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Who' s valuing the valuers?

Who' s valuing the valuers?

A new association, set up in August, faces a tough challenge to boost confidence in Cambodia’s real estate professionals and provide buyers and sellers with property values they can count on

The men set to clean up the sector


Lan Sinnara – Secretary General


Sung Bonna – President

The youngest of Cambodia’s real estate high rollers, Lan Sinnara has taken a more direct route to the top than Sung Bonna. Born in Cambodia in 1979, he graduated from the National University of Management with a bachelors degree in business management in 2001. His studies did not include any realty training, but he launched his career in real estate while still at university by signing on as a marketing manager with Cambodian Property Limited (CPL). Three years later, in early 2003, he left CPL with a colleague to set up his own company, Cambodia Estate Agents (CEA). He and his partner, executive director Sen Chan Rietrey, have quickly turned the agency into one of the largest in Cambodia, adding offices in Siem Reap and Sihanoukville. He is married with two daughters.
Real estate giant Sung Bonna was born in 1975 in Phnom Sruch district, Kampong Speu province. The orphan has no formal qualifications in business or real estate, graduating instead with a nursing certificate in 1996. The father of three entered the real estate profession in 1999, just in time for the land rush that kicked off at the turn of the century. Starting with just $250, an office and an old motorbike, pure determination and hard work helped him slowly expand his empire. Today, Bonna Realty Group is Cambodia’s largest real estate company, and Sung Bonna is arguably the industry’s most well- known individual. An ear to the ground and a natural inclination for marketing have ensured that his is the first name people think of when they think Cambodia real estate. He married in 2001.
All reasonable evidence shows Cambodia has experienced surging property values in recent years, and that prices are now starting to move in the opposite direction.

But while most countries have official bodies proclaiming price movements, investors and property buyers in Cambodia have had to rely on experience and the word of Cambodian property giants like Sung Bonna, the president of the country's largest real estate agency, Bonna Realty Group.

It is not a situation that sits well with Keat Chhon, minister of finance and economy. Speaking at a two-day valuation training course last month, the minister said transparency in prices was needed to increase confidence among investors and property buyers.

Real estate agents have agreed, coming together in August with support from the ministry to form the National Valuers Association of Cambodia (NVAC).

Ngy Tayi, an under secretary of state at the ministry, said the government was happy real estate agents had "raised up their hands" and taken responsibility for developing their sector.

However, the formation of the new association comes with a potential catch. The new president is Sung Bonna, and the secretary general is Lan Sinnara, the deputy director of Cambodia Estate Agent, another of the country's largest real estate groups.

As one international investor put it, on condition of strict anonymity given the realtor's influence, Sung Bonna is "hardly a disinterested party".

But Keith Oi, country head for property consultancy Knight Frank Cambodia, has no concerns, saying Bonna is the best candidate for the role.

"He has the local knowledge," Oi said. "He has seen the ups and downs of the market."

Knight Frank Cambodia chairman Eric Oi, no relation, is also on the board of the association, giving it an added touch of international respectability.

Keith Oi points out that the immediate priority of the association is not to provide hard and fast property values but to educate agents about best practice. "It's a first step for Cambodia," he said. "They are starting on education because no universities in Cambodia offer an estate management or valuation course."

Timing is right

For Sung Bonna, the formation of the association is timely given the crisis of confidence that has hit the property sector. Land prices have dropped somewhere between 20 and 25 percent in Phnom Penh from a historic peak in June, he said, largely due to an initial lull in sales in the lead-up to the July elections, which was then prolonged by the ongoing border tensions with Thailand and, more recently, the global financial crisis.

He has the local knowledge. He has seen the ups and downs of the market.

The fall comes after prices grew somewhere between 50 percent and 80 percent in 2007, and a further 80 to 100 percent in the first half of this year, reaching as high as US$5,000 per square metre in some prime central city locations.
"It is very important to have this association," Sung Bonna said. "We want to cooperate with each other to strengthen the confidence of people who want to invest in real estate in Cambodia."

Lan Sinnara said the association would boost cooperation between realtors in the country, which would help the sector as a whole.

"People who invest in real estate in Cambodia do not have any valuation standards to rely on," he said. "We want to work together to provide clear property prices and have regulations in the real estate sector to protect investors from unscrupulous people who cheat."

Though not compulsory to join, the association provides agents with a certificate detailing the type of business they are approved to carry out, such as valuation or agency. Real estate licences are issued by the Ministry of Economy and Finance.

Realtors spoken to by Prime Location were mixed on the value of the association.

Seng Sopeak, valuation manager at Cambodia Property Limited, said it would help realtors develop professional skills. "It will mean national and international investors will have more confidence in our business," he said.

But Rong Rattanak, the chief of research and development at the relatively new Rattanak Real Estate, said he had not joined and was unsure of the value of doing so.

"I don't understand clearly how my company can gain an advantage from the association," he said. "I am waiting for them to communicate with me or give me advice. Then I might join."

Visal Real Estate director Sear Chaylin said he had joined the association. He was not convinced of its worth beyond providing an opportunity for networking. "To have a real estate association or not is not a concern for me," he said. "Why do I say this? Because there have never been any problems in this business sector.

"I think that individual real estate agents are still using the same strategy to value properties even though we have the valuers association."

According to Oi, that strategy is the comparative value strategy, by which a given property is compared to similar ones that have been sold. However, even then the actual transaction value might be quite different from disclosed values.

In Cambodia, many transactions involve one contract to be lodged with the Ministry of Finance for the purposes of assessing stamp duties owed, one contract posted with the bank if financing is involved and an actual contract between buyer and seller.  

Knight Frank has called on the ministry to establish a Department of Land Valuation to collect and publicise property transaction data in the name of transparency.

To get around the problem of buyers and sellers misreporting transaction values to minimise taxes, it has also recommended that the department independently value land and to use that value for the assessment of transaction taxes.

For now, Oi has a simple rule of thumb. "Valuation is just an opinion of value," he said. "If you can justify your value, then you cannot be wrong."

In today's market, sellers are  facing a harder time justifying their values. The market will be watching the valuers association carefully for guidance. Its  toughest, and most important, job will be to re-educate them and convince them of the new value of their land.


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