A Singapore-backed real estate developer unveiled its plan yesterday to build a $500-million hotel and residential project called The Bay in the capital’s Chroy Changvar peninsula.
TEHO Development Cambodia, a wholly-owned subsidiary of TEHO International in Singapore, will spearhead the project in a venture with local developer Sok Bun Development.
TEHO holds a 49-per-cent stake in the ambitious project, while Sok Bun will own the remaining 51 per cent of the development, which is to be located near the peninsula’s Sokha hotel. The project’s first phase includes a 45-storey luxury hotel named the Okura Prestige Phnom Penh, expected to cost around $50 million, and a 53-storey apartment building which aims to be the tallest building in Phnom Penh.
“We have submitted the construction project proposal to the government already,” said Sok Bun, adding that construction was expected to begin by the end of this year and will finish in late 2019 or early 2020.
Foreign buyers will largely be targeted rather than local ones, Sok Bun said.
“I believe that the supply of apartment and condominiums is not overloaded yet as big international companies increasingly enter the Cambodian market and cause demand to increase,” he said.
“At this rate, in the next five years, I am not sure there will be enough supply for the demand or not.”
The five-star hotel, to be operated by Japanese firm Hotel Okura, will have 250 rooms, a Japanese restaurant, banquet halls, a rooftop bar, conference rooms, a spa, and an outdoor pool.
The second and third phases of the project will see the construction of five 55-storey apartment buildings, which will include shopping malls and other entertainment venues, said Bun.
Although there are relatively few five-star hotels in the country, Luu Meng, president of the Cambodia Hotel Association, said that the supply of luxury hotels is higher than the demand.
He urged newcomers to study demand before entering the market.
“During the high season, some hotels sell only about 70 per cent of their rooms,” he said.
“While it is good for Cambodia to have big investors coming in with big investments, more hotels will mean everyone will have a smaller share of the pie, unless the new players can bring in more clients or create more direct flights from Japan or the US to Cambodia,” he added.
Sear Rithy, director of local development firm Oxley Gem (Cambodia), which is overseeing the construction of the Shangri-La International Hotel in Phnom Penh, said the project has “both pros and cons”.
“One must be very clear about the potential of their market, or else it will only end up like the 2008 property bubble crisis if they are not serious with their investment,” he said. “Increasing investment reflects positive growth for Cambodia’s construction sector, but investors have to be realistic about the demand. Higher supply than demand will not bring good results for the sector.”