More concrete details surrounding WorldBridge Land’s proposed $100 million affordable housing project have surfaced, however the Cambodian government’s involvement in the development remains unclear.
In November 2015, WorldBridge and Singapore-based construction company, Straits Construction Singapore Pte. Ltd, announced a memorandum of understanding (MoU) on affordable housing with the government.
Oknha Sear Rithy, WorldBridge group chairman, told Post Property this week that although specific details concerning location would be confirmed when the project is launched at the end of this year, he said the development would be located around 17 kilometres from the centre of Phnom Penh.
It is unclear if the government has offered land concessions for this project.
“For our first project, the company has land and we will build the houses on that land, and sell it to the eligible buyers with incentives and regulatory support from the government,” Rithy said.
“In the future, the government may have land available for private developers to develop into public housing projects.”
Rithy said the company had been collaborating with the Ministry of Land Management, Urban Planning and Construction (MLMUPC) in relation to the project’s planning stages.
“Together with our strong partner, Straits Construction Singapore which has built public housing in Singapore since 1982, we have been working closely with the MLMUPC on the draft regulations for the public housing to make sure that the regulations are responsive to the interests of concerned parties: the buyers, the state and the company,” he said.
“There are various forms of public and private partnership in public housing development as stated in the government’s National Policy on Housing.”
For this particular project, slated for completion within two years, Rithy said, “We have strong hope that the government will provide us investment incentives including tax exemption and provision of infrastructure connection to the project site in addition to the development of regulations that promote public housing projects.”
The houses will range from $25,000 to $30,000, and Rithy added that financial assistance will be available in the form of housing loans for buyers.
“We expect that the initial deposit is around 10 per cent of the housing cost, and the buyers can pay the remaining sum in monthly instalments.”
“I believe a lot of people can afford that,” Rithy added.
In terms of financing options, Rithy said the company would work to ensure favourable loan terms.
“Our company will work with commercial banks and hopefully international development banks to make housing financing available and affordable by the low and middle income families. So far, those banks have already been in touch with us to realise such collaboration,” he said.
“As for the government’s home-loan financing, it is already stated in the National Policy on Housing though it may take some time before such state financing mechanisms can be put in place. We hope that, in a longer term, the government should be able to play that role too.”
Rithy says affordable housing plays a key role in Cambodia’s sustainable development, and is something that is in high demand.
“Not different from birds, either big or small, every family needs a proper shelter or a place they can call ‘home’ regardless of their income status. So far, we have seen a lot of developments and supplies of boreys and high-end condominiums, which are good for upper middle and high income households, but are beyond the reach of low and lower middle income families, who also deserve the opportunity to own a home,” he said.
“So, there is a real demand from the lower end of the housing market.”
Another developer – Cambodia Natural Lucky Real Estate, currently building Sino Plaza near Boeung Trabek Plaza in Chamkarmon district – has also recognised the need for affordable housing in the local market, according to a self-published report titled “Housing a Kingdom: Affordable housing for Cambodians”.
The private report, which was recently handed to the MLMUPC, notes: “Affordable housing is a huge concern among young, young families and middle-income group of Cambodians. Cambodians in this segment are increasingly finding themselves priced out of private housing.”
In response to this, Cambodia Natural Lucky states that, “10 per cent of the whole [Sino Plaza] development will be priced much lower than market rate as part of the developer’s Corporate Social Responsibility toward the Cambodian housing issue.”
This will be done using a “non-open market” ballot system which allocates a selection of units within the development to be sold via a ballot system subject to a family income cap of $2,000 per month, qualified by a family income statement and a pre-qualified bank loan.
Flats sold under these terms may not be re-sold in the open property market for a minimum occupation period of 5 years. If they have to sell within this minimum occupation period, they would have to sell it back to the developer, under the developer’s guaranteed buy-back scheme at the purchase price.
However, the report highlighted the need for government support.
“The government, together with the support from the MLMUPC, should drive the initiative of affordable housing working together with Natural Lucky Real Estate, for Sino Plaza.”
“We humbly seek the ministry’s aid in endorsing this paper and pushing it forward with the best of intentions,” the report concludes.
Some industry commentators suggest that direct government subsidies are needed to create truly affordable housing ventures given the high price of land in urban centres such as Phnom Penh.
Cambodian real estate agency Huttons CPL Cambodia said it is important to offer units at adjusted rates to lower income groups.
“Allowing lower income families affordable housing options in wealthy areas of the CBD is key to social elevation for these groups and more chances of raising their income level in this generation and the next,” Sharon Liew, CEO of Huttons CPL Cambodia, said.
James Whitehead is director of content at Realestate.com.kh
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