Logo of Phnom Penh Post newspaper Phnom Penh Post - Construction industry cooling down: analysts

Construction industry cooling down: analysts

Construction industry cooling down: analysts

Government revenue collected on property transfers and construction services dropped off by 25 percent last year, reflecting a slowdown of the Kingdom’s construction sector despite a surge in the reported value of investment in real estate development projects, according to analysts.

Data released yesterday by the Ministry of Land Management, Urban Planning and Construction (MLMUPC) show revenue collected by the ministry fell to $72 million last year, from $90 million in 2015. The 25 percent decline in revenue stood in stark contrast to the total value of approved investments in construction and real estate, which soared 155 percent to $8.53 billion last year, from $3.3 billion in 2015.

Ly Chhuong, vice president of the Cambodia Constructors Association (CCA), said the ministry’s revenue figure was a bellwether of the construction industry, and a far more reliable indicator of its performance than tallying approved investments.

“The revenue collection figure reflects real construction activity,” he said. “In fact, real construction activity in 2016 was not as strong as in 2015.”

According to the ministry’s report, about 85 percent of the $72 million in revenue it collected last year was as tax on property transfers. The remainder was from various construction services.

The MLMUPC report showed the total number of approved construction projects increased last year to 2,636, from 2,305 in 2015.

The report did not break down the projects by their type or investors, and the ministry’s spokesman could not be reached for comment yesterday. However, a ministry official recently told the Post that most project approvals involved condominiums, apartments, hotels, office buildings, borey units and commercial centres.

Kim Heang, president of the Cambodian Valuers and Estate Agents Association (CVEA), was also unimpressed by the reported surge in investment in the construction sector. He said that 2016 clearly saw a slowdown in construction activity, and he cast doubt on the investment figure.

“It would be great if the $8.5 billion was a real reflection of activity in the construction sector, but I doubt the actual amount is that high,” he said. “The recorded value is huge, but the actual value is not that much.”

Heang explained that the investment figure was merely a number scrawled into the ministry’s books when developers register their projects. However, it was no guarantee of the actual capital invested into a project.

He said dozens of ambitious property development projects were declared last year that were unlikely to ever come to fruition.

At the same time their multi-billion price tags were unrealistic, given that huge and very real large-scale projects such as The Bridge and Aeon Mall 2 were only priced in the millions.

MOST VIEWED

  • Omicron patients can stay home: PM

    The Ministry of Health has issued a directive on the treatment of people who have tested positive for the highly transmissible Omicron coronavirus variant, following a suggestion from Prime Minister Hun Sen on the night of January 21. The directive permits home quarantine for those who

  • Cambodia’s first ever anime festival kicks off Jan 22 at capital’s F3 centre

    Phnom Penh's first ever Anime Festival will bring together fans, artists, shops and other local businesses with ties to the Japanese animation style for cosplay competitions, online games, pop-up shops and more on January 22, with Friends Futures Factory (F3) hosting. F3 is a project that

  • Mr Pancake or M Crepe? Tasty by any title

    Crowds of people gather around a lone man with a mobile food cart every day at around 2pm in front of the Institut Francais du Cambodge to order what many say are the best crepes in Phnom Penh. To some – even to the man making

  • Phnom Penh condo market loses steam

    Just four new condominiums were launched for sale last year in the capital, down from 17 in 2020, according to research by CBRE Cambodia. The four developments comprised “more than 1,000” units, while the 17 in 2020 consisted of 10,866, the real estate firm reported. CBRE Cambodia categorises condos as “high-range”, “

  • Fourth dose Covid booster drive jabs 43K in two days

    In the first two days of the fourth-dose Covid-19 vaccination campaign, more than 43,000 people volunteered to get the jabs, while over 4.6 million people have received a third shot. Health ministry spokeswoman Or Vandine said that fourth-dose vaccinations, which began on January 14 exclusively with the Pfizer

  • PM sets tourism reopening as centrepiece of ATF 2022

    Prime Minister Hun Sen urged ASEAN to reopen tourism and trade now that many of the bloc’s member countries have vaccinated their populations. Speaking at the 40th ASEAN Tourism Forum 2022 (ATF 2022) in Preah Sihanouk province on January 18, the premier also said ASEAN has a