With the third annual PropertyGuru Cambodia Property Awards fast approaching in March, B2B Cambodia sat down with Sorn Seap, Chairman of the Judges Panel, to find out about the property industry in the Kingdom, the challenges and changes it faces, and what the future holds.
How has your industry evolved in Cambodia in recent years?
The real estate industry has played a vital role in Cambodia’s economic growth. In the past 20 years, Cambodia didn’t have many high rise buildings and until 2008, Phnom Penh started to have a few. However, ten years since then, there are countless high rise buildings in the city, including condo, serviced apartment and commercial buildings.
In recent years, the industry has been growing so fast which has attracted major investors to invest in Cambodia’s real estate, particularly construction sector. In the end of 2017, China is the largest investment country in real estate and construction in the Kingdom, following by Korea, Japan, Singapore, Thailand, Malaysia, Taiwan, and Europe.
In addition to high rise complex, landed properties draw more attention to the local while supply and demand is also remarkably high. The whole industry has created more jobs for Cambodian people.
What have been the major factors for these changes?
I think that due to the potential Cambodia’s market including geographical location situated among Asean countries where population is approximately 600 million. This is the strong statue of region. While Cambodia is a new emerging real estate market, compared to neighbouring countries, all the prospective developers, buyers, and investors can seek for their investment opportunity to make profits.
The stable political statue buoyed more confident to potential investors. Meanwhile, Cambodia’s local investors also have opportunity to promote the real estate market to outside market. I also think that incentive law have encouraged the investors to inject the investment to the Kingdom.
In addition, other sectors such as industrial, agriculture, and tourism sectors contributed the development process. For instance, tourism brings million of international visitors every year. This is the reason why we need to have sufficient accommodation for these tourists. The interaction between each sector benefit to people. The increase of middle class demand for more houses especially the affordable housing project.
What challenges remain in Cambodia regarding to this industry? What are the solution to these challenges?
In fact, Cambodian real estate has experienced rapid growth just for ten years now, so we cannot say all the supporting factors to the growth is already well organised. This means some of these factors need more improvement, including strong regulation, improved infrastructure, and better education.
In term of regulation, it is really important for investors to ensure their investment is secured and protected. And the strong law will also guarantee the benefit of both local people and investors. Now I believe that many necessary regulations are approved but they just haven’t correctly practiced. As we already gained the confidence from local and international investors at the time being, so this should be the time to put in practice all the relevant regulations to ensure the protection for all parties.
With regard to the infrastructural system, I still think now Phnom Penh needs better road and sewage, and electricity systems. All these require more preparation to welcome a strong investment pace, and population growth. To get it done, the local authorities and expert officials from the relevant ministries can effectively work in cooperation to handle ongoing challenges; otherwise, the strong pace of development can be slow down.
Education system is also a concern as we have known real estate created many jobs, but without specific skill and good languages such as English and Chinese. It will be not easy to get the job in this sector. So, we need to have strong education both skill and general knowledge to compete with foreign employees.
What are the most exciting things happening in the industry right now and can we expect to see some of these things in Cambodia in the near future?
As what I have seen, I noted that the construction industry is very potential now. Residential buildings like condos and serviced apartments, office building and landed property (borey) are constructed in the major cities of Phnom Penh, Siem Reap, and Sihanouk Ville.
Meanwhile, the infrastructure is also strongly constructed. Recently we are just funded by China to construct three big new projects such as new airport in Phnom Penh, expressway project connected between Phnom Penh and Sihanouk Ville and new port project in Stueng Hav. This will help to reduce the transportation cost, give more convenience and increase of accessibility to the country.
With regard to road development, it is relatively strong throughout the country. In Phnom Penh alone, the new roads are being constructed. The city is also being expanded and the second city’s ring road is built while third city’s ring road sets to build this year.
When it comes to the real estate’s future development, I am optimistic. I believe what is happening now in the industry, it will keep moving forward gradually in the near future. This is due to the fact that currently real estate development is strong and stable. The demand also grows; Moreover, the market free opens for the region and the world. Therefore, the market will remain potential to the future. And I also believe potential developers will look for prospective investment area like Cambodia.
Terry Blackburn, Founder and Managing Director of PropertyGuru, adds:
There’s an immense supply of new build condominiums in Cambodia this year, specifically in Phnom Penh, totalling around 13,000 according to reports, so consumers have more options. But more than quantity, the construction quality improves year after year as developers introduce more sustainable and safe building practices learned from foreign partners. Developers should also diversify and cater to the mid-range and affordable housing segments. “Enhanced connectivity to neighbouring countries like Thailand could definitely help in improving Cambodia’s commercial viability, with casinos and industrial land and properties under development. The judging panel of the PropertyGuru Cambodia Property Awards acknowledges the potential of this segment, introducing the category for Best Industrial Development in 2018, and expects to receive more entries for the Best Mixed Use Development category. Cambodia offers a lot of potential and we’re proud of what local developers have accomplished in the last two years that we’ve held the Awards there.