Construction Ministry greenlights 300 projects in September, more than in previous months, but value of development falls

It is not like IT WAS last year when we had a lot of big projects.

MORE than 300 construction proposals worth a combined US$70 million were given the green light by the Ministry of Land Management, Urban Planning and Construction in September, official figures released late Tuesday show.

This compares with a combined 357 approvals in July and August. However, the indicative value of projects greenlighted in those two months dwarfs September at $470 million.

The latest round of approvals brings the number of projects cleared for construction to 1,805 for the first nine months of 2009, 15 percent up on the same period a year earlier.

However, the projects were earmarked to be worth just $1.68 billion to the economy, 22 percent down from the $2.16 billion indicative value of construction projects approved over the same period in 2008.

Lao Tip Seiha, director of the ministry’s Construction Department, said that developers had scaled back their ambitions in the wake of the global financial project and were seeking approval for more modest developments.

“It is not like it was last year when we had a lot of big projects,” he said.

According to the ministry’s figures, the average size of new building sites approved in the year to October was 313 square metres, compared with the 2008 average of 475 square metres.

National Valuers Association of Cambodia President Sung Bonna said the number of new approvals for small projects was up as developers began to take advantage of falling property prices, particularly outside the most central areas.

“The size of investments in the construction sector has decreased, and only small, family-owned residence projects have been submitted for approval,” he said.

“Real estate prices at present are still very low, though I think the prices will bottom out early next year and then begin to increase again.”

Key projects

Lao Tip Seiha identified several prominent developments among those approved in September.

These included the Battambang Shopping Mall Centre and Apartments, owned by Pung Sovan; mixed-use buildings owned by Ly Yongphat in Koh Kong province; a rice-milling development belonging to Duong Vibol in Kampong Thom province; several garment factories in Kandal province and Phnom Penh; and a monosodium glutamate factory belonging to Ajinomoto, and a shoe factory belonging to Tiger Wing, both in the Phnom Penh Special Economic Zone.

Back on track

Lao Tip Seiha also said work has resumed at several sites where construction had slowed in 2008, singling out the US$300 million, 237,500-square-metre Star River residential development being built by Korean company Posco E&C in Phnom Penh’s Tonle Bassac commune.

Work has also begun on Emario Shonan Marine Corporation’s development in Sihanoukville, Bellevue’s apartments, motor assembly factories belonging to Honda and Yamaha in Phnom Penh, and a garment factory being built by DK Inc, he said.

The Kingdom’s construction sector will continue growing in the coming years, he predicted, as the global financial crisis recedes, leaving a growing opportunity for real estate development in its wake.