As development in Phnom Penh increases, so do real estate prices and rent fees. Will Jackson spoke to business owners, real estate brokers and residents about who is benefitting and who is losing out as neighbourhoods gentrify.
Customers and staff were left diving for cover on a recent afternoon when irate landlord Nol Sokha vented her angst about alleged noise and traffic problems from new dumpling and pulled noodle restaurant Mama Wong’s.
Sokha, who owns the house opposite in Tonle Bassac’s Street 308, was furious about the restaurant’s noisy extraction fan and on-street dining, which she claimed was causing traffic congestion and could lead to an accident.
“They’re entitled to do business, but they’re doing it the wrong way and in the wrong place,” she said later.
“I’m worried that a drunk or speeding driver might smash into the people at the outside tables.”
The tenant in Sokha’s property, Louth Somaly, 50, said the whirring noise of the extractor when the restaurant was busy at about 8pm was like “a Boeing jet”.
“It’s making me ill,” she said.
The restaurant’s owner, Dah Lee, who also owns The Duck restaurant on Sothearos Boulevard, said Sokha is overreacting.
Lee said he had spent $400 buying and installing the new, quieter extractor fan, and the on-street dining was not a problem because the road narrowed to a similar width only a short distance away.
He intends to form a business community to install street lights, rubbish bins and other amenities, he revealed.
“She’s making a mountain out of a molehill,” he said.
Street 308 has been transformed over the past year. With the arrival of six new restaurants and bars, what was once a dark, quiet laneway is now a bustling drinking and dining strip. Most nights, patrons – mostly foreigners – can be seen sitting at the brightly lit outdoor tables enjoying a pizza or gin and tonic well into the evening.
But like in any city in the world where residential areas are undergoing gentrification, some residents are happy about the changes and some aren’t.
Among the new arrivals around Street 308 are two boutique watering holes: Seibur, on the street itself, and Meat and Drink, in an adjoining unnamed alley, both owned by New Zealand brothers George and William Norbert-Munns.
George Norbert-Munns said the location was convenient for nearby residents and the neighbours were friendly.
“I guess it’s also a bit cheaper than BKK,” he said.
The brothers said they had gone to great lengths to maintain good relations with their new neighbours, installing plenty of soundproofing and keeping lines of communication open.
Their efforts seem to have paid off.
Sitting on a bench at the entrance of an unnamed alley off Street 308, long-term resident Chan Nath said she owned her home, opposite Meat and Drink, and had had no problems with her new neighbours.
The day after a busy opening night last month, with lots of people drinking and making noise outside the bar, the Norbert-Munns brothers visited her and her neighbours and apologised.
“The owners are very nice. They clean up all the rubbish so there’s no bad smell anymore,” she said.
She added that the area felt safer now that there were more people around at night.
Touch Bunthorn, lounging on his moto nearby in Street 308, said he lived a bit further down the network of alleyways behind Street 308 in a house that his wife owned.
He believes the changes in the neighbourhood have been positive.
“As a motodop, I can get more money from foreigners who come here now,” he said. “And I can practice my English with them.
“This is a good place to live and do business.”
Real estate agents and business owners say that the area’s development is being driven mainly by spillover from the increasingly upmarket BKK1 – just on the other side of Norodom Boulevard. As property prices in BKK1 have soared, house hunters and entrepreneurs have begun looking for cheaper options nearby.
Bobby Peoples, sales director at BKK1 real estate agent Independent Property Services, said gentrification began in the suburb because the historically wealthy area had the highest concentration of large villas in Phnom Penh.
UNTAC personnel first moved into the area in 1992 and they were followed by a growing number of NGOs who used the villas as offices.
Western style restaurants and bars opened up to cater to the rich foreigners’ tastes and as time went on, more businesses and other breeds of expats were lured by the amenities.
A recent report by the VTRUST Property Co. Ltd found that the average asking price for land in BKK1 was now a staggering $3,900 per square metre on main streets and $2,800 on back streets. This contrasts starkly with the Phnom Penh average of $1,140 per square metre.
According to the report, main street property prices in Chamkarmon – the district that stretches from Sihanouk Boulevard down to Boeng Tra Baek – increased from $2,500 per square metre in 2008 to $4,100 per square metre in 2013.
Peoples said real estate figures were notoriously unreliable in Cambodia, and usually massively inflated, but land prices in BKK1 were undoubtedly sky high.
He said a 30 x 20 metre property went on the market this week for $1.7 million, which equated to about $2,833 per square metre.
The demand for living space in the area was now so great that property owners were demolishing existing buildings to put in tall apartment blocks in order to extract maximum profit from the land.
He said there were now 38 apartment buildings in BKK1 and another 14 under construction with demand driven almost exclusively by foreigners including European, American and Asian expats.
“You’ll be lucky to find even one or two Cambodians living in any of these apartment buildings,” Peoples said.
“It’s all foreigners working in embassies, NGOs or international companies. If you removed them from the equation it would all fall apart.”
Peoples said increasing house prices were good for Cambodian landowners.
“If they decide to sell up they can afford to move into a new barei (gated community) to the south or west of the city and have enough left over to buy a Landcruiser and still come out with no debt,” said Peoples.
With BKK1 becoming so expensive, cheaper areas in close proximity such as Tonle Bassac, BKK2, BKK3 and Toul Tompong (the area around the Russian Market) were now experiencing gentrification, he said.
“People are either moving up or they’re moving out,” he said.
The trend is not unique.
Daniel Parkes, general manager of Hongkong Land Ltd and chairman of the International Business Chamber’s real estate sub-committee, said gentrification was not confined to the area in and around BKK1.
He said apartment towers were shooting up all over the city with Daun Penh, Tuol Kork and Chroy Changvar (across the Japanese Friendship Bridge) experiencing particularly rapid development.
While it was foreigners who were initially the primary drivers of gentrification in BKK1, he said in these other areas it was being caused by more and more Cambodians.
“Families that used to live in one home are maybe spreading out into two or three,” he said.
“And the population is becoming increasingly urbanised with people moving from the provinces.”
“The city’s growing very quickly and expats are becoming less and less significant.”
In Toul Tompong, new restaurants and residential developments are popping up like mushrooms after a summer storm.
Sem Song, a housewife whose family owns their home in a street west of the Russian Market and opposite a 10-storey residential building under construction, said she was happy to see her neighbourhood developing.
Once the building across from her terrace house is completed she will consider opening a small general store to cater to the influx of new neighbours, she said.
She said she and most of her neighbours in the street rented out rooms, charging about $60 per month per room, up about $5 from a year before.
“Many people coming to Phnom Penh like to live near here because it’s easy to go to the market,” she said. “It’s more expensive to live closer to the market.”
Unfortunately, the benefits of the city’s property price rises aren’t being felt by everyone.
Moun Avy and her family have paid $250 per month for the past five years to rent the first floor of a house near Russian Market.
The deep-fried banana seller said she had a long term contract that ended in September and she expected her landlord to jack up the rent by $50.
“I haven’t really thought about the future, but we will have three months to find a new house,” she said. “Hopefully I will find a house nearby.”
Around Street 308, some residents who don’t own their homes fear they could soon be left unable to afford to live in the area as gentrification increases.
Garment worker Srey Noch has lived in the alley parallel to Street 308 in a wooden two-storey, two-room home with nine other family members for the past two years paying $90 a month.
Sitting on a wooden platform outside her home, Noch said her landlord was now threatening to raise the rent by another $10.
“We can’t afford to pay any more,” she said. “If the landlord can find someone who will pay more we will have to move, maybe out near the Kbal Thnal sky bridge.”
She said some landlords had been putting up prices over the past year and many families had moved away but she wasn’t sure how many.
According to Sahmakum Teang Tnaut, an urban housing NGO, development and gentrification is forcing thousands of people on lower incomes out of the centre and onto the poorly serviced fringes of the city.
The NGO’s Eight Khans Survey found the number of urban poor settlements – more commonly known as slums – in the four inner khans (districts) decreased from 256 in 1997 to 129 in 2009. During the same period the number of slums in the four outer khans increased from 123 to 281.
The NGO’s Tale of Two Cities report said that the periphery of Phnom Penh was underdeveloped with inadequate, unsealed roads, lack of services such as water, electricity and sewage and little formal housing.
STT research project manager Sok Lida said that thousands of people had been forcibly evicted and dumped at relocation sites on the outskirts of the city.
Meanwhile, increasing rents were a problem even for those able to afford paying some rent.
“The focus is on only rich people and not the poor people,” he said.
Hun Chansan, one of the founding partners of Re-Edge Architecture and Design, said development in Phnom Penh was being driven almost entirely by commercial imperatives without much guidance from the government.
San said he believed the government had a master development plan for the city but was failing to communicate and enforce it.
The result was that Phnom Penh was not becoming a “well rounded city” with affordable housing, public transport and parks. Those who were able to take advantage of the commercial opportunities afforded by the lack of regulation were benefiting but many were being left worse off.
Asked to compare Phnom Penh to Ho Chi Minh City and Bangkok, he said the city should follow Vietnam’s example rather than that of Thailand.
“Ho Chi Minh City is a good example of development but I think we’re maybe 20 years behind,” he said. “It feels like a balanced city; the business districts, the residential housing, parks, historic buildings.
“It’s a very walkable city and you can really feel the history there because they’ve retained so many of the old buildings and the trees.”
He said Bangkok was “overdeveloped”.
“In Bangkok you still see the traditional pagodas, but apart from the people and food, everything there is very generic. It’s very overcrowded and there’s a lot of pollution,” he said.
San said believed the government had yet to reach a level of “maturity” where it could properly implement proper planning for Phnom Penh.
However, he said there was still time for the city to get back on track and develop in a way that benefited all residents – rich and poor.
The municipality did not respond to request for comment in time for publication.
ADDITIONAL REPORTING BY VANDY MUONG