Land prices in Arey Ksat have been steadily rising on the expectation that two planned bridges to connect the area will increase property values.
More certainty over the future construction of two Chinese-funded bridges to span the Mekong River has fuelled land speculation in Arey Ksat, a quiet agricultural community on the opposite bank of the river from Phnom Penh and the Chroy Changva Peninsula.
Real estate specialists say prices have been climbing steadily in the commune, with speculators picking up what they see as deeply undervalued land that will soar in price once bridges connect it to the capital.
“The key ingredient driving the purchase and sale of properties in Arey Ksat is the construction of two new bridges,” said Dith Channa, CEO of Lucky Realty Co Ltd.
Land prices in Arey Ksat have climbed about 10 to 15 percent since last year, according to Channa. Currently, land located in settled areas along main roads is selling for about $400 to $450 per square metre, and between $200 and $300 per square metres along smaller roads. Farmland located away from the roads is still very cheap, with some plots selling for as little as $2 per square metre.
Until now, the only way to reach Arey Ksat from Phnom Penh is by ferry, or a circuitous road trip using the Prek Tamak bridge some 15 kilometres north of the capital.
In 2015, Prime Minister Hun Sen announced plans to construct two bridges that will facilitate movement between Phnom Penh and the east bank of the Mekong River. The first bridge will link Arey Ksat to Kdei Takoy on National Road 1, and the other will connect Svay Chrum, the commune immediately north of Arey Ksat, to the Chroy Changva Peninsula.
The government has also announced its intention to incorporate Arey Ksat commune into Phnom Penh Municipality.
Nou Vathanak, spokesman of the Ministry of Public Works and Transport, said the government has asked China to finance the construction of the two bridges and feasibility studies are still underway. He said once built, however, the bridges will put Arey Ksat within easy reach of the capital.
“Until now, the timeline to construct the two bridges connecting Phnom Penh and Arey Ksat has still not been confirmed,” he added.
According to Channa, the construction of these two bridges is still at least three years off and investors should not expect a quick return on investment.
“Those who wish to invest in properties in the Arey Ksat area should have capital to lay down for three to five years and consider the location carefully, as it could be long time before the properties generate a return,” he said. “Most people who purchased properties there expect to make a high return once the bridges are built, but when that will actually happen is still up in the air.”
Chrek Soknim, CEO of Century 21 Mekong, said many of his clients are seeking real estate in Arey Ksat for long-term investment. As most of the land in the commune floods during the rainy season, and many areas lie far from any roads, prices are still very affordable for investors prepared to buy and hold.
“Property in this area does not look good now as it lacks infrastructure,” he said. “But in the long run, investments in this area are sound.”
Developers are already selling the future connectivity the two bridges will bring to Arey Ksat and other rural communities on this side of the Mekong River, with at least three borey (gated residential community) projects announced.
A senior sales representative of Borey Chaktomuk City, which has several residential projects in Arey Ksat commune, said sales of flats and villas have improved since the start of the year, while nearly all units in the company’s 500-unit condominium have been sold.
“To me, land and properties in Arey Ksat will continue to fetch higher prices as it is a good place to live and close to Phnom Penh,” he said.
The sales representative added that he had heard construction on the two bridges connecting Arey Ksat to the capital would start no later than 2020.