For many years, Phnom Penh has been too small, in international terms, to attract the attention of the big players in the world of property consultancy, and the local market has been the province of local companies. However, there have been a few exceptions, where big international companies have seen the potential in the Kingdom, and established offices here, staffed with knowledgeable, highly trained staff.
One of the longest established international firms operating in Cambodia is London-based Knight Frank, one of the world’s biggest independent global property consultancies, originally established in 1896. Headed in Cambodia by the enthusiastic Sunny Soo, the company has been ideally placed to watch the market here develop.
Post Property asked Soo how he thought the Phnom Penh property market was doing. “Well, it seems to be going strongly. I think the locals keep building, although I’m not seeing that much foreign investment coming from the regions that were previously strong, like Malaysia or Singapore.”
Other areas in the region are mixed in terms of their presence in Cambodia: “It seems like the Japanese are coming in, if not the Koreans, although I’ve had conversations with Korean entrepreneurs, who are saying that the second wave of Korean investment is likely to come in very soon, although we haven’t seen any solid evidence of this. But I take them as serious developers. I think they have the intention to complete the projects they’ve started, but it’s slow.”
With Phnom Penh having seen a destructive property bubble in 2008 due to an influx of foreign investment, does Soo see the same thing happening again? “It depends on how we define bubble, but if we talk about the price of development land that’s currently being asked, it seems like the locals are buying land in the prime areas in a manner similar to people buying antiques, where it’s about buying places they like rather than assessing the economic value of it; they may be paying above what I think the real economic value might be, but they’re happy.”
But if there is another bubble, how bad could it be? “I think it’s too early for us to tell: the majority of developments here do not get funded by banks, so this is funded by individual wealth, so with that, a bubble, if there is one, will not cause a downturn if there’s a huge economic crisis. Because it’s being funded with money from under the mattress, as it were, it’s very difficult for the price to adjust to the market. People will just complete their projects, and even if they don’t get what they want, they can just wait.”
Is the government doing enough to manage the property market in the Kingdom? “The government is trying to explore how they can control the behaviour of developers to protect homebuyers at the moment, but I think the process has been very very slow. For instance they’ve been talking about a housing development act for a while, and we still haven’t seen any clear indication of how this act might go. There are issues with strata titles, as well, and we need those to be sorted out. So there is quite a lot to be done,” Soo says.
But Soo says he is optimistic about the future of the property market in Cambodia, for two main reasons. Firstly, “from the feeling I get talking to the locals, the privileged groups, who know what’s going on, and have good government contacts and can see where the country is going, and they seem to be very optimistic.
Many of these people have very strong exposure overseas as well, maybe in Hong Kong, and France, and they seem more and more to be looking to Asia for development, they really truly believe that Cambodia is very pro-business, and it makes them very very positive about the levels of interest in this country,” Soo says.
And secondly, Soo believes that “industries are on the increase, exports are growing, and that’s all very optimistic. And oil should have a good impact on GDP.”
He continues: “In property terms, in the short term there is a lot of potential. There is a lot of property available for sale: it really depends on how far you want to look ahead, in the short term the market is stable, rather strong, and I’m always cautiously optimistic.”
To contact the reporter on this story: Rupert Winchester at [email protected]