chrek Soknim, CEO of Century 21 Mekong was also surprised at the figure.
“This amount of investment is huge for Phnom Penh and Cambodia,” he said, and added, “We do not have any measurement for this figure.”
Soknim continued, “This amount of investment would need five to ten years for the projects to be finished.”
Mey Kalyan, senior advisor to the Supreme Economic Council, echoed Soknim’s comments, saying the figure was based on a set of investments which were long-term.
“This figure could show that the construction and real estate property sector is reaching its peak with investment,” he said, asking, “$7 billion [worth of] investment in seven months? There might be something here that we’ve missed.”
“It also means there is more interest from [foreign] investors in this sector.”
When asked if Cambodia should be worried about this, Kalyan said, “If they get money from their home [countries] to construct in our home, it shouldn’t be a problem. However, if they use credit from Cambodian banks, it can cause problems.”