To maximise profits by reselling undeveloped land, some questionable local investors buy large plots of land, split it up into smaller units and sell it on to buyers who believe they will be able to build their own homes on them. Unwittingly, these buyers often find themselves owning land that is too small to develop.
One such landowner, Ratanak, purchased a 5 by 20 metre parcel of land in the Por Sen Chey District, using up his own savings and borrowing from his family, hoping to build a future home. Initially, he said, he was not concerned that such a small piece could face difficulties.
However, when asked if he has taken into account the legal aspects that define land and infrastructure development that would reduce his parcel size, he was baffled and said: “I haven’t thought about this. I forgot to take this into consideration, but I think it will be fine.”
Pisith Nget, assistant director at Borei Piphup Thmey, said that there are legal questions that need to be taken into account when subdividing land due to the fact that the law requires that two metres of land surrounding the home can’t be built upon.
Additionally, 30 centimetres have to be reserved for residential sewage systems. Asked if Ratanak’s plot of land could be built upon, Pisith simply said “no.”
Citing a similar example, Pisith told Post Property that small land plots near Wat Samrong Andet have been left undeveloped after being sold in 2005 due to them being too small.
Nevertheless, he added that breaking up large parcels of land into smaller and smaller plots has paradoxically caused land prices to surge.
“The system of land plot trade has dramatically raised the price of land, but those plots are not developed. That obstructs the development rate. Though when we ask the authority, they will say the land plot projects consist of suitable infrastructures,” he continued. “Most of the small land plots are not developed. Even if buildings are to be constructed, they will not have appropriate infrastructure.”
Pisith views the splitting up of large parcels of land as a scheme to take advantage of people with lower incomes. He called upon City Hall and the Ministry of Land Management, Urban Planning, and Construction to prevent and reevaluate this problem, adding that most affected areas are located in the Southwest part of the capital, namely Dongkor District and Por Sen Chey District.
Long Dimanche, City Hall spokesman, acknowledged that these sales often occur, but claimed that it is well within the land owner’s rights to divide the property as they see fit. Cambodia does not have a legal framework to prohibit overly subdividing land.
But Dimanche added that in order to properly subdivide land, owners must receive permission from the city after submitting a request.
When asked about when these problems occur, Dimanche said, “City Hall will investigate these cases.”
Other than facing legal problems of developing the small parcels of land, owners are often left without the money to upgrade the infrastructure, according to Chrek Soknim, director of Century 21 Mekong. He told Post Property that “the land plot trade causes some problems for the development because the land plot owners don’t have access to a proper public sewage system.” He added that with insufficient piping, plot owners have to “spend a lot of money to [improve] infrastructure.”
Seng Lout, spokesperson for the Ministry of Land Management, Urban Planning, and Construction, said that there should not be any concern because all the land plots have undergone the government’s cadastral survey, which aimed to provide strong ownership titles. He added that the reason why these parcels have often not been developed is that they are in areas that have not yet seen economic development. Nevertheless, he added that these land titles allow for owners “to request a loan from the bank to [improve their] investment.”
As a matter of fact, current land sellers have not abided by the Ministry of Land Management, Urban Planning, and Construction’s guidelines; as the sellers build roads and infrastructure that do not meet legal guidelines. For instance, a road must be 7 to 10 metres wide, yet many are built at only 6 metres wide with insufficient sewage systems.
Although landowner Ratanak eventually expressed some concern regarding the size of his land, he still expects to make a profit should he decide to sell. With an initial investment of $11,000, he has considered listing his land for $17,000 to earn him a $6,000 profit.