With the construction industry growing at a dizzying pace as the sound of buzz saws and jack hammers relentlessly permeate the capital while announcements of massive developments become a weekly affair, many unanswered questions remain to what can be done regarding halted projects—most notably the massive unfinished cement skeleton of the $240 million Gold Tower 42 at the corner of Sihanouk and Monivong Boulevard, the delayed $1.1 billion Booyoung Town and the $300 million Star River development along the Tonle Bassac river in Chamkarmon District.
In response to those unanswered questions, Seng Loat, spokesman for the Ministry of Land Management, Urban Planning and Construction (MLMUPC), said there was little that could be done, adding that it was “only a matter of time before investors recommitted to these projects” given the favorable investment climate and market expectations.
While the MLMUPC is responsible for granting construction permits, they do not ensure their completion or level of financial commitment, he said.
For the first half of this year, 915 new construction projects were granted permits totaling $808 million, while another 666 projects are waiting for government approval. Last year, MLMUPC granted 1,960 permits worth an investment of about $2.5 billion
“The permits are valid for one year, and if the project still hasn’t been constructed during that given time, another one-year permit can be requested. Once that permit is no longer valid, the project owner has to send in another request if they desire to continue their project,” he said.
The responsibility of completion, he said, is left up to the developer. But when it appears that there are delays or investment has faltered, they can call the developer to question the status of the project.
“The current procedure allows the ministry to intervene, but we prefer not to. We would prefer to accept a project rather than turn one away,” he added.
“The government’s policy has a gentle nature,” he said, adding that it would be a violation of the law to force anyone to complete a project within a given timeframe.
In regards to the Gold Tower 42 project, Lao Tip Seiha, construction co-director of MLMUPC, said that the ministry was assured by the developer earlier this year that construction would restart by the end of 2015.
The project is being developed by Yon Woo Cambodia and financed by DAIHAN Real Estate, both South Korean companies.
Since the project first broke ground in 2008, it has faced numerous delays. The first came in 2009 when the financial crisis hit. Resuming in 2010, the second postponement occured in 2012. During a brief period in 2013, the project eventually reached 32 floors. Since then, it has remained quiet.
Similarily, Booyoung Town, a 235 hectare project that began in May of 2013, ground to a halt a few months later. Last December, a senior manager of Booyoung Town confirmed to Post Property that the project would restart construction earlier this year, after citing that the ambitious project had to be redesigned to fit the local market. Construction has remained at a stand still.
A Booyoung Town representative in Cambodia, who declined to be named, said that the new design has been approved by the company’s management and will present the information to the media at a later date. He declined to provide any further details on the progress of the development or an expected date of when construction would restart.
According to Seiha, once a development has been granted a construction permit, “they have to proceed with the construction under any circumstances. If not they will have to notify the ministry or relevant departments in the city.”
Nevertheless, Seiha said that halted projects are not representative of the future of the property sector, or a hindrance to the current market, as many new developments have been announced.
“These few inactive projects are not an obstacle to the growth of the property sector because we currently have [many] skyscrapers that have been permitted to construct along with many other projects in the upcoming years,” he said.
Seng Bunna, director of Bunna Realty Group, confirmed that the Booyoung project is expected to begin construction at the end of this year. However, he said that stalled projects like the River Star project and the Gold Tower 42 project “are still long-term projects that need extensive consideration by their owners before restarting.”
“Since Cambodia has a small market, investors have to wait for the opportune moment,” he said, reiterating that because of the small market, “owners should not be blamed for [stalled] projects.”
He added that some developers are waiting to see how ASEAN Economic Community (AEC), which is set to take place at the end of this year, will play out.
Nevertheless, “our country should have some conditions to [make sure] projects are completed,” he said.
“It would look horrible if there are many half completed projects,” he said. “But it wouldn’t look as bad to see projects [cancelled] that haven’t started yet.”