Businesses feeling crunch as fewer land sales mean fewer new rich with money to burn

Photo by: Heng chivoan

Mel Trea's spending days are temporarily over.

THE end of Cambodia's property boom is increasingly being being felt across the economy as a downturn in land sales means fewer newly-rich Cambodians hit the capital with money to spend.

Sam An, 43, who runs a private automobile dealership on Phnom Penh's Monivong Boulevard, said his sales have declined by up to 50 percent over the last six months from a peak during the building boom of 2006, 2007 and the early part of 2008.

"Many of our buyers made a lot of money from selling land and came to buy cars here," he said. "Now they are so quiet."

Sok Narin, 28, said he used to make a handsome profit from selling Suzuki motorbikes from his private dealership in 7 Makara  district to people arriving from the provinces with cash in hand.

"At this time last year I sold between four and five motorbikes per day, but now my business is very quiet," he said. "I think that this is because the property market is not good."

Cambodia's sole Toyota distributor, TTHK Co Ltd, told the Post last month that it has sold only 1,200 vehicles this year, well short of the 2,000 previously anticipated, after sales plummeted almost 50 percent since May.

RM Asia Co Ltd, the country's second-largest automobile importer, said sales of Ford vehicles have declined about 10 percent within the last few months.

Va Teang, 35, who owns a gold shop at Pochentong Market in Phnom Penh, said her income has dropped 50 percent because of the real estate market slowdown.

Mel Trea, 72, a farmer-turned-land speculator from Prakar village in the outskirts of Phnom Penh, said the land boom had made him rich over the past five years.

"I never thought that I would have a great chance like this," he said.

"I earned a lot of money from land I sold during 2006 and 2007 when the land was fetching very high prices. If I had bought land for $1,000 per hectare I sold it at $10,000 per hectare; if I bought at $10,000 I sold at $100,000."  

With the proceeds, he built a villa for his family and bought cars and motorcycles. With few buyers around, his wealth is locked up in his remaining land bank and his spending money has dried up.

"Now, the property market is very quiet," he said. "It's not like the last few years when I was very busy speculating."

Kang Chandararot, president of the Cambodia Institute of Development Study, said it was inevitable that the slowdown in real estate sales would be felt throughout the economy.

"The world economic crisis has already affected the real estate market in Cambodia," he said. "If the real estate market collapses, it can make life difficult for other people doing businesses in Cambodia, especially car and motorbike sellers."

Ngy Tayi, undersecretary of state at the Ministry of Economy and Finance said the government was considering how it could intervene to boost the sector.

"I can't give you an answer as to what we will do, but I can say the government is discussing the issue and considering helping them in the near future," he said.