With a rash of changes of senior management at some of the Kingdom’s largest real estate firms in recent months, it can be hard to keep track of who is working where.
However, Sunny Soo, former country head with international property firm Knight Frank, is always happy to talk to the press. He has just left Knight Frank to start his own firm, Messrs Sunny & Co. He talked to Property Post’s Rupert Winchester about changes in the Kingdom, and what drove him to strike out on his own:
So why make the jump now?
I believe now is a good time for our sort of professional firm, for valuers, and we’ll start to have more opportunities. We are starting to see international firms shown some interest in Cambodia, like DTZ, Jones Lang LaSalle and Savills, and I think that we’re starting to see several Singaporean real estate firms studying the market now.
So what will your new firm be doing?
I’m basically doing what I have been doing over the past 15 years, maybe with Knight Frank or DTZ– I’ve always wanted to have my own practice. I’ve been productive for Knight Frank in Cambodia, and I see it as a good thing. I’ve got their blessing to go solo, and to me its win-win. For me, it’s really about having greater freedom in planning my own career. I will be doing global research; we’ll do appraisal works and will expand further into agricultural valuation, we are targeting potential retail and commercial property management jobs, and we’ll continue to do pre-development investment consultation along with real estate agency.
How big an operation do you want to have?
If I could just keep the size and focus of business I really want in this coming year, I would think five or six key players able to handle key role positions assisting each other will be enough for my targeted market. We will make plans according to size of our business focus. We want to have a bigger focus on our Cambodian clients while continuing to serve our foreign clients. The business is really about having good people, and well-trained professionals giving sound advice, otherwise it will be meaningless.
What’s going to set you apart from other real estate firms?
We continue to work with each other and support the growing of this real estate industry. We also have good local contacts too, and I intend to expand the level of advisory works to them. The gap of competency in real estate advisory and valuation between firms, whether a foreign-based or locals is closing in, although some tend to be faster than another, the standard of advisory services will need to be more constant and reliable, and we understand that, we kept to it and could improve upon it based on our foreign exposure. A Chinese developer will know how to value my , five years advisory background in China that enables me to put to them the difference in carrying out a development here and in China, for instance.
For the past six or seven months we’ve seen more Chinese investors taking an interest in Cambodian real estate; we are comfortable working with them.
Do you think there is an approaching property bubble in Phnom Penh?
Approaching bubble? Yes, I think it warrants some concern: if you are indeed the one thinking your product doesn’t sell very well and your potentials shy away from your asking price, then it’s a form of bubble in some way. In Phnom Penh, most projects already encounter some form of competition, and will now need to be competitive and innovative, although location and price is always the top concern. So when the level of increasing risk in a high-price market is not in line with increasing profitability, plus the opaque market does not grant you a satisfying way to quantify real estate demand, how could an investors pay a premium price on your level of market optimism?
So what are we talking about – hot money?
No. Foreign investors who came in after 2008, mostly genuinely want to own a building or do a development to sell. But many locals still have speculation in mind, - that tells a lot about why some obscure projects that have been known in the market for a while are having tough time to kick start.
I say the real estate fundamentals in relation to the banking industry are still stable in Phnom Penh. Construction costs have gone up, and the volume of construction materials sold has gone up, but collection is getting tougher. Obviously construction projects are coming out faster than the developers see the speed of their pre-sale fulfilled. So the question now is how fast does this construction run and how fast the sales can catch up, because otherwise you may need to worry about a bubble, if there is already one.
But now is a very good time. The locals have to become competitive. Being competitive will lead to better products. If the current pro-investment government continues to protect the interests of investors, the real estate market of Phnom Penh will still have capacity when the price is right.