"Only rich people will buy apartments at the skyscrapers, because the price is unaffordable for most people": Chan Sophal

Cambodian real estate market heated up by S Korean projects

By Long Heng, Xia Lin

PHNOM PENH, June 18 (Xinhua) -- South Korean investor GS Engineering and Construction held here Wednesday the ground-breaking ceremony for the construction of its 52-story skyscraper, the tallest one to be built in Cambodia and latest one to stir up the heated market and trigger off mixed comments.

Cambodian Deputy Prime Minister Sok An said at the ceremony that the construction shows the close relations between South Korea and Cambodia and the confidence of foreign investors for Cambodia in its political and economic stability.

"The project will provide hundreds of jobs and contribute to the economic development of our country," he said.

The skyscraper, a model role from the private sector in developing the country, will become the historic building and the tallest in Cambodia and become a center of tourism, culture and engineering. he added.

GS Engineering and Construction, the largest real estate developer in South Korea, will take 45 months to complete the billion-dollar International Finance Complex (IFC) project near the Tonle Bassac River around March 2012, according to a press release.

The 68,461 square meters project includes a 52-story office block, a 32-story residential block with 275 units, an international school and a shopping mall with 1,064 units, it said.

"The plan is to expand business domain not just to architecture and housing, but to a broader area of plant, civil engineering and development," it added.

GS Engineering and Construction president and CEO Kevin Kab Ryul Kim said that the recent interest of the Cambodian government in city development welcomes South Korean company's development projects with advanced technologies like us.

"IFC Phnom Penh projects will open the gates to more South Korean companies entering the Cambodian market," Kim said, adding that with this project, GS will lead the real estate and development market of Cambodia, newly rising in the Indochina peninsula.

The plan is to expand business domain not just architectures and housing, but to a broader areas of plant, civil engineering and development, he added.

Meanwhile, Mu Hion Woo, the developer's Chief of Business Division in Cambodia, told local media earlier last week that the project is not only a business but also a contribution to the development of Cambodia.

"If you want to see the potential of Cambodia, you can see it in this project," he added.

Currently, a second South Korean real estate developer is constructing a 42-story skyscraper of comprehensive functions, namely the Golden Tower, in downtown Phnom Penh and a third one developing a satellite city named Camko in the suburbs.

These South Korean projects will transform the skyline of the capital, as it is now dominated by buildings only four- or five-story high.

And, the GS project seems to compete with the Gold Tower and the Camko City in the ever booming real estate market of Phnom Penh.

The three mega projects are widely considered as new achievements of the Cambodian government led by Prime Minister Hun Sen. People are waiting and want to see them turned into reality.

Chan Sophal, president of the Cambodian Economic Association, expressed concern over the new buildings' inconsistency with the previous style of the city.

"We all welcomed the construction of the highest skyscrapers in Phnom Penh and other places in Cambodia. We also requested for the government to conserve the houses built in the French colonial era," he told Xinhua.

If conservation and development work well with each other in style and construction, Phnom Penh will be a city both modern and classic, more beautiful and with more cultural hints, he said.

In addition, he asserted that these projects has mirrored the confidence of foreign business people in the political and economic stability of the country and will therefore bring in more foreign investors and benefit the local people.

However, Chan Sophal is also worried that skyscrapers can't really meet the market demands.

The skyscrapers have drawn much public attention, because the Cambodians never saw these things before, but in regard of their essential choice, they prefer to live at the ground floor of a house with a garden and some trees.

"Only rich people will buy apartments at the skyscrapers, because the price is unaffordable for most people," he said.

Some wealthy people subscribe to houses at the top floor of these skyscrapers, but they won't live there.

"They buy them for investment. When sold again, there will be profits," he added.

Nov Rathana, general manager of the Gold Tower project, said that his project will finish in May 2011, adding that market competition is a good impetus for developers.

Sung Bonna, director of the Sung Bonna Real Estate Agency, said that house and land are hot topics for the Cambodians now.

"People like to talk about land, house and their prices. Most of them buy land and houses for investment, and expect fat rewards when they sell them out," he said.

According to industry statistics, land and house prices have spiraled in Phnom Penh and neighboring provinces as result of 10 years' stable development of the country. Top villa in downtown Phnom Penh now sells over one million U.S. dollars, 10 times the previous price.

The mega development projects of skyscrapers have just fueled the vogue and drive land and house prices even higher, said Sung Bonna.

"Phnom Penh still has huge land, waiting for us to develop," he added.

Tale of Uncle Chev, a (former) newly rich man in Cambodia

Uncle Chev at the Karaoke bar…

By Ros Dina
Excerpt from Ka-set
Unofficial translation from French by Tola Ek

A story is circulating about the “newly rich people” gaining from real estate speculation:

Uncle Chev is invited to the Karaoke bar by one of his friends. The first time he went there, he asked to listen to the song “Oh! What a poor man!*”. The second time he went there three weeks later, he wanted to hear “Ah! How lucky!*”. He just sold his land at a good price. The third time he went there, one month later, just after he pocketed the money from the sale of his land, he wanted to sing: “Where did your virginity go?*”. The fourth time he went, three months later, he asked to put on “Life is so short*”, meanwhile he was infected by AIDS. On the fifth time, his friend came to the Karaoke bar by himself, and he asked to put on the traditional “Khlang Khek” music, the one that is played during funeral… this time, it is for the memory of his deceased friend!
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* These are oldie songs by Sin Sisamouth

Phnom Penh city lost half of its rice fields

Friday, March 7, 2008
Everyday.com.kh
Translated from Khmer by Socheata

An official from the agriculture department of the city of Phnom Penh said that rice fields belonging to the people along the suburb of the city, amount only to 4,000 hectares at the end of 2007. Beyond that, all the former rice field lands were developed as industrial zones and housing development. Pheng Sokham, the director of the agriculture department of the city of Phnom Penh, told Rasmei Kampuchea on 05 March that, in 1999, the extend of the rice field lands amount to 11,000 hectares, and it shrunk to 7,300 hectares in 2001. Each year, the loss of rice field lands amount to about 1,000 hectares, and among the 4,000-hectare remaining, the majority of them have changed ownerships already. Pheng Sokham said that the rice field land in the suburb are very expensive, for example, in Sak Sampov, 1 hectare of rice field land cost more that $500,000. He said that people living in the suburbs used to have a hard life as farmers, but the majority of them are all rich now when they sell their lands. He said that this situation does not affect food shortage at all, because turning rice field lands into industrial zones and housing development is more beneficial than using them to plant rice.

Unlike his boss, Hun Sen, Chan Sarun is concerned about farmland price increase

“Land is a granary. You should not sell it”

27 February 2008
By Ky Soklim
Cambodge Soir Hebdo
Translated from French by Luc Sâr

Experts are concerned about the progressive disappearance of cultivable lands. The minister of agriculture issued a warning to farmers, advising them against selling their lands.

During a visit to Takeo, Chan Sarun, the minister of agriculture, called on farmers to resist from the temptation of money and to preserve their lands. He said that he is concerned that the pursuit of consumer products will push more and more farmers to get rid of cultivable lands to buy for themselves TV, radio sets, or motorbikes with the money they earn.

This call follows the concerns expressed recently in a report issued by agriculture experts. The latter insist on alerting the government about the upcoming dangers created by a progressive disappearance of cultivable lands which are currently under strong land speculation influence from investors.

“Agriculture land is a granary in which money lies dormant. You should not sell it because it will bring income to you year in year out, and with this money, you can buy material things to help you live better and work better. If you sell it, you will get money only once, then it will all be gone. If you sell all your lands, you will no longer produce rice. Rice does not come from the sky,” Chan Sarun tried to explain, adding that the price of lands will continue to rise in Takeo in the upcoming years.

Lawmakers consider letting foreigners buy real estate

By Cat Barton
Phnom Penh Post, Issue 17 / 01, January 11 - 23, 2008

Foreign investors may not need to wait for the stock market in 2009 if they want a piece of Cambodia's economy.

The government is on the verge of changing the property ownership laws so that foreigners will be able to buy real estate in the country and own it outright.

Although current law prohibits foreigners from actually holding title to land in Cambodia, the National Assembly is considering an amendment to the law that could be approved soon, said Nuth Narang, Secretary of State at the Ministry of Land Management, Urban Planning and Construction.

"Local developers have a massive interest in seeing the law change. Cambodia is open for business now. There is huge demand, foreigners would buy property," said Matthew Rendall, a lawyer with the investment advisors Sciaroni and Associates.

Although it was not clear what restrictions Cambodia might put on foreign property investment, Rendall said there is no downside to changing the law. Cambodia has "nothing to lose," he said.

Developers contacted by the Post said a change in the law would change the marketing environment for developers in Cambodia.

Marketing director Nhem Sothea at Grand Phnom Penh International City said changing the law would make it "much easier to sell property here."

"There is a large Korean market -they want to come here and retire and we could access that market better with a change to the law."

Backed by Indonesia's Cinputra, through a local partner RCAF Gen. Ke Kim Yan, the International City is developing 260 hectares 20 minutes northwest of the city center into a gated community.

Nick Chandler, sales and marketing director for Brocon, which buys colonial buildings in Cambodia and rehabilitates the apartments for sale to foreign investors, said a change in the law would create huge demand.

"There is a real buzz regarding Cambodia," he said. "They have had three years of double digit growth-9 percent this year. A lot of people see that and those people see property as the best and most stable way to get into this market."

Narang said the ministry is discussing whether changing the law "will be beneficial to the economy." "We need to assess how best to go about this," said Narang. He added that the ministry is seen as favoring the amendment because in August it passed a sub decree allowing foreigners to use property they own via a leasehold as collateral with the banks.

Some of Cambodia's neighbors already permit some type of foreign property ownership. Thailand, Singapore and Malaysia all allow foreign investment in "immovable property" with various restrictions. Immovable property includes not only land but buildings and leases.

In Thailand, the rules are that at least 51 percent of high end apartment block developments must be Thai-owned. In Singapore, foreign nationals can own property above the seventh floor.
"It would be a natural progression for Cambodia to introduce something similar," said Rendall. "It will bring a massive injection of investment into the economy. There will be a huge reaction."

Other options could be prohibiting foreign ownership of ground floor units, but allowing sale of above ground apartments. Or the government might change the title deeds so that anything defined as a "building" but not as "land" could be bought. A change in the law would clearly benefit developers such as the South Korean developers of the Camko City project, which includes many high end apartments.

Camko City officials could not be reached for comment. According to the company's marketing information, the first planned development includes 18 houses and 100 townhouses, but many more large blocks of apartments.

At the moment, property developers get around the land buying restriction by selling leaseholds to foreign investors, said Chandler at Brocon,

He said foreign buyers obtain a 99-year lease with an option to renew. The leases all include a clause saying if the land law changes, the leaseholds will be converted to "free hold." Owners would have to pay certain taxes and transfer fees to convert. He said Brocon has sold more than 20 properties under the lease agreement.

"A change of law allowing foreigners to buy would mean all leases revert to freehold and that would give us an even easier product to sell," said Chandler.

Brocon's target market is sophisticated foreign investors who already have property portfolios in the region. "The current legal framework is not an impediment to us. We are not selling to mum and dad investors."

"Capital growth on land over the last two years has been ridiculous-something that sold for $500 two years ago is now $2,000 plus," said Chandler.

Public confidence in Cambodia's banking industry picks up [-but the gov't is as corrupt as ever]

July 13, 2007

"It is the already well-off who are getting more wealthy and using the banks, not so much everyday Cambodians" - Anonymous senior representative at the Cambodia Asian Bank

The Cambodians are resuming their confidence in the kingdom's banking industry, as deposits and accounts increased in 2006, said recent statistics from the central bank.

Total deposits in the country's banking system grew by 40 percent in 2006 over 2005, with the number of accounts rising to nearly 300,000, said the statistics from the National Bank of Cambodia (NBC).

Some 2 percent of the 14 million population use bank accounts, while there are 20 banks operating in the country, with the major players reporting healthy growth, according to the statistics publicized on English-language bi-weekly the Phnom Penh Post on Friday.

"(The growth) demonstrates that public confidence in the banking system has been increasing markedly and banking operations have been fairly and efficiently competitive," the paper quoted NBC governor Chea Chanto as saying.

Meanwhile, a senior representative at the Cambodia Asian Bank (CAB) told the paper on condition of anonymity that "the growth is coming from two main sources: increased overseas investment, with money flowing into the country, and the boom in the land market."

"People are buying and selling land, the prices are rocketing and people are making money," he said.

"It is the already well-off who are getting more wealthy and using the banks, not so much everyday Cambodians," he added.

Decades of conflict led to a series of sudden bank liquidation in the late 1990s, exacerbating widespread mistrust of the banks in Cambodia.

With a large number of depositors losing their savings, the banking collapses reinforced a culture of in-home savings, where cash used to be transferred into gold or other assets.

Source: Xinhua