“Cambodia is one of those key countries for our brand investment campaign.”
Andre De Jong, managing director of Bosch Cambodia, acknowledges the potential signs of an economic bubble in Phnom Penh’s real estate market but remains confident in the city’s long-term fundamentals and predicts a soft landing for the bubble.
German-headquartered Bosch, a global services and technology supplier which reported global sales revenue of approximately $79.1 billion in 2015, is fresh from releasing its first Southeast Asian branding campaign to heighten awareness of how the company makes the lives of people a little better each day.
Speaking to Post Property in the wake of the launch of the three-year campaign, called ‘We help make a difference’, De Jong said Southeast Asia was one of the fastest growing markets for Bosch, naming Cambodia as a standout performer for the business.
“I think [property construction] is one of the greatest contributors [to our business] because the majority of our business is related to building and energy and this is exactly what the infrastructure boom in Cambodia is about,” he added.
When it comes to Phnom Penh’s fast-developing property construction industry, De Jong said the quality of buildings was slowly improving, and as such, Bosch was capitalising.
“What we also see is not just a lot of construction going on but the level and quality of construction is also increasing,” he said.
“There are more luxurious apartments, lifestyle five-star hotels, modern shopping and an upgrade on the airport.”
He added, “These are all considered to be quality investments so [construction companies, developers] cannot, or don’t want to work with inferior products or building materials, therefore our power tools have a good chance of being chosen and used as well as our security systems.”
While De Jong acknowledges there will always be companies that try to reduce costs or save on important safety systems, like fire alarms, he said reputable firms operating in Cambodia were adopting high standards.
“For the higher mid-scale and up-scale developments, they usually follow certain codes which is positive for companies like Bosch,” he added.
Commenting on the state of Phnom Penh’s booming apartment and condo market, De Jong, who is also board member and chairman of the real estate and construction committee of EuroCham, said it was showing signs of overheating.
“The pace is continuing, there are so many projects being released this year. We’ll see how many of those projects really materialise though,” he said.
“Will it overheat? Yes, it will”.
However, De Jong expressed confidence in the ability for Phnom Penh’s property market to rebalance in the mid to long-term.
“You do see that this kind of development always balances out in some way,” he said, referring to similar patterns which have occurred in Thailand’s and Vietnam’s property sector.
“It’s all logical and within the normal development and I think some of the investors know that in the short-term or mid-term it may be overheated for a while, but lots of them invest for a long time, over a horizon of 30 years or 50 years, and over that period of time we may look back and laugh at that expectation of overheating of the market.”
Speaking on the long-awaited construction law which would legally enforce and standardise building codes, De Jong said the framework was far from imminent.
“We have been working on a prakas (sub-decree) together with the government on construction management, but in this prakas they refer to other prakas’ that are not even written. In fact, this construction management prakas is detailed under the construction law but the construction law has not been launched.”
“Of course we would welcome very much this construction law because it would set the base and the pace for further improvements on details,” De Jong added.
De Jong, who has been directly involved in the drafting of the current law, said it was currently a step-by-step process.
“First, there needs to be the [overarching] construction law and then they should describe areas where there needs to be clearer details and start drafting those laws. And then the building code is basically a combination of all those steps and standards and regulations that really describe in detail everything related to construction,” he said.
De Jong also said that if the government provided full support, and if the private sector also backs it up, it would be a minimum of four years for full implementation of the law.
“Currently, in Cambodia, different developers use codes from different countries, which makes it impossible for the government to track, due to the complexity of too many codes being practised,” he explained.
“There’s still a lot to be done and Bosh is committed to making the market safer, and lifting up the quality.”