The real estate sector seems to be slowly recovering from the global financial crisis. The Post's reporter Rann Reuy sat down with Sung Bonna, president and CEO of Bonna Realty Group and president of the National Valuers' Association of Cambodia.
Can the Kingdom’s real estate market return to its fiery pre-crisis growth levels?
The brief answer is that whether it goes up, and whether it returns to 2007 levels depends on the economy and politics. If the economy improves quickly this year and next, so will real estate. If GDP remains high for two years in a row, our land prices will start to rise. It could take three or four years to have a situation [of high growth rates in real estate] like 2006 and 2007, but it can be even faster if GDP remains high and politics and the economy remain smooth.
What can we expect for the real estate sector in 2011?
During 2009, real estate was like an unconscious year. The whole body was unconscious. In 2010 in real estate, our legs and arms and organs started to move substantially, but we could not yet sit up. Therefore, in 2011 we can sit, but not walk or run like the year 2007. In 2011, we are no longer afraid, but it is still not as good a time as previous years; the sector will still need time.
Some large developments, such as the Gold Tower 42 skyscraper, are looking to resume construction in 2011. Does the demand exist to support these projects?
Because the size of the cities and number of citizens in Cambodia remain steady, we are still careful about predicting demand. What restores confidence is doing the right thing – resuming construction on planned projects. One must allow the projects to continue so the customers, who have already bought units, are happy.
What factors will push the real estate sector to flourish faster?
First of all, the political factor is important. Laws must be strengthened for the trust of the investor, to make sure that they do not return to their own countries with hands bare after investing in our country.
Second is to facilitate the work of investors and avoiding disturbances from low-ranking officials who make things complicated.
Third is to encourage investment, and the last step is ensuring proper interest rates. If comparing our interest rates and those of other countries, it is even more difficult.
Developers and investors cannot invest for long periods because of high interest rates.
But this is not completely the duty of the state. The state has to work with private companies to bring interest rates in line with other countries in the region.
Cambodia’s GDP is generally expected to increase by about 5 percent this year. What role will the real estate sector play in this?
Every country is the same, worldwide. The real estate sector is a field that pushes faster economic growth.
If this field remains asleep like in 2009, our economy will lose out. In 2010, there had been more exchange and purchases. This is one factor that will help GDP.
Government officials have declared they will collect a property tax in 2011. What effect will have on the real estate market?
It is the duty of citizens to pay the tax. Besides, it is just a on a small scale.
Think about the middle and upper class citizens – it will not have any impact on them because the scale is small, say 0.1percent.
The largest effect is on the lower class people, who are poor with a difficult standard of living as they don’t have much money to spend. But I don’t think this will
be a problem.
The real worry is whether or not it is transparent.