Local landowners are not necessarily aware of their property’s current worth. They could either be ignorant, uninterested to sell, or are not getting concrete answers from prospective buyers because they place too high a price on their land, according to local real estate and economic experts.
Oknha Cheng Kheng, Managing Director of CPL Cambodia Properties Limited, said that landowners are generally unaware of their potential wealth.
“Some landowners are aware of how much their land is worth after they use their land as collateral with banks. However, most Cambodians do not know about this specifically,” he said.
Those who are in the know, though, ask for too large a sum when approached by prospective buyers.
For urban hotspot areas such as Boeung Keng Kang 1, most of its residents are aware of their land’s potential wealth.
Khai Chantha has lived in a ground-floor flat in hotspot residence BKK 1 with his parents and eight siblings since 1981, and runs a small local food store there.
According to him, his house is currently worth $600,000 and he has been approached by three buyers, including a Korean investor, since 2010.
“But the agreement has never been reached because [the owner of] a flat located behind my house broke the [consensus] by increasing his price to $100,000 from $80,000,” he lamented.
To sell a piece of land, all families living on it must reach a common agreement to sell it – which, according to Kheng, gets increasingly complicated as sometimes, if a consensus cannot be reached, or if a particular family increases its house price above the initial agreed price, a forced evacuation could be taken against the disagreeable family.
The 476-metre square land upon which Chantha’s house is shared by three other families.
“If the trade was ever completed, there might be a building like De Castle because I heard the owner of the condo approached this land,” he said, referring to the 32-storey De Castle Royal condominium in the BKK 1 area.
Another resident in BKK 1, 74-year-old Chin Sokhun has lived with her niece in a ground-floor wooden house for 35 years.
“Over 10 buyers had approached this compound since 2010. Also, I want to sell this house above $200,000 because I am too old and have nothing to support my livelihood,” she said.
However, the prospective buyers, both local and foreign, never got back to her with a concrete decision, and she is still waiting for a buyer to come and snap up the land at the price she is asking for.
According to Sung Bunna, Founder and Chairman of Bonna Realty Group, some landowners who may not know better just quote a price off the top of their heads according to word-of-mouth prices they hear of through the grapevine.
Bunna, echoing Kheng’s view, also said that those who are aware try to take advantage of their potential and ask for very high prices.
“The overall atmosphere is that these landowners do not fully understand the property market or terms like return investments or value of property,” Bunna said.
Besides putting prices that do not match the land’s potential, there are certain landowners who consciously do not want to bank in on their land.
Uninterested in selling her land, a 42-year old lady who declined to be named, rents out her BKK 1 ground-floor flat to a Japanese businessman who runs it as a Japanese restaurant.
“Several buyers have come to negotiate with us. Recently, there was one buyer who approached me but I clearly stated that I don’t want to sell my house,” she explained.
She is also unaware of the price her house can fetch, saying that she doesn’t take note because it has never been her intention to sell the house.
The house acts as an investment security for her, as “these days, I have no need for more money. If I need money, I will sell it later, but now I don’t. I don’t know why I need to sell it.”
Her dismissive nature can be attributed to the local society’s culture: it is not in the local nature to sell, nor to invest, as stated by Bunna.
He added that “even the culture of taking housing loans from the bank is not very widespread, and it is only in the past few years that the phenomenon of buying, selling, or investing is taking shape”.
“If they want to sell, they sell. If not, they are happy to leave things as they are,” Bunna stated.
On the side of success stories, a lucrative land deal was made by Yi Soksan – a former resident of BKK 1 – in 2012 when he sold his house for $330,000 as part of a $1.5 million sale for the total land.
Having bought it in 1994 for $35,000, the sale from his house enabled him to buy two properties – a $135,000 house in Borey Peng Hout along National Road 1, and a $150,000 flat in Daun Penh district – the latter of which he rents out to a local at $600 a month.
He believes that his former house’s worth has now doubled to $600,000, and said that the current owner is trying to find developers to sell it to.
Amidst this issue of unawareness, would local real estate agencies go out into the open and educate the locals on the value of their property?
“No, it is not really a practice here. I know in other countries the real estate agents approach individual house owners or landowners, but in Cambodia it has not yet reached that stage,” explained Bunna.
However, the fact that most landowners are in the dark about their land’s potential may not be a bad thing for now.
Mey Kalyan, Economic Advisor to the government proffers his insight: “From a social point of view, the land and real estate industry has increased tremendously in the past few years, to the point that it could be detrimental to socio-economic health if everyone suddenly wants to sell their land.”