High demand for property in Sihanoukville is pushing many investors to consider the once sleepy town of Kampot as an alternative.

The surge in property prices in Sihanoukville, where Chinese investors are snapping up properties for hotel and casino projects, is being felt in Kampot, a quiet backwater town 100 kilometres to the east near the mouth of the Teuk Chhu River.

Ping Serey, CEO of Cambodia Angkor Real Estate, said the provincial capital is starting to feel the impact of surging property prices along Cambodia’s southern coast. It is also benefitting from plans to develop the town’s tourism and transport infrastructure, including improvements to National Road 3 and the construction of a new tourist seaport.

The Asian Development Bank (ADB) is providing an $18 million loan to cover the construction of the new port on 4 hectares southeast of the town centre in Teuk Chhu district. Construction is expected to kick off next month and run through 2019, with the completed facility providing a landing for passenger ferries from Sihanoukville and cruise ships from Thailand and Vietnam.

Other large projects have been announced in the area, including a $23.2 billion development project by Pallas Group dubbed French Riviera Marina, and a $300 million private seaport built by tycoon Try Pheap.

Serey said that property developers are not waiting for the projects to open. Land prices are already showing signs of life, with plots along the river in the centre of town quoted 10 percent higher than last year.

“If we talk about the price of properties in Kampot now, it is gradually rising, but not as much as in Sihanoukville,” said Serey. “Some areas in Sihanoukville under heavy demand from Chinese investors have seen prices shoot up over 100 percent since last year.”

According to Serey, land within 250 metres of Kampot’s famous Durian Roundabout is currently valued at between $1,000 and $1,500 per square metre. Property in the town’s central riverfront and old French quarter is worth between $1,500 and $2,500 per square metre. Further afield, developed land prices range from $30 to $300 per square metre, while undeveloped agricultural land in many areas can still be purchased for under $1 per square metre.

“Within the next few years, especially after the completion of the ADB-funded tourist port, the price of real estate can be expected to surge much higher,” he added.

Sear Chailin, CEO of Chailin Sear Realty, said the property market in Kampot province is booming, with fresh investment following news of several large developments to be built along the coast between Kampot town and Ream. He said prices are up by 10 to 15 percent in the last year.

“In the future, I think that the real estate sector in Kampot will continue fare even better than how it’s doing now, because this area is very favourable given that it has a lot of resorts, not to mention ocean transport from a nearby deepsea port,” Chailin said. “In addition, it’s also a favourable area for investment in agriculture.”

Vorn Chanthorn, managing director of Town City Real Estate, said the palpable rise in land prices in Kampot over the past year has been driven by an influx of Cambodian and Western investors. Many of these investors sold their properties in Sihanoukville to Chinese buyers at a premium and relocated to Kampot and nearby Kep in search of cheaper real estate for their businesses.

“It can be said that there’s no other good land left in Sihanoukville to buy because all the good locations are gone and whatever’s still left is vastly overpriced,” he said. “As for market values in Kampot, however, prices are quite reasonable.”

Chanthorn said a surge in tourist arrivals is driving economic growth in Kampot province but also creating new challenges. According to the Ministry of Tourism, more than 1.6 million domestic and foreign tourists visited the province last year, putting pressure on its limited infrastructure and facilities.

“Kampot province is developing very rapidly, but as it does the province is facing a harsh reality that it lacks suitable accommodation for tourists as well as investors, especially when there’s a national celebration,” he said. “Hopefully soon there will be more hotel and guesthouses built here.”