The Phnom Penh Post, Written by Kay Kimsong, Friday, 16 May 2008
Cambodia’s red-hot property market has cooled significantly as investors fretting over the outcome of July national elections curb a buying spree that has seen land prices more than quadruple in some parts of the country, realtors and lawmakers say.
This trend, however, is likely to reverse itself as post-poll jitters die away, they add.
Sung Bonna, chief executive of the Bonna Realty Group, said the pace of sales had slowed by about five percent since mid-April and prices that have been on a scorching run for the past three years have flatlined.
While most agree that polling on July 27 is unlikely to be followed by radical land reforms or policies that restrict investment, realtors say people remain wary of change – especially political – and this is playing out in urban and rural property markets.
“In general, businesspeople involved in real estate are waiting to see what the situation is after the national election,” Bonna told the Post, adding that without buyers, property sellers have been forced to cap prices.
“Also, the rainy season isn’t a good time to go out and see land,” he added.
Realtors, however, including Bonna, predict the elections would register as only a small blip on the long-term pattern of rising Cambodian property prices.
“I think real estate will remain a tool that helps the country develop,” said Cheng Kheng, owner of Cambodia Properties Limited (CPL), adding that he expected prices to resume climbing a few months after the polls, once concerns over restructuring subside.
According to Kheng, many of the bigger spenders in Cambodia’s real estate sector have political party affiliations that were demanding more of their time as the election approached.
“I think people who have a lot of money to buy land are busy campaigning for the election.”
But the real estate sector slowdown has also hurt an unprecedented building boom that was a key factor behind Cambodia’s recent double-digit economic growth.
In general, business-people involved in real estate are waiting to see what the situation is after the election.– Sung Bonna
Several mega-projects around the capital appear to be languishing in the financial doldrums, according to economists who say a combination of domestic political concern and shaky global markets has discouraged investment in real estate.
“I don’t think construction firms would want to stop their buildings if they had enough money,” said Kang Chandararot, director of the Cambodia Institute for Development Study.
“But they seem to be lacking finances to finish their projects,” he said, adding that inflation had squeezed project funding, with rising prices for construction materials and labor impacting on new developments.
Cheam Yeap, a lawmaker with the ruling Cambodian People’s Party (CPP) that is expected to dominate the July polls, said a CPP-led government could protect property investments, something that opposition politicians have demanded as the country attracts more foreign money.