Logo of Phnom Penh Post newspaper Phnom Penh Post - Loans to realty, construction up 16%



Loans to realty, construction up 16%

Content image - Phnom Penh Post
Real estate mogul Sam Soknoeun said banking industry loans are a vital backbone in boosting the national economy and affording Cambodians the opportunity to buy their own homes. Hean Rangsey

Loans to realty, construction up 16%

The total outstanding loans extended to the real estate and construction sector by banking institutions in Cambodia amounted to nearly $7.69 billion as of the end of the first half of this year, the National Bank of Cambodia (NBC) said in its Semi-Annual Report 2020 released on July 8.

This is a 16.23 per cent climb from the more than $6.61 billion posted at the end of last year, the NBC said.

Overall outstanding loans in the banking industry reached $26.7 billion on June 30, of which the real estate and construction sector accounted for 28.8 per cent.

Loans in the sector accounted for 11.6 per cent ($3.097 billion) of personal mortgages, 9.2 per cent of construction ($2.456 billion) and eight per cent of real estate transactions ($2.136 billion).

Overall outstanding loans in the banking industry reached $24.5 billion on December 31, of which the real estate and construction sector accounted for 27 per cent.

Sectoral loan accounted for 10 per cent $2.450 billion) of personal mortgages, 10 per cent of construction ($2.450 billion) and seven per cent of real estate transactions ($1.715 billion).

NBC governor Chea Chanto cited a number of Covid-19 repercussions emerging in the Kingdom’s banking sector.

“The primary risks are a prolonged Covid-19 and a fall in people’s incomes and businesses which would constrain growth in deposits and credit, trigger a wave of debt restructuring, provoke cracks in the real estate and construction sector and decelerate foreign capital inflows into the Kingdom’s banking sector.

“Although Cambodia has taken effective measures to control the spread of Covid-19, the construction sector in Cambodia is also facing a decline due to in part foreign funding are from overseas.

“With all these challenges, Cambodia’s economy is expected grow negatively in 2020, at the lowest rate since 1995,” Chanto said.

Cambodia will be set to make a V-shaped economic recovery next year if the novel coronavirus can be contained by the end of the year, he said, noting that the growth rate would fall short of 2009 levels due to a slow recovery in the tourism, construction and real-estate sector in the short-term.

Soeng Phorn, senior vice-president and credit division head at Acleda Bank Plc, told The Post on Wednesday that his bank had seen a slight decline in mortgages in the first half of this year.

The bank, he said, focused on lending to the hardest-hit sectors, especially small and medium-sized enterprises (SMEs).

“At Acleda, the number of mortgage loans fell just less than one per cent in the first half from the end of last year, but I expect a second-half rebound,” Phorn said.

He said the outstanding value of his bank’s mortgage loans totalled $142 million as of June 30.

Sam Soknoeun, the president of both the Global Real Estate Association and KW Sam Sn Realty Co Ltd, said banking industry loans are a vital backbone in boosting the national economy and affording Cambodians the opportunity to buy their own homes as fewer now have the cash in hand needed to go through with the purchases.

“The rise in bank mortgages bodes well for the real estate sector in Cambodia to remain a favourable forward pace,” he said.

But as the number of bank mortgages rises, the trend towards buying homes from developers with instalment pay plans increases substantially, he warned.

In a more upbeat tone, Soknoeun said mortgage lending in the Kingdom’s banking industry will further accelerate down the line, as interest rates plunge even lower to catch up to other countries.

MOST VIEWED

  • Prince Norodom Ranariddh passes away at 77

    Prince Norodom Ranariddh, the second son of the late King Father Norodom Sihanouk and former First Prime Minister of Cambodia, has passed away in France at the age of 77. “Samdech Krom Preah Norodom Ranariddh has passed away this morning in France just after 9am Paris-time,”

  • Cambodia purchases 4 million Molnupiravir tablets

    Cambodia has arranged for the purchase of four million US-made Molnupiravir pills – enough to treat 100,000 Covid-19 patients – even though the current rate of daily infections in Cambodia remains low. The medicine will be distributed to state hospitals, pharmacies and private clinics, according to the Samdech

  • Rise in planned flights lifts travel hopes

    Six airlines have applied to resume flights in December, while two others have put in for additional flights and routes, according to State Secretariat of Civil Aviation (SSCA) head Mao Havannall on November 29. These account for 43 new weekly domestic and international flights in December, up 16

  • Is Cambodia’s travel sector in for another cheerless holiday season?

    The travel and tourism sector was heaving back to life as borders started to reopen, promising a festive vibe for the holidays and New Year. But Omicron and other Covid-related issues are threatening to close the year on a bleak note ‘Seems [like] Covid-19 won’

  • Cambodia, Thailand to discuss border reopening

    Cambodian authorities from provinces along the Cambodia-Thailand border will meet with Thai counterparts to discuss reopening border checkpoints to facilitate travel, transfer of products and cross-border trade between the two countries. Banteay Meanchey provincial deputy governor Ly Sary said on November 22 that the provincial administration

  • Cambodia planning new border checkpoint at Thma Da

    Cambodia is looking into the possibility of opening a new Thma Da Border Checkpoint with Thailand to boost trade and tourism. The Ministry of Public Works and Transport said on December 4 that Minister of Public Works and Transport Sun Chanthol led a technical working group