Logo of Phnom Penh Post newspaper Phnom Penh Post - Construction costs low, but could rise



Construction costs low, but could rise

Construction costs low, but could rise

130307 16
The Riviera construction on Koh Pich. Photograph: Hong Menea/Phnom Penh Post

Construction costs in the Kingdom have increased only 1.36 per cent year-on-year, compared to Cambodia’s inflation rate, which is projected at 3.5 per cent for 2012, according to a new report from global estate agents CBRE.

The company says the minimal increase is due to the competitive market conditions, as well as labour costs remaining the same year on year. Labourers on average receive $5 per day, which is the same rate as in 2011.

However, compared to construction costs regionally, Cambodia’s costs are approximately 10 per cent higher than in neighbouring Thailand and Vietnam, because even though labour costs are significantly lower here, the lack of supply of domestically manufactured construction materials has created a dependence on imported materials, resulting in higher costs.

The construction sector is projected to grow by 9.9 per cent from 2012 to 2015, according to CBRE.

Construction approvals by the Ministry of Land Management, Urban Planning and Construction have seen large fluctuations in recent years, with the first three quarters of 2012 seeing construction approvals reaching $541.3 million in Phnom Penh.

That is already higher than the yearly total since 2009. The value of the construction projects has been steadily increasing each year, which clearly indicates that the market dynamics are starting to shift, and strong growth is returning to the market.

However, with a limited amount of vocational training on offer, the current supply of skilled workers is not meeting the increased demand of the construction sector, and skilled workers’ wages are likely to increase at a faster rate due to the current lack of supply. This could potentially lead to an increase in construction costs.

The demand for materials remains high across the region, particularly China, and this will mean construction material prices are unlikely to decrease in the short or medium term.

Material costs will only fall if there is an increased supply of domestically manufactured construction materials, and this is not likely to change in the coming months, if not years.

The outlook for the construction industry is positive, but construction materials will remain subject to international forces, while the supply of skilled labour will increase overall construction costs and could hit development.

MOST VIEWED

  • With herd immunity likely in 2022, is Cambodia ready to reopen for tourism?

    The government aims to inoculate 80 per cent of the target population by June next year, giving it a head start among regional peers to reboot the sector but first, it has to do a few things to up its game A sign on a glass

  • Quarantine still a must for all arrivals, in next Covid chapter

    Since early May, an average of five to 10 Cambodian people have died from Covid-19 a day with many others testing positive amid the ongoing community outbreak. At the same time, however, hundreds of patients also recovered a day. The first Covid-19 case in Cambodia was

  • US wants 'full access' to Ream Naval Base

    On June 11, the US embassy's Defense Attaché Colonel Marcus M Ferrara visited Ream Nava Base in coordination with Cambodian officials following the recent approval of Prime minister Hun Sen to allay the concerns on Chinese military presence at the base as raised by US Deputy

  • First commercial gold mine online

    Australian miner Renaissance Minerals (Cambodia) Ltd on June 21 began the commercial operation of its $120 million Okvau Gold Project in the northeastern province of Mondulkiri, becoming the Kingdom’s first gold producer. Located in the Okvau area in southwestern Mondulkiri province’s Keo Seima district, the

  • Jab drive heading to 5 provinces

    The government is set to vaccinate more than 1.2 million people in five provinces after finishing with Phnom Penh and neighbouring Kandal in an ongoing campaign administered by the ministries of Health and National Defence. The five provinces are Preah Sihanouk, Kampong Speu, Takeo, Kampong Cham

  • New immigration bill targets illegal foreigners in Kingdom

    General Department of Immigration (GDI) officials are discussing revisions to the new draft law on immigration to prevent foreigners from entering Cambodia illegally and to supervise those living in the Kingdom more effectively. The revisions draw wide support among civil society organisations. GDI director-general Kirth