Logo of Phnom Penh Post newspaper Phnom Penh Post - As land prices grow, so does the city skyline

As land prices grow, so does the city skyline

Content image - Phnom Penh Post
Building construction underway in the Chamkarmon district. CBRE Cambodia says land prices in the district have risen dramatically. Heng Chivoan

As land prices grow, so does the city skyline

In recent years, the number of skyscrapers jostling for space on the Phnom Penh skyline has boomed.

Many remain shrouded in green netting, awaiting their unveiling prior to completion. The proliferation of skyscrapers is largely a product of economic circumstances predominantly related to the price of land, as well as the aspirations of developers and occupiers.

As cities develop, demand grows for prime land sites in central locations due to the access benefits these sites provide to the resultant occupiers. Land is a finite resource, and centrally located land available for purchase becomes increasingly scarce as developments proceed.

With development and urbanisation picking up speed, central areas increasingly come under pressure from growing volumes of traffic and the subsequent demands of occupiers to be located in prime positions close to amenities and/or facilities that they wish to access quickly.

In Phnom Penh, we can see evidence of this occurring with the rapidly increasing land prices witnessed in central districts. CBRE Cambodia recorded average prices in the Daun Penh and Chamkarmon districts as having grown by more than 110 percent between 2010 and Q1 of 2017.

Developers are typically motivated by profit and seek to construct a building that maximises the return on their investment, the major capital expenses ofwhich include the price of the development plot and the project’s construction costs.

As a result of land price increases, pressure builds on developers to increase the density of the development they construct so that they may continue to ensure an appropriate return on their investment by spreading construction costs over as much of the site area as possible. Tall buildings increase the density of a development; by stacking office, shops or residential units on top of one another greater use can be made of the same development plot.

Flying into Phnom Penh, the economics of land prices and their effect on development can be clearly seen. The tallest buildings are located in clusters centred upon locations where land prices are the most substantial, principally the financial district, along the city’s main boulevards and in the vicinity of Diamond Island, as well as a more dispersed accumulation across the enduringly popular location of BKK1. Of course, this does not preclude developers from building tall elsewhere. Indeed, many do choose to build higher than the economics of land prices would suggest is necessary for their chosen location, and usually this is to create an impression of prestige, in an attempt to derive greater investment return, or to make the most of available views.

Land prices in Phnom Penh have not yet reached the levels seen in the likes of Bangkok or the Vietnamese cities of Ho Chi Minh and Hanoi. Indeed the most expensive sites in Phnom Penh remain at between one third and a quarter of land prices seen for prime city centre plots in these neighbouring countries. In part, this is due to Phnom Penh’s continued urban expansion which provides a ready supply of more affordable land on the city fringes.

James Hodge | Surveyor | Research, Consulting & Valuation Services

MOST VIEWED

  • Cambodia rejects UN rights claim

    Cambodia's Permanent Mission to the UN Office in Geneva on Friday hit back at David Kaye, the UN special rapporteur on the Promotion and Protection of the Right to Freedom of Opinion and Expression after he raised concerns over the repression of free speech and

  • Snaring may spawn diseases

    The World Wildlife Fund (WWF) has warned that snaring of animals has become a crisis that poses a serious risk to wildlife in Southeast Asia and could spawn the transmission of zoonotic diseases to humans. Its July 9 report entitled Silence of the Snares: Southeast Asia’

  • Ex-party leader, gov’t critic named as secretary of state

    A former political party leader known for being critical of the government has been appointed secretary of state at the Ministry of Rural Development, a royal decree dated July 9 said. Sourn Serey Ratha, the former president of the Khmer Power Party (KPP), told The Post

  • Residence cards set for over 80,000 immigrants

    The Ministry of Interior plans to grant residence cards to more than 80,000 immigrants to better keep track of them. The ministry announced the plan on July 10, following the results of an immigration census. “An inter-ministerial committee and many operational working groups have been set up

  • Kingdom produces PPE gear

    Medical supplies from Cambodia have been donated to member countries of the Asian Development Bank (ADB) to assist in the fight against Covid-19, said an ADB report published on July 9. The report stated that the supplies were donated as a response to global efforts to

  • Kingdom, US vow stronger ties

    At an academic forum on Saturday to celebrate 70 years of Cambodia-US diplomatic ties, Cambodian researchers and officials expressed hope of encouraging US investments and for that country to deepen and improve its bilateral relations. Held at the Royal Academy of Cambodia, it reviewed the past 70

  • Fifteen Cambodians from Saudi get Covid-19

    The Ministry of Health on Sunday confirmed 15 more imported cases of Covid. The 15 men ‒ all Cambodian aged 21 to 33 ‒ arrived from Saudi Arabia on Friday via a connecting flight in Malaysia. They were travelling with 79 other passengers, three of them women. The ministry said 80 of the

  • Ministry requests school opening

    The Ministry of Education, Youth and Sport on Thursday said it would request a decision from Prime Minister Hun Sen to allow a small number of schools to reopen next month. Ministry spokesman Ros Soveacha said if the request is granted, higher-standard schools will reopen

  • Kingdom eyes India FTA, China deal set for August

    Cambodia is studying the possibility of establishing a bilateral free trade agreement (FTA) with India to open a new market with the second-largest regional economy. This comes as an FTA with China is scheduled to be signed next month while similar negotiations with South Korea

  • Judge lands in court after crashing into alleged thief

    Sen Sok district police on Thursday sent a Koh Kong Provincial Court judge to the Phnom Penh Municipal Court on manslaughter charges after he crashed his car into a woman riding a motorbike on Wednesday, killing her. District police chief Hour Meng Vang told The