LAND values are continuing to drop in Phnom Penh according to figures from the National Valuers Association of Cambodia, but an analyst has warned that the numbers need to be interpreted with caution given the paucity of land sales.
Valuers Association President Sung Bonna said research showed commercial and residential land was worth between 3 percent and 6 percent less in the third quarter compared to the previous three months. He warned that values were likely to continue to slide.
“We are worried that land prices for the fourth quarter will continue going down,” he said. “There is no sign of recovery for the property market because local and foreign investors do not feel confident in the business sector. They still feel fear.”
The association estimated commercial land at US$2,700 per square metre, down from $2,800 per square metre on average across the second quarter. In residential areas, land was worth $1,600 per square metre, down from $1,700 three months earlier.
Sung Bonna said residential and commercial land had dropped around 50 percent from a peak in mid-2008.
Daniel Parkes, country manager at property services company CB Richard Ellis Cambodia, said a lack of transaction data piled doubt on the market value estimates.
“We know that due to economic circumstances the perception of value has adjusted downwards, but where we are at the current time on the graph is very difficult to say in a scientific sense,” he said. “I hear people mentioning that prices have dropped 30 percent or 40 percent from its peak. I could not say definitively whether this is the case.”
Parkes said each site has to be treated on its merits, but that smaller sites tend to command a higher value per square metre than larger sites. Sites at key road interchanges and those within the area between Wat Phnom and Norodom, Monivong and Sihanouk boulevards also attracted a premium.
Other market watchers spoken to by the Post agreed with Parkes. One, who asked not to be named, said large blocks on the outskirts of the city were probably now worth less than $1,000 per square metre, though he acknowledged that debt-free landlords were holding out for better prices.
Visal Real Estate Director Sear Chailin said he did not see any signs the sector would recover this year or next. ”[Real estate agents] are very worried about the sector,” he said.