Land and property prices have spiked in the northwestern part of Phnom Penh after the announcement of Aeon Mall’s second project in the Pong Peay City near Toul Kork, scaring many experts in the property sector who say that landowners are artificially raising their prices.

A landowner, who wished to remain unnamed, in Pong Peay who owns four hectares of land along Oknha Mong Rity road, about 800 meters away from AEON mall’s new project, confirmed that he has increased the price of his land. Last year, his land was valued at $400 per square metre. Now he claims it is worth $1200.

“The price has jumped up like this because the area will have a lot of development in the future with houses, apartments and a modern shopping mall,” he said. “My land is large and landowners can sell [their land] for at least $1,000 to $1,200 per square metre.”

Panh Sokkheng, who left Kampong Siem district in Kampong Cham to live in Phnom Penh five years ago, is currently a vendor along Ha Noi street, which is located about one kilometre away from Pong Peay City. She said that she’s happy to hear about the new shopping mall in the area because she has never had the chance to visit the Aeon Mall in the Tonle Baasac area, yet.

However, the rise of land prices makes it impossible for her to buy land in the area.

“I’m not able to buy any land [here], so I only rent some [space] to live here,” she said.

Kim Heang, general manager of Khmer Real Estate, said that these prices in the area made land difficult to buy and sell.

“One square metre of land now costs $500 to $1,000. With those kinds of prices, it is difficult to develop any project if the building is a flat house or villa. Only high-rise buildings can justify that kind of an [investment],” said Heang, adding that the area is not ready for those.

“I cannot find the right reason that has made the land so expansive,” he said, adding that the new figures are artificially inflated by the launch of the new mall.

“[The prices] don’t represent the real value of the land. The real value of the land is determined by the price the buyers are willing to pay, not the prices landowners claim,” he said.

Additionally, Heang believes that the Aeon Mall project was announced prematurely.

Aeon Co., Ltd. announced the second project at Pong Peay city last week. The mall will cover 10 hectare of land while the building will have 151,000 square meters of floor space, a parking lot sized to hold 2,500 cars and 2,000 motorcycles. The mall is expected to open in mid-2018.

Sung Bunna, director of Bunna Realty Group, said Phnom Penh land prices are increasing beyond economic growth in Cambodia, and that boosting them around other developments does not help. Such increasing prices can affect Cambodia’s development, which can lead to difficulties attracting foreign investment, he explained.

“Even though Cambodian land prices are lower than neighbouring countries, their economy and trade scales are bigger than Cambodia’s,” he said.