Real estate prices continue to fall, even after double-digit declines in last part of 2008, but dealers expect recovery to begin later this year

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A "for fale" sign hangs in Phnom Penh on Tuesday. Real estate agents reported that property lost nearly one-third of its value at the start of 2009 as the global economic slowdown takes its toll on Cambodia’s economy.

CAMBODIA'S real estate market lost more than a third of its value in the first three months of 2009 compared with the same period last year, due to the impact of the global financial crisis, say real estate developers.

"According to our research, the real estate market dropped 40 percent in the first three months in 2009 if we compare the situation to the first three months in 2008," said Sung Bonna, CEO of Bonna Realty Group and president of the National Valuers' Association of Cambodia.

He said that land in Boeung Keng Kang I commune, worth between US$2,500 and $2,800 per square metre during the first quarter of 2008, had fallen to between $1,600 and $2,000 in the same period this year.

World financial instabilities were the main cause of the decline, he said, but added that the sector should recover by 2011.

"I think that property will regain its value when the world economy recovers," Sung Bonna said.

Varied impact in the region

But the global crisis has had uneven effects, he said, with Vietnam having largely avoided a devaluation, while Thailand had experienced a contraction in the sector due to the economic crisis and the effects of domestic political instability.

Local developers echoed Sung Bonna's outlook, saying development projects conceived during the real-estate boom had been undermined by a widespread contraction in local markets.

Leav Vanny, project manager of Kaing Meng City, a

Property will regain its value when the world economy recovers.

$30 million housing development project in Kandal province's Takhmao district, said Monday that even though construction was under way, the company had had difficulty attracting clients, having experienced a "50 to 60 percent" drop in business compared to the same time last year.

"Our project is still up and running, but we cannot find clients," he said.

"Wealthy Cambodian people are still afraid [and] are hesitant to buy property. They are waiting for things to recover too."

Kong Vannsophy, general manager of Dream Town City, a $1-million project in Phnom Penh's Dangkor district, agreed the property sector was not in good shape, and that the market for both buyers and sellers was quiet.

"Our project is continuing, but there is not the rush we experienced before 2007," he said, adding that falling rental services currently made leasing a better option than acquiring property.

Chhean Dara, project manager of the $50-million Happiness City housing project in Russei Keo district, said the financial crisis had led to a precipitous drop in customer interest for the project. "The project is moving along very slowly.

"Public interest dropped 70 percent when the world's credit crisis hit, and our new villas are now for sale but no one is interested," he said.

Chhan Dara added he has even had difficulty selling off 20-hectare plots of empty land in Kampong Speu province, which have fallen from between $20,000 to $30,000 per plot to around $10,000-$15,000.

"No one is asking to buy my lots in Kampong Speu," he said. "I have to pay back my loans to the bank every month [so] I hope the real estate sector recovers soon."

However, the Kingdom's top construction official said a slowdown in the construction sector in the second half of last year was a temporary blip induced by the global financial crisis and that he expects to see rapid growth to resume by the end of 2009.

Im Chhun Lim, Minister of Land Management, Urban Planning and Construction told the Post last month that there were signs the sector was already rebounding after a number of high-profile developments were slowed, cancelled or put on hold towards the end of last year, resulting in mass layoffs across the sector.