Cambodia’s property sector reflects Hong Kong’s blooming era in the 1980’s
Instead of focusing on the overheated property market in his home city of Hong Kong, Ko Sek Yan, founder and CEO of Hong Kong-based Meridian International Holding, has an eye on Cambodia’s property market, whose growth reminds him of Hong Kong’s golden period in the 1980s. Post Property’s Natalie Leung met Ko at the occasion of the launch of his second condominium project, Skylar Meridian, on Diamond Island and talked to him about how Phnom Penh’s property market of today mirrors the image of Hong Kong’s golden period.
How does Hong Kong’s property market of the 1980s resemble the Phnom Penh property market of today?
Back in the day, the Hong Kong property market just started to bloom. The Hong Kong government had to develop new towns as there was not enough land in the city centre. Today’s Phnom Penh faces the same situation of insufficient land, so it has to develop new towns such as Diamond Island. Besides the need for development, the housing price is also about the same. The entrance price for a small apartment was about $10,000 and $20,000 for a bigger apartment in 1980s’ property market. It is comparable to the entrance prices for the current local property market. Although currently there is no mortgage law in Cambodia, that was also the problem for Hong Kong in 1980s, as the system was developing and banks just started to provide mortgages. We found that the local market goes in that direction as more and more banks start to provide mortgages in recent years.
How do the investment climates compare?
The Hong Kong property market was very hot in the 1980s. Investment in property can be very simple and profitable. People had to queue to buy property at that time, and they could easily resell to other people to make quick money. As it is a fast way to make money, some people even hired triad society to queue for them. Like back in the day in Hong Kong, Cambodia, and Phnom Penh in particular, are currently at a stage of transition. There is a need for condominiums as the worsening traffic problem limits people to choose to live near the centre of the city. Increasing land prices also raise the price for town houses, which local people used to live in. Condominiums become more appealing, though the need may take some time to be revealed in the market as it is still a different concept of living.
What are difference between the property markets in Cambodia and Hong Kong?
Cambodian people currently have fewer ways to make money as they do not trust banks. In Hong Kong, banks provide a variety of investment products like stocks or foreign currencies. People can have income other than work income and may only need to save a portion of money; Cambodians may have to save because they cannot make money out of the savings through different financial investments. Their wealth grows at a slower rate.
There are different types of housings in Hong Kong including public housing. Do you think the Cambodian government has to develop public housing as well?
The local government and some developers have discussed building housings away from the city centre and selling them at a very low price. It is not called public housing but is a similar concept. The idea is to offer affordable housing to encourage people living in the centre to move out, giving way for the development of old districts. But the local government does not have enough money to build this kind of housing, so it encourages the private sector to do so. We are also studying this investment opportunity.