Ly Hour, head of the Housing Development Association of Cambodia, sat down with Post Property’s Siv Meng to discuss current market trends, the flow of housing development in Cambodia, and the evolution of the country’s socio-economic status.
What is your take on the current real estate market in Cambodia?
The current progress of this sector is still looking very good, but luxury housing sales are struggling a bit. On the other hand, the market for people within the middle income bracket and lower is expanding and demands are pouring in.
In fact, I recently started a housing project for people within the middle income bracket and lower consisting of 200 houses on a three-hectare (7.4 acre) parcel of land and everything was sold out in a matter of one month.
Nevertheless, housing for people within the middle income bracket and lower doesn’t yield a lot of profits, since land value is continually rising with no end in sight.
What challenges do you expect in the real estate market in the next five years?
I don’t think there will be that many problems if the political and economic situations maintains its steady improvement like the years before and now, due to ever-increasing housing demands, our country’s rapid development, and the migration of people to the cities, not to mention our country’s luck with an almost non-existent occurrence of natural disasters such as storms, floods, earthquakes, or volcanic eruptions.
If our economy continues to make its seven-percent development rate every year, I think that this sector will flourish even more, due to the side-by-side increases in our GDP per capita and the flow of the economy. Presently, our country requires 20,000 new units annually, but our rate of supply has yet to satisfy the demand; therefore, more investment is needed.
Phnom Penh is currently prospering. Which part of the capital do you think will see the strongest development in the future?
If we examine the evolution of urbanization through a scientific lens, we have to pinpoint the greatest need of the people, which is water. So the area near National Roads one, five, six, and seven are the areas with the highest potential, because the water will never dry up in these areas.
What’s important is water; therefore, for areas without water, it will be hard to make successful despite what our efforts may be, and we all know that during the French colonial era, all cities were built with their proximity to rivers, lakes, streams, and seas in mind. We can see this in Pursat, Battambang, Kratie, and Kampong Cham.
The public is worried about the upcoming 2018 election. What are your thoughts on this?
I think that merchants, investors, and the public shouldn’t give the time of day to this issue, because what’s essential is everyday workin agriculture, industry, and commerce – these are the things that we should focus on, because there’s bound to be an election every five years, and people are getting more and more knowledgeable about the electoral process, so there’s nothing to worry about; we just have to focus on making a living.
The current political tension can stretch until the upcoming election. How does this affect the confidence and the trust of investors?
Listening to other people’s words doesn’t really reflect what is really happening, and what we currently experience. In fact, we can clearly see that nothing’s a cause for concern for the people living here at all, that’s why we shouldn’t focus on this particular point so much.
If we listen to gossip, the stories can very well be exaggerated. For investors here, there’s really nothing to worry about, and if there were any problems at all, I wouldn’t have released one project after another. In fact, I will release another project very soon.
I don’t think it’s a big issue, because after the election everything will go back to the way it was. So, if we have any business at all, we should look at what’s right in front of us and what we can do with it; don’t throw your hands up and abandon everything before anything even happens.
I personally don’t think anything will happen. If I had that fear in mind, I wouldn’t have continued my investments, because each real estate project requires a lot of money. Millions of dollars are spent on just one hectare of land, and we have 20 hectares or more in our projects, not to mention all the expense on heavy equipment.
With the speed of development in the private sector, how has the government responded in its various infrastructure developments?
The issue remains unchanged, because frankly, the rate of development in our country is insanely fast; however the infrastructure in some areas is way behind the times. The sewage system and the provision of clean water need updating, and some areas don’t even have electricity poles. That is why the Housing Development Association of Cambodia conducted a seminar with associated institutions such as the Ministry of Economy and Finance, the General Department of Taxation, and the Phnom Penh Water Supply Authority, to discuss what’s required and to draw out their responses.
As a response to the problem, the Phnom Penh Water Supply Authority showed us all their plans up to the year 2030, but what they plan is still not enough, because some areas were given to the private sector to develop. When the private sector is involved, the price of water becomes more expensive; moreover, the supply is still inadequate compared to the demand.
Before, there weren’t any issues with the outskirts of the city, but now even those areas are faced with traffic congestion problems. All of us know that we’re developing at a fast pace, and this is evident in the congestion during the hours that people go to work and when they leave work. This is something that we all need to accept. Therefore, don’t be too worried about the political climate.