Cambodia imported $849.332 million worth of “iron and steel”, “cement” and other “construction equipment” in the first half of 2023, down 8.04 per cent from $923.626 million in the same period last year, a commerce ministry bulletin showed, as the domestic construction sector continues to suffer in the still-brittle global economic environment.

Individually, iron and steel totalled $192.280 million, up 3.51 per cent year-on-year from $185.764 million; cement $10.315 million, down 33.49 per cent from $15.510 million; and construction equipment $646.736 million, down 10.47 per cent from $722.352 million, noted the bulletin, citing data from the General Department of Customs and Excise of Cambodia (GDCE).

Housing Development Association of Cambodia secretary-general Huy Vanna told The Post on July 19 that these past three years of global economic turmoil have had a particularly detrimental effect on the Kingdom’s construction industry due to how closely it and the real estate sector are linked to the production of goods and services.

Prior to the Covid-19 crisis, the local construction industry was expanding at a brisk pace, with investment pouring into a whole bevy of large-scale projects, most of which were foreign-financed, Vanna said, noting that work on these developments dwindled after the pandemic struck.

“Even though the global economy is presently growing faster than it was two years ago, it still won’t be enough for a full recovery in the construction sector – jobs typically demand a significant investment of time and money,” he said.

On July 6, National Bank of Cambodia deputy governor Chea Serey commented that the Ukraine conflict, international financial tightening, and China’s persisting real estate woes have hindered inbound Chinese investment and impacted prospects for exports and capital inflows.

“Falling credit growth and higher borrowing costs brought on by heightened interest rates across the globe may also diminish domestic investment.

“Overall, due to the openness of the Cambodian economy and its strong reliance on external resources, the majority of risks to its financial stability stems from outside sources,” she said.

Serey advised careful scrutiny of the Cambodian real estate sector, which she identified as a material source of risk to financial stability, highlighting a slump in demand for properties following a decade-long growth boom.

In the same vein, recent CBRE Cambodia research suggests that the average office occupation rate in Phnom Penh decreased from 60 per cent in the first quarter to 58 per cent in the second as supply increased by about 39 per cent of the 215,000sqm expected to be added over the course of the year. This, it said, puts further pressure on the market.

This year’s additions are slated to bring the capital’s total supply up “by 24 per cent to over one million square metres”, the local affiliate of US commercial real estate services and investment firm CBRE Group Inc said in a July 13 press release.

“With the upcoming supply over the rest of 2023 and the fewer business expansions, thus low new demand of office spaces, we expect further pressure on office rents and occupancy levels during the remaining period of 2023,” the release quoted CBRE Cambodia senior valuation and advisory manager Chin Daluch as saying.

Global Real Estate Association president Sam Soknoeun remarked that growth in the local real estate and construction sectors since 2019 has been subdued, with a number of projects either being delayed or scrapped altogether.

He was in part making reference to the turbulence experienced in the two sectors in 2019 – before the pandemic – which was largely attributed to an online gambling ban.

“Even if the Covid-19 situation no longer poses a major threat to the globe, the real estate and construction sectors have continued to be under pressure from the ongoing global economic crisis, in particular from geopolitical tensions between the superpowers and the Russia-Ukraine war,” Soknoeun said.

The Ministry of Land Management, Urban Planning and Construction issued construction permits for 1,463 investment projects in January-May, covering “more than five million” square metres, with total registered capital of $2.270 billion, or up 138.52 per cent on a yearly basis from just over $0.95 billion, according to ministry secretary of state Lao Tip Seiha on June 23.