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Sihanoukville gets a wake up call

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Besides having the only coastal port, Sihanoukville could attract more tourists through more activities. Heng Chivoan

Sihanoukville gets a wake up call

Sihanoukville has long been a part of the government’s plan to develop the Southern coast as Cambodia’s next tourism hotspot after Siem Reap, and if recent arrival numbers are anything to go by it seems to be growing in appeal. However, as new property developers and casino operators descend on the city, and as budget backpackers continue to zip past to the beaches of nearby islands, it is yet to be seen how the development will play out and what crowd it will bring in.

In the first eight months of the year Sihanoukville airport handled a total of 65,698 passengers, with total arrivals at 35,882, up 149 per cent and 140 per cent year-on-year, respectively.

But as nearby islands such as Koh Rong and Koh Rong Samloem become more heavily marketed, and with the amount of visitors increasing every year – including tourists from other Asian countries –Sihanoukville still looks scarcely more than a forgotten seaside town.

Ho Vandy, a tourism expert and former co-chair of the Private and Public Sector Working Group, said the city has been neglected and outpaced by visitation to the islands, which is largely apparent in the low season.

“There needs to be more attractions such as theme parks and special places to visit to get more tourists all year round,” he said.

But beyond the view of sleepy restaurants along Ochheuteal and Serendipity beaches that offer nearly identical sun-bleached and faded menus, Sihanoukville has a growing property sector driven by largely Chinese and ASEAN investment that could pick up the slack during the quiet periods.

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Large swathes of undeveloped land along the southern coast have long been seen as ripe for tourism. Moeun Nhean

One industry that appears to be taking off more than others is gambling, as integrated hotel and casinos aimed particularly at the rising number of Chinese visitors, multiply.

Ros Phirun, spokesman for the Ministry of Economy and Finance, said the number of licensed casinos operating in Sihanoukville has doubled since last year to 15, with an additional five applications pending approval.

“Before, casinos were mainly at the border but as the economy grows and more tourists visit the coast more casinos are opening… and for first time Chinese are going to the seaside to look for opportunities to invest,” said Phirun.

Sihanoukville’s casino boom now puts the city on a par with Poipet, near the Thai border, in terms of the number of licensed facilities, though, still lags behind in volume.

But this could change as Chinese arrivals continue to surge. From January to August of this year, arrivals from China to Cambodia totalled 461,518, up 26.5 per cent year-on-year and accounting for 15.2 per cent of total arrival numbers. These numbers have secured China’s place as the second biggest source market behind Vietnam.

With Sihanoukville International Airport now operating flights from South Korea, Singapore and China, as well as daily flights to Siem Reap, the coastal city totalled more than 1 million visitors during the eight-month period, boosting its connection not only China but the rest of Asia.

Phirun says the casinos, lit up at night in Chinese characters, predominantly do business with online games rather than face-to-face and that the growth of casinos will hopefully draw in more business tourists with greater spending power.

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The government has plans to expand Sihanoukville port . Heng Chivoan

“Sihanoukville previously attracted local tourists who mostly visit on the weekend and during the holidays, which means business is very slow during the week. If the city can attract more investors in gambling, then construction, hotels and a bigger tourism business will grow accordingly,” he says.

But despite the economic potential of hotel and casinos, the country’s gambling industry has long maintained a murky reputation, while Sihanoukville rarely makes positive headlines.

Earlier this year, there was a highly publicised incident involving a group of armed men launching an assault in the Queenco Hotel and Casino to extort money from music festival organizers. The music festival, Kazantip, which had for years been held on the Crimean peninsula before shifting to Georgia, was eventually cancelled after what government had deemed it an “indecent” and “illegal” event.

Meanwhile, casinos in the border towns of Bavet and Poipet have been dogged by stories of kidnapping and extortion.

Yet, the absence of law, oversight and bad press has still attracted brisk investment amid relaxed regulations and fewer restrictions compared to neighbouring countries.

The Post reported last month that a senior official in Cambodia’s anti-money laundering agency said the body lacks the resources to investigate or penalise financial institutions that break the law, leaving the country open to exploitation by organised crime.

But at the moment, it seems any investment is good investment explained Luu Meng, President of Cambodia Hotel Association. He said that with Chinese investors taking risks by building large scale properties, this could hopefully lead to diversification within the market when more cautious investors show interest.

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Casinos aim to bring in high spending business tourists. Eddie Morton

While he said it is important to have a balance of regional and foreign investors, regardless “Sihanoukville has been waiting for many years for someone to start it off...and it’s always good to have more tourists looking for different things,” he said.

“It’s always good to see construction going on and it’s a good indication there will [be] even more development because more than a year ago Sihanoukville was so empty.”

However, it’s not just casino operators that are looking to cash in on Sihanoukville’s growth. The city has caught the attention of major property developers.

Earlier this year Cambodian property and hotel conglomerate SGPD Corp. broke ground on The Sunshine Bay, a 31-storey mixed development with three towers comprising 900 units, water parks and bars, to be located on Independence beach. Prices per unit start from $123,000.

The developers reportedly sold more than 200 units before the groundbreaking ceremony in May to Taiwanese, Chinese and Cambodian investors.

Another such property is D’Seaview, a 735-unit condominium backed the Singaporean agribusiness company HLH Group Ltd under their newly formed Camhomes branch, will be located near Sokha Beach. Through private subsidies the company is marketing units as low as $33,000 for Cambodian citizens. Construction on the project is expected to begin later this year, with a completion date of 2018.

Ross Wheble, country director for global real estate consultancy firm Knight Frank, said Sihanoukville’s first real condominium projects are aiming to bring international standards to the city and breaking a long spell of inactivity and relatively flat land prices.

“This in part can be attributed to the increase in scheduled flights to Sihanoukville Airport which is only going to increase over the medium to long term, in addition to the growth of the industrial sector and the increasing number of [special economic zones],” he said in an email.

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With investment, the Cambodian coast could be the next destination after Siem Reap. Hong Menea

The inflow of investment is also seeing Sihanoukville’s popular beach, Otres, gain interest as higher-end hotels offering luxury amenities set up in the stretch farther away from the city called Otres Two.

“Presently, Sihanoukville itself does not have so much of a good reputation and Serendipity Beach is not the best. The reason we are seeing development at Otres Beach is that it is catering to the more upmarket/family tourist segment as opposed to the backpacker market associated with Sihanoukville,” said Wheble.

Norn Thim Sothear, director of Sihanoukville Property, said the speculation in Otres Two also comes amid a lack of space on Otres One, which has pushed land prices up by about $100 since last year, totalling $600 per square metre along the entire beach.

Whether Sihanoukville’s growth will complement the government’s tourism drive and attract a breed of tourist other than backpackers or whether it will turn into a generic casino town like Bavet will remain to be seen. But for now the focus is taking that initial plunge and shaking the city from its slumber.

“It requires someone to take the risk. Someone has to begin building and we’ll need to wait for the customers to see what happens,” said Meng.

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