“CAMBODIA – the best country for future business development in Asia”, is the tagline on the website of Cambia Estate & Advisor.

The country has received international praise for its recent economic growth and with the tourism sector leading that growth, coupled with rises in tourist numbers, it should mean Siem Reap in particular would be a hotbed of development activity.

But as tourism remains buoyant, there seems to be something of a current development freeze in Siem Reap that comes on the heels of a near building frenzy as hotels and shopfronts went up all over town.

Now that the dust has settled, it’s clear that Siem Reap is still in need of further infrastructure to become a more “rounded” destination. It’s not clear who will do it, what they will do or when.

But the potential in providing the infrastructure to boost tourist activity – shops, restaurants, theatres, leisure activities – is there for developers and investors.

And two major casino-hotel developments are taking place outside the town and at the port of Chong Kneas.

Fuelled by rising tourism numbers and speculation, a localised construction boom took off in Siem Reap after 2003. This was the ‘age of the amateur’. The market was good for everyone whether they had a few thousand dollars to invest in a new business or a few million.

This, in turn, fuelled the real estate market, so that “properties that were selling for $0.50 per square metre in 2000 were going for $80 per square metre in 2008”, says Bruno L’Hoste, the owner of Tigre de Papier and a local investor.

This led naturally to a desire to build properties that could be sold at such good prices.

What happened in those few years was an explosion of construction and speculation that was done with little regard to the real needs of the market. Shopfront-style ‘cities’ went up on the principal roads, where today they sit silently with minimal activity on the fringes.

These were principally sold by Cambodians to Cambodians in a similar kind of property cycle that has just seen Ireland almost brought to its knees. “It was all built on fantasy,” says L’Hoste.

At the same time, dozens of wedding-cake hotels were constructed that today see bare levels of occupancy, some say less than 30 percent. This style of hotel is not that attractive to many in the tourism market, but the glut of rooms they create have a negative effect on the prospects of other investors coming in to build hotels that do match the market.

Scott Lewis, a manager partner at Leopard Capital, refers to this as being “unhelpful”, and his view is confirmed by L’Hoste: “Many people like boutique hotels now; this seems to be the trend”.

In 2008, the global economic crisis brought it all to a halt. One of the developments that sits idle today is Angkor Residences, still a three-hectare grassy field. This was a $6 million project part-funded by Phnom Penh-based Leopard Capital to create a luxury development for the Khmer middle to upper classes.

Scott Lewis explains that the project was shelved because of a fall-off in tourism and a drop in the market for investment properties.

“During the property boom there were plenty of people looking to Siem Reap for investment purposes. But that’s evaporated.”

Lewis doesn’t know when Angkor Residences will get off the ground again and another local developer, Alain Hely, isn’t sure when the market will revive again either.

“I don’t see the indicators of a revival yet. Maybe in 2011 we shall see something”.

Both Lewis and Hely agree that much more needs to be done, however, and they identify similar restraints on development at this time, in particular poor infrastructure, low protection for investors, the high costs for tourists of getting to Siem Reap, in particular from Bangkok and Ho Chi Minh, and low levels of activities for tourists when they do get here.

The last provides one of the best opportunities for business developers and investors in Siem Reap, as visitors are being encouraged to spend a little more time here with the slightly more flexible ticketing option now offered for Angkor Wat.

Notwithstanding all the activity, tourists, who are still the main source of income for Siem Reap and its environs, have little reason to stay for more than a few days and keep spending the money in their pockets.

“There is still a lot of potential in the market,” says Lewis. A view that L’Hoste and Hely agree with.

“There needs to be more entertainment, leisure activities, things like movie theatres, better shopping facilities and infrastructure,” Lewis said.

“Restaurants need developing and parking facilities should be considered in town as it’s growing.

“I don’t know who is going to go first.”

Jean Yves Navel, a former real estate investor, points to a big development being run by the Koreans outside of town.

On a 30-hectare site, there will be hotels, a casino and other facilities. A further big development, more casinos and hotels, is ongoing at the port of Chong Kneas.