Construction is now underway on GoldTower 42, the Korean-funded project that upon its completion will be the first skyscraper in Cambodia. June 2, 2008
by Susan Postlewaite
Business Week
A decade ago, Phnom Penh didn't even have a traffic light. Now, high-rise condos and offices are in development and land speculators are raking in profits
At a construction site in the middle of the city, a yellow backhoe levels rubble left from the previous building, an old hospital, while dozens of workmen in hard hats and rubber boots scrape away at the dirt. Nothing that noteworthy about this scene—until you consider the location: the intersection of Monivong and Sihanouk Boulevards, in downtown Phnom Penh.
After spending most of the past three decades struggling to recover from the legacy of the Khmer Rouge's genocidal rule, Cambodia is in the midst of a real estate boom. If all goes as planned, the dirt at Monivong and Sihanouk will soon sprout the country's first skyscraper, a 42-story residential building funded by money from South Korea. A few kilometers away, near the river, workers are clearing a lot for another skyscraper, also Korean and even bigger, with 52 stories.
A decade ago, Phnom Penh lacked even a single traffic light. Today, as land speculators rake in profits and new developments lure tenants, the dilapidated capital, which until recently was dotted with dangling electric wires and garbage-strewn lots, is getting a makeover. All over the city, shanty towns and old villas are being sold for land value and razed to make way for high-rise apartments, office buildings, shopping malls, and new villas.
Other parts of the country are seeing development, too. Developers are targeting Siem Reap (BusinessWeek.com, 4/21/08), near the ancient temples of Angkor Wat, for new hotels.
Does Cambodia Need Skyscrapers?
The Phnom Penh skyscrapers, which will be more than three times higher than the tallest existing building in Cambodia, are the most dazzling projects. And the most controversial. The developer of the $240 million Gold Tower 42, Yonwoo Co., expects construction to take three and a half years to complete. Already, says Teng Rithy, sales manager for Gold Tower 42, "high-ranking Cambodians and some foreigners from other Asian countries" are plunking down deposits. "We are 80% sold out," he boasts.
Not everyone is convinced the skyscrapers make sense. Many lawyers, bankers, and real estate brokers in the Cambodian capital are wondering whether the skyscrapers will really go up and whether there is demand for new construction. So far, new buildings are not having trouble leasing, since the city suffers from a shortage of modern office space. Tenants like the World Bank lease space in rabbit-warren-like villas with odd hallways leading in all directions.
But residential skyscrapers are a new concept in a country that not too long ago was still giving away property, not trying to market a 40th-floor condo for $1.6 million. "I feel it's a little bit early for that," says Sung Bonna, head of Bonna Realty, one of the leading real estate firms in Cambodia. "They said it's going to be a success. But I don't know. If it doesn't happen, it is not good for us."
Bonna says the whole idea of a real estate market in Cambodia is so new that no one can predict how it will turn. "We used to share property, not sell it. After the Pol Pot regime, however many properties you want, you can take all of them." He says there is a need for more modern restaurants, office buildings, and commercial centers, but the supply and demand for residential properties is in balance.
Korean Connection
For now, though, there are promising signs. Prime Minister Hun Sen—whose government at one point or another signs off on the big development deals—likes the skyscrapers and he wants more of them, according to his aide, Sry Thamarong. And land prices are hot. A traditional shop house—4 meters wide by 18 meters deep and going up four to five floors—along the river that sold in 2006 for $300,000 is now going for $600,000 to $700,000. But this is still much cheaper than Ho Chi Minh City in Vietnam, the real estate agents say.
Since Cambodia is still a very poor country that has never seen so much investment capital flying around, the trend is unnerving some observers. "Where is the money coming from? Cash coming out from under the mattresses, cash coming from overseas," says John Brisden, vice-chairman of Acleda Bank, the largest bank in Cambodia. He calls the real estate boom "very unusual" because much of it is not being financed by bank loans. Are there signs that the boom may be running its course? Brisden doesn't see a sudden popping of the bubble. Instead, he says, "people envision a slowdown. The scenario is a lot of empty high-rise properties but no forced sales."
Most of the big new projects are coming from Korea. Financing the Gold Tower 42 skyscraper is Korea's DaeHan Real Estate Investment Trust. Yonwoo is the developer. A director at Yonwoo in Seoul, who asked not to be named, says his company began exploring real estate development opportunities in emerging economies three years ago, when Korea's domestic construction market began cooling. "In view of a number of wealthy Cambodians and a growing number of foreign investors arriving in Cambodia, we are confident Gold Tower 42 will be a success," the director says. Phnom Penh-based salesman Rithy says there are "high-ranking Cambodians" involved in the project, but he won't say who.
Investors Face Legal Hurdles
The 52-story skyscraper announced in January is a project of Korea's GS Engineering & Construction. The Seoul company plans to start construction in June and finish in 2012. A 34-story project near the Russian embassy will have serviced residences for 280 households and several floors of apartment blocks on top, as well as shopping and an international school, according to GS spokesman Choi Byoung Geun. "Cambodia really needs this kind of Class A facility," says the business development chief in Cambodia, Mu-Hion Woo, who figures by the time the $1.2 billion project is built, the demand will be there.
A Korean developer is also behind Camko City, a new suburb northwest of Phnom Penh with a $2 billion price tag that is in the early stages of development. World City, the property developer, began construction last June and is scheduled to complete the first phase by November, 2009, according to Korean contractor Hanil Engineering & Construction, the Seoul-based company that is also the contractor for Gold Tower 42.
There are some legal hurdles for potential investors to overcome. For instance, foreigners are not allowed to own real estate outright in Cambodia. But there are plenty of ways to get around the law. Foreign investors can set up a joint venture with Cambodian partners, use long-term leases, or put the land in the name of Cambodian partners. There's even the possibility of becoming Cambodian. "With an investment of a certain size, you can get citizenship. It's a contribution to the country," says Matthew Rendall, a lawyer with Sciaroni & Associates, a law firm in Phnom Penh.
Evictions in the Name of Development
National Assembly lawmaker Sam Rainsy, a former Finance Minister and leader of the largest opposition party, calls many of the real estate deals "shady." He argues that Cambodia is awash in illegal cash plundered from the sale of national assets, including illegal logging and the sale of public lands, where land titles are easily changed and the sales revenues never get accounted for in the state budget.
And there has been a social cost to all the new development. The scramble for prime land has led to widespread evictions of people without clear land titles to the properties. A report by human-rights group Adhoc in Phnom Penh says in 2006 and 2007 more than 50,000 people were evicted for development. Chan Soveth, program officer at Adhoc, says he expects 4,252 families in Phnom Penh to be evicted from villages surrounding Boeng Kak, a lake in the city where a developer wants to build a new township that will have condos, a hotel, and shopping. "It is very bad and getting worse," says Soveth. Adds human-rights lawyer Am Sam Ath of the nongovernmental organization Licadho: "There is no balance between the big development and the rights of the people."
But with land prices continuing to skyrocket, regardless of what happens with the skyscrapers, there is no indication that the land speculation boom will stop. "No one can predict," says Bonna, but he thinks it could run "maybe five years more."
With Moon Ihlwan in Seoul.
Postlewaite is a reporter for BusinessWeek in Phnom Penh.
At a construction site in the middle of the city, a yellow backhoe levels rubble left from the previous building, an old hospital, while dozens of workmen in hard hats and rubber boots scrape away at the dirt. Nothing that noteworthy about this scene—until you consider the location: the intersection of Monivong and Sihanouk Boulevards, in downtown Phnom Penh.
After spending most of the past three decades struggling to recover from the legacy of the Khmer Rouge's genocidal rule, Cambodia is in the midst of a real estate boom. If all goes as planned, the dirt at Monivong and Sihanouk will soon sprout the country's first skyscraper, a 42-story residential building funded by money from South Korea. A few kilometers away, near the river, workers are clearing a lot for another skyscraper, also Korean and even bigger, with 52 stories.
A decade ago, Phnom Penh lacked even a single traffic light. Today, as land speculators rake in profits and new developments lure tenants, the dilapidated capital, which until recently was dotted with dangling electric wires and garbage-strewn lots, is getting a makeover. All over the city, shanty towns and old villas are being sold for land value and razed to make way for high-rise apartments, office buildings, shopping malls, and new villas.
Other parts of the country are seeing development, too. Developers are targeting Siem Reap (BusinessWeek.com, 4/21/08), near the ancient temples of Angkor Wat, for new hotels.
Does Cambodia Need Skyscrapers?
The Phnom Penh skyscrapers, which will be more than three times higher than the tallest existing building in Cambodia, are the most dazzling projects. And the most controversial. The developer of the $240 million Gold Tower 42, Yonwoo Co., expects construction to take three and a half years to complete. Already, says Teng Rithy, sales manager for Gold Tower 42, "high-ranking Cambodians and some foreigners from other Asian countries" are plunking down deposits. "We are 80% sold out," he boasts.
Not everyone is convinced the skyscrapers make sense. Many lawyers, bankers, and real estate brokers in the Cambodian capital are wondering whether the skyscrapers will really go up and whether there is demand for new construction. So far, new buildings are not having trouble leasing, since the city suffers from a shortage of modern office space. Tenants like the World Bank lease space in rabbit-warren-like villas with odd hallways leading in all directions.
But residential skyscrapers are a new concept in a country that not too long ago was still giving away property, not trying to market a 40th-floor condo for $1.6 million. "I feel it's a little bit early for that," says Sung Bonna, head of Bonna Realty, one of the leading real estate firms in Cambodia. "They said it's going to be a success. But I don't know. If it doesn't happen, it is not good for us."
Bonna says the whole idea of a real estate market in Cambodia is so new that no one can predict how it will turn. "We used to share property, not sell it. After the Pol Pot regime, however many properties you want, you can take all of them." He says there is a need for more modern restaurants, office buildings, and commercial centers, but the supply and demand for residential properties is in balance.
Korean Connection
For now, though, there are promising signs. Prime Minister Hun Sen—whose government at one point or another signs off on the big development deals—likes the skyscrapers and he wants more of them, according to his aide, Sry Thamarong. And land prices are hot. A traditional shop house—4 meters wide by 18 meters deep and going up four to five floors—along the river that sold in 2006 for $300,000 is now going for $600,000 to $700,000. But this is still much cheaper than Ho Chi Minh City in Vietnam, the real estate agents say.
Since Cambodia is still a very poor country that has never seen so much investment capital flying around, the trend is unnerving some observers. "Where is the money coming from? Cash coming out from under the mattresses, cash coming from overseas," says John Brisden, vice-chairman of Acleda Bank, the largest bank in Cambodia. He calls the real estate boom "very unusual" because much of it is not being financed by bank loans. Are there signs that the boom may be running its course? Brisden doesn't see a sudden popping of the bubble. Instead, he says, "people envision a slowdown. The scenario is a lot of empty high-rise properties but no forced sales."
Most of the big new projects are coming from Korea. Financing the Gold Tower 42 skyscraper is Korea's DaeHan Real Estate Investment Trust. Yonwoo is the developer. A director at Yonwoo in Seoul, who asked not to be named, says his company began exploring real estate development opportunities in emerging economies three years ago, when Korea's domestic construction market began cooling. "In view of a number of wealthy Cambodians and a growing number of foreign investors arriving in Cambodia, we are confident Gold Tower 42 will be a success," the director says. Phnom Penh-based salesman Rithy says there are "high-ranking Cambodians" involved in the project, but he won't say who.
Investors Face Legal Hurdles
The 52-story skyscraper announced in January is a project of Korea's GS Engineering & Construction. The Seoul company plans to start construction in June and finish in 2012. A 34-story project near the Russian embassy will have serviced residences for 280 households and several floors of apartment blocks on top, as well as shopping and an international school, according to GS spokesman Choi Byoung Geun. "Cambodia really needs this kind of Class A facility," says the business development chief in Cambodia, Mu-Hion Woo, who figures by the time the $1.2 billion project is built, the demand will be there.
A Korean developer is also behind Camko City, a new suburb northwest of Phnom Penh with a $2 billion price tag that is in the early stages of development. World City, the property developer, began construction last June and is scheduled to complete the first phase by November, 2009, according to Korean contractor Hanil Engineering & Construction, the Seoul-based company that is also the contractor for Gold Tower 42.
There are some legal hurdles for potential investors to overcome. For instance, foreigners are not allowed to own real estate outright in Cambodia. But there are plenty of ways to get around the law. Foreign investors can set up a joint venture with Cambodian partners, use long-term leases, or put the land in the name of Cambodian partners. There's even the possibility of becoming Cambodian. "With an investment of a certain size, you can get citizenship. It's a contribution to the country," says Matthew Rendall, a lawyer with Sciaroni & Associates, a law firm in Phnom Penh.
Evictions in the Name of Development
National Assembly lawmaker Sam Rainsy, a former Finance Minister and leader of the largest opposition party, calls many of the real estate deals "shady." He argues that Cambodia is awash in illegal cash plundered from the sale of national assets, including illegal logging and the sale of public lands, where land titles are easily changed and the sales revenues never get accounted for in the state budget.
And there has been a social cost to all the new development. The scramble for prime land has led to widespread evictions of people without clear land titles to the properties. A report by human-rights group Adhoc in Phnom Penh says in 2006 and 2007 more than 50,000 people were evicted for development. Chan Soveth, program officer at Adhoc, says he expects 4,252 families in Phnom Penh to be evicted from villages surrounding Boeng Kak, a lake in the city where a developer wants to build a new township that will have condos, a hotel, and shopping. "It is very bad and getting worse," says Soveth. Adds human-rights lawyer Am Sam Ath of the nongovernmental organization Licadho: "There is no balance between the big development and the rights of the people."
But with land prices continuing to skyrocket, regardless of what happens with the skyscrapers, there is no indication that the land speculation boom will stop. "No one can predict," says Bonna, but he thinks it could run "maybe five years more."
With Moon Ihlwan in Seoul.
Postlewaite is a reporter for BusinessWeek in Phnom Penh.
26 comments:
Is it earthquake proof ? i just don't want to know only 3.0 ritcher scale everything goes down to the foundation.
Don't worry about that. Just don't vote number #9. Otherwise, everything will surely go down the drain.
NUmber 9 is for ah one-eye Hun Sen right? therefore don't even think about voting for that 1-eye Yuon's slave HUN SEN, get it?
From the video below:
http://youtube.com/watch?v=1auRLX7ahSo
I think that GoldTower lack some serious hight. Hey Yonwoo are you really serious about this project, I mean the pedestrian is taller your tower man. Because it has been a while that this tower was anounce.
Kim Sung.
glad to see cambodia finally will have skyscrapers; it's about time we get one. sign of time and changes. god bless cambodia and her beautiful khmer people.
the views should be spectacular i.e., the mighty mekong river, the whole city of phnom penh and beyond. i'm so happy for cambodia. we want a lot more skyscrapers, please. it's more profitable to build up, nowadays. i wouldn't be surprised that the entire phnom penh area will change its look in a few more years or so. god bless cambodia.
next, autorails skyways, etc... for cambodia. cambodia has the best views in all southeast asia; also imagine a time will come when they will build skyscrapers in sihanoukville, siem reap, battambang, koh kong, etc., imagine the awesome views. cambodia also has the advantage of sunset along our coasts; and the views of angkor archaeological park from one of these planned skyscrapers in siem reap... god bless cambodia. i think a lot of people will want to live in cambodia when all the skyscrapers are going up and up. cambodia may be a good place to relax and retire...
" A decade ago, Phnom Penh didn't even have a traffic light."
I do not believe this sentence at the bigining of the text. I live in PP for 15 years ago and I see the traffic light more than a decade a go.
the facts is cambodia used to have everything imaginable, but thanks to the KR era, most everything was destroyed by the stupid, idiot KR regime. it is now and gradually that cambodia is beginning to experience growth and development again more than ever before. not all of us were old enough to remember everything then. cambodia is in a renaissance. god bless cambodia.
It is like one narrator in a Khmer tourism DVD saying there are not many songs about Kandal provinces, only Battambang. I said oh, open your eyes and ears. Plenty SS songs abou Kandal, it is just that those songs don't literally mention the word Kandal.
Calm down guys. Skyscrapers alone will not elevate the Cambodian lifestyle for as long as the Cambodians continue to do the work in the ricefields manually and do a back breaking work all day and every day. Abandon the use of cows and planning the rice manually but start using "BIG" machineries to grow tens of millions of acres of rice. The revolution of modern agriculure is, I believe, more imperative than having the Hi-Rise alone and millions of Cambodians still dwell in huts and shacks.
Of course not right away but it certainly raised up everyone standard of living afterward.
At any rate, it is a good start.
Vote number 4 to keep on moving in the right direction.
11.05 AM, don't forget to vote 9 so your sisters and mother continue good lives. Even if you dady is dead, they will be looked after and provided more husbands at no charge. Otherwise, your sisters will remain spinsters all their lives.
I know you will tick 9 in the box. Thanks you for awakening before your rice pot is taken over by the yuan robbers.
Bullshit, I don't know anyone who like to go back to year-zero or rather hell or Zimbabwe.
Is this retarded guy 7:32 PM even know what is talking about? He seems to talk in reverse. Doesn't he know that current HUN SEN administrations is like Zimbabwe (iron fist). He is being reverse psychology on Sam Rainsy. Even himself don't even know the history of Zimbabwe. It is not Sam Rainsy that bring Cambodia to year zero. It is HUN SEN right now he is curbing almost every freedom of expressions. Sam Rainsy is patriotic guy. He wants to bring all kind of developments for Cambodia. He wants to solve corruptions in Cambodian. He doesn't want the infested corrupted officials sucking up Cambodian natural resources and blood. Sam Rainsy is the most genuine one. Please vote for Mr. Sam Rainsy.
The picture posted depict Phnom Penh is nothing but a bush city among the shiny Gold Tower. It is mis-represented and it could leave a very bad impression for others of the Cambodian capital.
To 5:11 AM
Just wanted to ask if you are one of the street guys who never ever got any education. All your words used to comment here won't be accept by most readers. You won't be called a Vulgar man if you use your proper advices.
Regardless, what the negative thoughts are, we better appreciated that we are moving forward. It is about time that we develop something to show.
When the French colonized Cambodia and not a single Skyscraper was built and now look what happen!
I believe it is a good thing to have Shiny Gold Tower Skyscraper which will become a landmark in the future because it was the first one to be built and there is no doubt in my mind that it will give inspiration to the next generation of Cambodian engineers and designers to come up more better design than the Shiny Gold Tower Skyscraper!
I believe Cambodia can’t afford to waste too much time in pursuing modernity among other countries in the region! Cambodia must continue to build and rebuild to accommodate the needs of Cambodian people and beside Cambodian population is growing and the only way to make use of every available space is to build skyscraper and to show Cambodian people a new way of living!
Cambodian people may feel that they are not ready right now to live in such a high place but eventually they will because land is becoming too expensive for rice production to feed the whole Cambodian population!
I have also noticed that some experts believed that creating more cities will not help solve the poverty problem and it will only create more poor people because people by nature are born to grow food, raise animals, and to live whatever nature can offer them! But to create a city and the people can’t do none of the things that people should do by nature and now they have to chase after low paying job that can’t even support their family! It is a clear evident for me after seeing the Cambodian garment workers and many other workers including children who worked like an animal in the city!
11:38pm stupid monkey! Can you leurned more about world and tecnology history. What Skyscraper durring Frech colony? YOur mother may rape by a fool!
To 1:10AM
Hey! Before you are blowing hot air and you better prove me wrong fool! Is there any skyscraper build when Cambodia was a colony of France? Okay! Cambodia has some villas and boulevards and that is it and not even college or university! In case you didn't know that most of Cambodian people will have to go to Vietname to continue their high education and that including King Sihanouk!
Listen mother fucker! The French has the technology to build the Eiffel Tower since the 1800 and why can they build a simple skyscraper in Cambodia like the Korean? It is because the French think that Cambodian people like you are a bunch of monkey and that is why!
Don't believe me, then you should go check the French embassy and you will see those barbwires surround their embassy and they want nothing to do with you monkey! Ahahhahhahahaahah
By the way when you were born you got those umbilical cords tied around your neck which deprive the oxygen to your brain and now your brain is damage beyond repair!
It can see that clearly because it reflects in your critical thinking ability! Ahahhahhahah
i like it when you talk dirty to me. oh baby, me love you long time!
If I were HUN SEN, I kick out the French out of Camabodia. For these reasons: 1-The French always look down at us. 2-The French gave our huge chunk of our lands to YOUN. 3-Why don't they pull the Cochin-china and put them in French court to turn it back for Cambodia? Don't let them in, they have nothing to do in Cambodia. The only thing they like to do is to watch the American or spy over them inside Cambodia. French doesn't like American that much. So, they just being jealous thats all.
To 1:51AM
Hey! Talking dirty to you is nothing but kicking your sorry arse and that is something!
Cambodia will soon to be the Trading Center of SE Asia. Vote #4 to make it happens.
Guy's, I don't see how a 42 story building surrounding by a 15 foot hut will impress anyone. How about first things first: like get rid of Ah Kvak. Then, we can proceed to the next's agenda.
10:16 am, be smart and open minded! a skyscraper got to get started somewhere first before all others follow suit. so just because only one skyscraper is going up in one location now doesn't mean that more aren't going up to create the city of urban jungle like hong kong or new york, tokyo, seoul, etc...like all things, there's always a first time for everything. how else are you suppose to have one if you don't start somewhere. like driving, you first have to learn to familiarize yourself with the car, then as time goes, the more you drive the better you will be. same concept, here. it's very simple and basic, please. thank you.
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