Bourse-listed Phnom Penh Autonomous Port (PPAP) announced on Tuesday that it would lease land along the Tonle Sap River to a Chinese company that plans to develop a commercial complex there.
The lease agreement for 9.25 hectares stretching from the capital’s Chroy Changvar bridge to the Night Market, was signed on June 29 by PPAP and Chean Chhoeng Thai Group, a subsidiary of Yuetai Group.
The move comes after the land was reclassified from state-public to state-private.
In a press statement, PPAP said that included in the agreement are infrastructure development requirements in addition to a $16.5 million rental fee. The lease agreement lasts for 50 years.
Yuetai Group is a Chinese developer that operates various property projects in Cambodia such as East One and East View.
“To generate additional revenue and participate in urban development along the river, the port signed with Chean Chhoeng to lease the land, starting from June 29 this year until June 28, 2068,” its press release said.
Phnom Penh Autonomous Port CEO Hei Bavy could not be reached for comment on Tuesday.
Industry insiders have responded by saying that more development will boost the Kingdom’s real estate sector.
Key Real Estate Co Ltd director Sorn Seap said it is a good thing if the project appears to be sound.
“Constructing high-rise buildings along the riverside could have some drawbacks if the building is designed without first consideration on the space and the environment,” he said.
The lease contract requires Chean Chhoeng Thai Group to construct an embankment from Chroy Changvar bridge to the Night Market at a cost of $19 million, a walkway and path for small vihecle along the embankment at a cost of $11 million, a new PPAP administration building totalling $11 million and two new terminals blocks priced at $30 million.
The structure is set to include office buildings, a commercial complex, an arts centre, a cultural square, resorts, condos, a five-star hotel, an exhibition centre and a public park.
A real estate expert who refused to be named said that the rent fee was too low and didn’t match the value of the location.
“My heart broke when I heard the news. The land in this location should be $3 per square metre for a month, and in genaral practice, the price will increase by 10 percent every five years,” he said.
As calculated by The Post, that estimate would put the rent fee at $270,000 per month, or $166 million for 50 years.