Commentators say slump could reverse itself in the next year

I hope it will recover over the next two year, but that it is not a boom like in 2007....

LAND prices continued to fall in the first quarter of the year, according to the National Valuers Association, but analysts say the market could improve over the next 12 months.

Commercial and residential land prices dropped between 2 percent and 3 percent quarter on quarter, said Sung Bonna, president of the association.

He warned that values are likely to continue their slide through mid-year before rising again.

Commercial land in Phnom Penh was estimated to be worth $2,650 per square metre this quarter, down from $3,000, for the same period in 2009.

Residential land was valuated at $1,550 per square metre, down from $1,800, for the same period last year.

“Now it is reaching the bottom, then it will start to increase again,” Sung Bonna said.

He added that local and foreign investors alike remain tentative.

Today’s market is a buyer’s market, he said, in which people who have specific requirements or budget constraints can find what they are looking for, and some property speculation takes place.

The sector has started to have “more and more transactions compared to 2009”, Sung Bonna said.

“I hope it will recover over the next two years, but that it is not a boom like in 2007 and mid-2008,” he added

Meanwhile, the government has issued a directive to control property developers and is passing a law allowing some residential property ownership for foreigners. Both measures could “pave the way to boost foreign investment and real estate prices across the country”, Bonna said.

The National Assembly passed the property law on Monday after debating the proposals.

Sung Bonna said residential and commercial land in Phnom Penh had dropped in value between 40 percent and 50 percent from a peak in mid-2008.

Residential, commercial and industrial land on the outskirts lost 50 percent of its value over the same period, he said.

At Cambodia Properties Ltd, Seng Sopheak, a valuation manager, said land and housing prices had already stabilized, though his trade volume dropped 20 percent year on year.

Less optimistically, Sear Chailin, director of Visal Real Estate, said he did not predict a recovery in the sector until the third quarter of the year.

Valuation aside, investors remain shaken by the economic crisis.

More than half of 75 Cambodian respondents in a survey told Indochina Research earlier this year they will wait two more years to invest in property.