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A receptionist at the Cambodia Securities Exchange. Heng Chivoan

CSX lures more panel valuers

As interest grows in the nascent Cambodia Securities Exchange (CSX) amid announcements of new floats tentatively scheduled for 2016, real estate agencies push for approval to become panel valuers—the sole legal mediator to value property holdings while pursuing an IPO.

Thus far, members of just six real estate agencies have been granted approval for IPO appraisals in Cambodia: VTrust Appraisal, Real Estate VMC Cambodia, CBRE Cambodia, Bonna Realty Group and the most recent entrant joining this month, Knight Frank Cambodia.

Although activity on the CSX was initially slow, with the Phnom Penh Water Supply Authority listing in 2012 and Taiwanese-owned Grand Twins International listing in mid-2014, Ross Wheble, country manager for Knight Frank Cambodia, believes that the recent activity indicates growing confidence in the Cambodian economy and finance industry as a whole. “[This] is a positive sign for Cambodia’s real estate and construction industry,” he said.

The recent announcement that Hong Kong-based developer, Eastland Development, expressed interest in listing on the CSX follows a number of similar announcements by companies such as the Phnom Penh Special Economic Zone (PPSEZ), TY Fashion and Sihanoukville Autonomous Port.

If Eastland’s promises come to fruition and other real estate developers follow suit, “this shall enable investors who may not be able to afford to buy a property a chance to participate in the growing real estate sector by indirectly investing through the purchase of shares within real estate companies,” said Wheble.

Regardless if a company like Eastland pursues a listing, a publicly traded entity would bring in the much-needed transparency to a vague property market where financial capital and level of investment are often kept in the dark. But besides that, it would allow more investors to enter the market without having to put down the large sums to acquire property directly—and at lower risk.

“Small investors will have a chance to invest in the property market,” says Kuy Vat, president of VTrust Appraisal. Meanwhile, “the developer can mobilize more cash and spread the risk. Of course, the CSX will also receive a boost in public confidence with the announcement.”

Simon Griffiths, associate director at CBRE Cambodia, suggests that for developers with an established and diverse portfolio, new projects in the pipeline, and a well-financed organisation, “risk is diversified and can be stabilized across sectors to some extent” by joining the stock exchange.

While diversity is important, especially in the oft-turbulent real estate and property development market, “as we saw during the last global economic crash,” said Griffiths, a certain amount of risk will always remain.

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With growing interest in the Cambodian stock market, the CSX could finally gain steam. Heng Chivoan

“Buyers of any stock would consider this and hedge their bets,” he said.

However, if more developers join the CSX, Griffiths believes that it would allow for investors to capitalize on developments. It could also issue in the unique potential for Real Estate Investment Trusts (REITs)—a type of security that invests in real estate by combining property or mortgages, thus providing more liquidity and high dividend yields.

While Kuy believes that there would certainly be an increase in liquidity, additionally, it would also provide a secondary market for investors who want to easily trade out of their investment.

“This means adding more lubricant to transactions [across other] sectors,” he said.

But while it is highly debatable if foreign property developers are even considering listing,property valuation is an important step in the IPO process that requires companies to open their books and disclose their assets.

“A company is required to have its real estate assets valued to determine its Net Asset Value (NAV),” explained Wheble.

But with only six accredited panel valuers currently operating in Cambodia, Griffiths highlighted the high standards required to gain entrance into the club.

A foreign agent has to be security checked in their home country and in Cambodia, and academic and relevant valuation experience and qualifications need to be verified, he said.

One such accreditor that can audit an agent or a real estate company that wishes to be a panel valuer, is the Royal Institute of Chartered Surveyors—a London based organization that values property worldwide.

“[Royal Institute of Charted Surveyors] adheres to strict and internationally recognized valuations guidelines, practices and methodologies,” said Griffiths.

For smaller, local real estate agencies, the demand for CSX valuations remains too small of a market to service, with qualification thresholds currently out of reach.

“Until this stock exchange grows significantly,” Kim Heang, president of the Cambodian Valuers and Estate Agents Association, suggests, “local agents will continue to focus on [regular] property valuation.”

“It is great to have more, and more professional, panel valuers in the industry - so that we can compete with professionalism and quality rather than on price,” said Kuy. However, “considering the market and volume of assignments currently available, the CSX valuations market for local agents likely won’t grow dramatically in the short term.” James Whitehead,



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