The uncertainty of the global economy this year and the forecasted, albeit slight, dip in the Cambodian economy may cause land prices to stagnate in Phnom Penh, as well as in the provinces, according to assessments from real estate companies.
Po Eavkong, managing director of Asia Real Estate, said that with 2016 having a rocky start after further fears of a Chinese slowdown have emerged, real estate investors in Cambodia are treading carefully.
“Because of this drop, there will be detrimental impacts to the real estate market in Cambodia,” he said adding that further shocks will only heighten anxiety.
“The growth of land prices could either stagnate or drop compared to last year,” he said.
Despite warning signs that investors should ease off the pedal, Eavkong is concerned that real estate agents will continue to inflate land prices by up to 40 per cent, thus bringing about negative sales results.
Khom Monirath, a manager at Daily Realty Group, agreed with Eavkong’s views. For BKK1, he believes that real estate activity will become dormant as investors see their profit margins slip.
Monirath also believes that prices in Toul Kork will slow after peaking in 2015.
On a lighter note, prices in areas like Tonle Bassac, Daun Penh, and Chroy Changvar could continue to increase between 15 to 20 per cent due to ongoing investments from both local and foreign companies, he said.
Kim Heang, head of Cambodian Valuers and Real Estate Agents Association (CVEA), said that the lines have blurred as more real estate agents have crowded the market, all looking to cash in. Artificially raised prices would hinder foreign investment, he explained.
Nevertheless, Heang predicts that land prices will still rise at a more modest 5 to 10 percent in the city centre, while the suburbs could still attain 20 per cent growth during 2016.
“The demand for land this year could slightly negate the strong growth we have seen from 2013 to 2015, when foreign and local investors first started to rush in,” he said.
“During those years, demand rose dramatically. And land that was big enough for large developments has already sold out,” he said, adding that agents have to find new areas to sell.