It’s no secret that the upcoming ASEAN Economic Community is one of the main factors pushing land prices up in Phnom Penh, while adding a slew of taller buildings to its once-quaint skyline.

But even though the AEC is often touted as an incentive to invest in the Kingdom’s booming property sector, some in the industry are urging caution.

Land prices across the capital are surging.

A World Trust Estate survey released earlier this month indicated that land prices had increased from 10 to 30 per cent for the first five months of 2015 alone, citing the AEC as one of the main reasons for the rise.

In some upscale districts like Chamkarmon, commercial land can sell for up to $8,000 per square metre.

According to Kim Heang, president of Khmer Real Estate, the AEC property “boom” will take place as more foreigners set up in the capital, thanks to Cambodia’s economic attractiveness.

“The country has no natural disasters, more than 60 per cent of Cambodians are under 36 years old, labour costs are very low, tax advantages and more,” he said.

James Padden, surveyor at real estate firm CBRE Cambodia, agreed.

“AEC will enable the free flow of goods, capital and labour leading to much greater efficiencies in doing business across the region,” he said.

“By removing these barriers in trade, demand for real estate is set to grow in line with the additional needs of a growing business community.”

One sector which is aiming to capitalise on the AEC is the capital’s condominiums, which are increasingly dotting the skyline and aiming at a mostly foreign, wealthier market.

According to a survey released by real estate firm Century 21 in December last year, “speculators believe that the demand of condos will strongly increase in Phnom Penh thanks, to ASEAN connectivity, when many investment and business opportunities arise.”

If all the current projects are finished on time, Phnom Penh’s condominium supply is expected to more than triple from 3,090 units today to 10,000 by 2018.

The condos range in price, with an average of about $1,900 per square metre to up to $3,300 per square metre at the most exclusive developments such as The Bridge, a 762-unit project in Tonle Basac.

Condo buyers from ASEAN countries are already a strong share of the condo market, with buyers from both Singapore and Malaysia.

Heang said the AEC would strengthen the market, despite some risks.

“No risk, no return! The competition will make the market stronger,” he said.

However, others say that not everything is as rosy as it seems.

With developers constantly pushing new projects – which soared from 1,694 in 2012 to 1,960 last year – a property glut failing to match expected demand is a risk.

“As far as I can see, there will be an oversupply,” said Nguon Chhayleang, CEO of Regent Realty, a Century 21 franchise.

According to Chhayleang, signs of the AEC’s effects could take 4 to 5 years to appear.

Meanwhile, Cambodia’s government needs to build up its capacity before banking on any massive rise in foreign investment.

“Unless we have [a] strategic competitive edge over other countries, I’m not quite sure whether AEC will totally boom the market, because other countries are also doing their best to attract foreign investors to their countries,” he said.

By making it easier to conduct inter-ASEAN trade, the AEC may also push the scales in favour of Cambodia’s competitors, according to Alexander Knight, Southeast Asia director at real estate marketing firm BuyAssociation.

In Vietnam, a law allowing foreigners to own houses and apartments was passed last year and will begin to take effect this July, while Indonesia is currently making plans to allow foreign ownership sometime soon.

“What is going to shake up the market--just in time for the AEC--is a raft of new laws in Vietnam and Indonesia that could hit statute books this year, making it potentially more likely for investors to focus on these countries and away from Cambodia,” he wrote in an email.

Knight added that Cambodia’s property market was already behind in how attractive it was compared to its neighbours.

“Five per cent rental yields in Cambodia are hardly stellar --compared to 7.5 per cent in [the] Philippines--and capital growth isn’t predicted to top Indonesia anytime soon.”