Developers have refuted rumours that projects have been postponed until after national elections in July, attributing the delays instead to technical issues.
Developers and real estate agents have noted that Cambodia’s property market saw a significant slowdown in the months preceding the 2013 election only to pick back up shortly after the poll. Domestic buyers in particular appeared hesitant to conduct real estate transactions during a period of political uncertainty, and developers waited for the clouds to clear before launching projects or commencing construction.
Industry insiders have said off the record that they expect construction and sales to slow ahead of this year’s national election in July. However, the developers of projects rumoured to be on hold until after the election have refuted the idea that political uncertainty is to blame, pointing instead to various technical issues.
Kim Heang, president of the Cambodian Valuers and Estate Agents Association (CVEA), acknowledged that there was some concern in the property sector last year that projects were being postponed due to election anxiety – though he himself did not buy into it. He said project delays were normal in this industry, and there was no reason for developers to hold off construction as there was little uncertainty how the national election would unfold.
“Nowadays, they don’t talk about the election anymore because we already know what’s in the cards,” he said before stating unequivocally: “There are no projects on hold due to the national election.”
That hasn’t kept the rumours from flying. Some have pointed to the stalled Kowloon Bay Twin Tower project, a joint venture between WorldBridge Land and Star City Cambodia with blueprints for a 59-storey twin tower building on a 1.5 hectare site at the south end of Sotheros Boulevard.
A massive showroom for the mixed-use development was quickly erected last year, but until now there has been no sign of construction on the two towers.
Sear Rithy, CEO of Worldbridge Land, said the project had already broken ground and construction would commence once the building’s design is finalised.
“The groundbreaking phase has already been completed, and work on the structure is expected to start by the end of this year after the designing stage is completed,” he said.
Rithy dismissed rumours that his company was waiting for the election result to proceed with construction, insisting the delay was purely technical and tied to the government’s approval of the building’s height. He explained that the initial proposal for 63 storeys had to be cut down to 59 floors to comply with ministry regulations and the project’s architect is now redesigning the building accordingly.
Kowloon Bay Twin Tower will contain condominiums and a mall. While Rithy admitted he was watching the property market closely to gauge the level of demand, he remains positive on the project’s potential.
“I still have confidence,” he said. “My attitude is that if I am not confident, I don’t do it.”
Another project whose conspicuous delay has raised questions is the Glory Business Centre, a 78-storey multi-purpose tower capped with a revolving restaurant set to cast a tall shadow over a cluster of nearly completed skyscrapers in Tonle Bassac commune. The site was hastily cleared following the project’s announcement last year but has remained empty ever since, with no sign of telltale equipment or building materials.
Po Sambath, a representative of Yung Chung Real Estate Cambodia, the Chinese developer behind the $200 million project, could not be reached this week. However, he previously insisted it was unfair to describe the apparent lack of progress as a delay as the company had never set an official date for the start of construction.
“The company is now redesigning the building’s plan as it is a tall building, therefore the technical aspects require attention to ensure a smooth and successful construction process,” he said previously. “We are working on preparing a schedule.”
Election delay rumours have also swirled around Sina Plaza, a curvaceous 37-storey office tower set to occupy a corner near Olympic Stadium. The Taiwanese developer behind the project had announced a completion date by 2020, but until now the fenced off site has been used only to store materials. No explanation has been given for the project’s glacial pace, and the developer could not be reached for comment.
A study published in trade journal Cogent Engineering last year titled “Causes of delay in residential construction projects in Cambodia” cited over 30 reasons contractors gave for project delays in the Kingdom. “Shortage of materials on site,” “unrealistic project scheduling” and “late delivery of material” topped the list reasons given by contractors who responded to the researchers’ survey, while no mention was made of postponing projects until after elections.
Ann Sothida, director of real estate firm CBRE Cambodia, said developers have cited various reasons for delaying their projects, but election anxiety does not seem to be one of them. She said most delays appear to be concern about the viability of their sales projections, as the market has become increasingly competitive.
“The market is a developer’s biggest concern,” she said. “However, when it comes to postponing a project, the [decision to do so] can also be due in part to internal company issues, though the developer is unlikely to disclose it.”
A recent study by VTrust Appraisal would appear to confirm there has been a recent slowdown in both project launches and sales of residential properties. The study found that new launches of condo units slowed to 10,000 units last year, a 45 percent decline compared to 2016. Meanwhile, sales of condominium units fell by 73 percent year-on-year in 2017.
However, the study identified the cause of the slowdown as a glut of supply as well as external factors. It found that by the end of 2017 a total of 61,199 condominium units had been launched in Phnom Penh, with 8,793 units completed.
It said a surge in supply had pushed the market absorption rate of condo projects up to 14.8, “meaning a project might need 14 years and 8-9 months to sell off a project. Meanwhile, another 13,000 condo units are expected to come online in Phnom Penh this year.
The VTrust report also noted that the slowdown had not affected the boreys (gated residential communities) preferred by Cambodian buyers, with new launches increasing in 2017 and sales growing 27 percent year-on-year.
Grace Rachny Fong, executive president of Century21 Cambodia, said neither developers nor buyers appear particularly concerned about the upcoming elections.
“Today, people never think about any problems in the upcoming election [when considering real estate],” she said. “Buyers concentrate on good products, such as a condominium, while developers pay more attention to the design, space and quality of units, as well as the timeline.”