Author – James Hodge | Associate Director | Professional & Office Services

After a frenetic first half to 2017, CBRE Cambodia takes a look back on some of the key market trends witnessed during the second quarter and what they might mean for the future of Phnom Penh’s real estate market.

The market remains underpinned by robust developer confidence in the health of Cambodia’s economy and the country’s future prospects. Across the country, approved investment into construction projects was up 64 percent on the same period for 2016, and a marked 300 percent up on Q1. Roughly US$3.66 billion worth of investment achieved approval across 737 projects. The majority of projects approved were within the residential sector.

In the industrial sector, 23 projects received approval in the second quarter, however little discernible movement has been recorded in rents for factories and warehouses. A distinct lack of speculative development beyond infrastructure, coupled with increasing interest from investors and occupiers bodes well for the industrial sector throughout Cambodia as long as capacity issues are correctly handled. CBRE analyse demand to be greatest for factories and warehouses measuring 1,000 – 2,000 square metres (sqm). Without speculative development, industrial occupiers face challenges in selecting Cambodia as a suitable location due to timeline constraints. A build to suit option often take between six and 18 months to complete, depending upon complexity and size. In addition, second hand stock is rarely of sufficient quality, especially for multi-national occupiers. Rents for ready-built industrial property within Special Economic Zones (SEZs) average $3.20 per sqm per month while build to suit can reach as high as $6 per sqm, largely dependent upon land costs and the specification required.

While the condominium sector has been the focus of much speculation, fears espoused during the past 12 to 18 months have yet to be seen in what has been a solid performance. Quarter 2 of 2017 saw 1,911 units delivered to the market, the most significant quarter for new supply in the market’s history and a definite bookmark to a noticeable evolution in Phnom Penh’s residential market. Total condominium supply reached an estimated 6,109 units by the end the second quarter. Overall, both asking prices and rents remained broadly unchanged. Asking prices in the mid-range and affordable sectors were the only segments to see a reduction, a marginal 1 percent fall. The modest price fluctuation in the lower tiers of the condominium sector are assessed to be as a result of developers shifting their focus to capture greater interest from local buyers, in particular the young, rising middle-class. Other developers continue to rely upon incentives, including substantial asking price discounts of as much as 10 percent in addition to less tangible benefits such as furniture and lifestyle packages.

The fact that rents have remained robust for condominiums in the face of significant new additions to supply speaks of the interest from tenants and confidence from developers in the quality of the properties delivered. However, CBRE anticipate a softening of rents over the course of the next 18 months as new supply ramps up.

For the commercial sector, the big news story during the last quarter was the delivery of Exchange Square, which added a further 18,000 sqm of office space as Phnom Penh’s second Grade A project. In the face of increasing supply, the occupancy rate for offices has risen 1.25 percent over the quarter, indicating the market’s ability to absorb additional space at this time. CBRE anticipates continued appetite from a range of sectors for good quality office space within the city centre, with demand coming from new entrants, expanding companies and those looking to improve the quality of their office. Both the availability of car parking and the need to ensure the office complies with health and safety codes are major considerations for many office occupiers in the present market.

For further information, including data and CBRE’s outlook for the retail sector and strata-title office market please visit www.cbre.com.kh to download a copy of our free Q2 2017 Marketview.

Details on when two new bridges linking to the villages of Areyskat and Svay Chrum will be constructed remain hazy despite government assurances on the development.

Va Simsorya, spokesman for the Ministry of Public Works and Transport, recently told Post Property that the schedule of the new bridges had been changed. However, he refused to elaborate or give specific details on the construction timeframe of the bridges.

Ministry of Public Work and Transport spokesman Nou Vathanak said a Chinese company was still carrying out studies on the specific location of the new bridges.

“When construction will start is unclear,” he said. “However, the bridges will be constructed in the short future.”

When built, bridge number one will connect the Kdey Ta Kdoy area along National Road 1 to Areyksat village while the second bridge will start in the Chroy Changvar area and end in the Svay Chrom village in Kandal.

Speculation surrounding the bridges has been rife since the government confirmed plans to construct two bridges to link the Svay Chrum and Areyksat villages to mainland Phnom Penh in early March. News of the infrastructure proposal temporarily spiked up land prices in the areas of both villages.

Kim Heang, president of the Cambodian Valuers and Estate Agents Association, said the announcement of the bridges from the government resulted in land prices in the two areas rising from $200 to $400 per square metre for a short period of time

He added, “Generally, the faster we have the bridges, the better. However, even after the bridges are built, the land prices won’t go any higher because they would have already reached the peak.”

Chrek Soknim, CEO of Century 21 Mekong, said recent ambiguity relating to the construction start dates of the two bridges had seen land prices in Svay Chrum and Areyskat fall marginally.

“The sooner the bridge is built, the better, as it will boost the development trend in the surrounding areas as additional investment was already made in those areas after the announcement of the new bridges by the government.”

Creed Asia (Cambodia) Co., Ltd, a subsidiary company of Creed Group, has committed to develop numerous residential projects in Phnom Penh, in the form of both landed housing and condominiums. Post Property sat down with Creed Asia (Cambodia) president Takashi Eguchi to discuss the company’s development plans in the Kingdom and get his take on the local market.

When did the company first decide to invest in Cambodia?
Our company partnered up with Triple Gem in 2012 and started the Bodaiju Residences in 2013 which consists of condos and residential units. The first project, Bodaiju Condos, is close to being sold out with a 90 percent occupancy rate. We are very attentive when it comes to quality, and as a result, numerous customers are utterly satisfied.

[img]

What are your views on the state of the condo market in Cambodia?
There’s really a limit to the demand of condos by the locals. However, our focus is on foreign customers, including the Chinese, Japanese, Korean, and customers from Hong Kong and Taiwan. Nevertheless, within the next 10 years, I think the Cambodian people will change their mindset with regards to condos. More will decide to live in condos, similar with what is happening in Bangkok and what happened in Ho Chi Minh a few years ago. Due to expensive land prices and overcrowding issues, people will choose the condo lifestyle. I believe the Cambodian youth will want to live in condos in the not to distant future.

Besides condo projects, CREED Group has also expanded into boreys. What are the details of the borey investment?
Our investment focuses on the middle-income customers. We have invested in Borey Moha Sen Sok, which is close to the Phnom Penh International Airport. The 12-hectare project is almost sold out. So far, 200 houses have been built. The project has eight construction stages and is expected to be fully completed by the end of 2018. Just last week we also started a new project that targets the higher middle-income bracket with prices ranging from $87,000 to $200,000.

What are your thoughts on the future of real estate in Cambodia?
We are certain that Cambodia will always continue to flourish. Therefore, Creed feels there will be more investments made in real estate, especially as the middle-income status of the country rises. We are looking for a chance to invest out of Phnom Penh city in the future, and Sihanoukville remains of interest.

Cambodia’s construction industry may be one of the fastest growing sources of employment, however many workers remain unhappy with the labour laws governing the sector. The concern is compounded for female employees, with some workers expressing to Post Property frustration over wage disparities.

Chak Yeoun, a 30-year old construction worker who has worked mainly in the area of steel binding for the past ten years, said her male counterparts are generally better remunerated than the female workers on construction sites.

“As a female construction worker, we face both light and heavy duty jobs under the same harsh climate as the men, but we generally get less daily fees than they do.”

“Male workers get about 28,000 riel per day, but female workers only get about 20,000 to 22,000 riel,” she said, adding “we have tried to ask for more money from contractors and payroll clerks, but they claim that we don’t do the same amount of work as the guys.”

From her experience working in the construction sector, Yeoun says female workers do a range of duties such as arrange tiles, mix cement and carry heavy material such as steel.

“Sometimes we even work longer hours than the guys but the head of the big [construction] companies and contractors won’t admit it,” Yeoun claimed.

According to Yeoun, there are also disrepensices in employment arrangements and entitlements when working in the construction indsutry.

“If we are directly employed by the companies, they would double our pay if we work during holidays, but contractors would give you the same amount of pay as work done on normal days,” she said.

Suon Srey Ya, a long time construction worker who has recently been working at the AEON 2 mall construction site, expressed similar concerns as Yeoun regarding pay disparity.

“Men and women both work eight hours a day, but sometimes we only get $5 or $6 dollars per day, while the guys get $7 and upwards,” she said.

Both women told Post Property that workplace discrimination in the construction industry also extended beyond the claimed wage gap.

“During jobs if they know we are pregnant, the manager or the contractor will fire us immediately,” they claimed, adding “ we have requested for the government to create laws protecting construction workers, and laws related to work holidays, maternity leave, and gender discrimination.”

Yann Thy, secretary-general of Building and Wood Workers Trade Union Federation of Cambodia (BWTUC), told Post Property that there are currently 200,000 workers employed in Cambodia’s fast growing construction sector with about 30 percent of that figure comprised of women.

[img]

Thy said it was important that females workers received the same benefits and wages as their male counterparts.

“For the greater good, we implore the government to help create policies that can help set a minimum wage for all workers employed in the construction sector and create new laws that can help both male and female construction workers,” he said.

Thy also implored for improved working conditions across the board, noting that workers in the construction industry are exposed to a high level of risk.

“In the past, there have been a lot of construction workers who have suffered serious injuries from a range of accidents such as falling from a great high and being electrocuted which are due to unsafe work practices,” he noted.

“Unfortunately, however, construction workers don’t receive a lot of attention from authorities or associated NGOs,” he added.

Commenting on the wage construction workers receive, Thy said that the minimum wage for workers on building sites was in fact higher than the minimum wage received by those working in the country’s garment sector.

He continued, “That’s why there’s a need for a proper study from the International Labour Organisation and parties concerned on whether the government should use the same minimum wage formula as the garment industry or whether to establish a different minimum wage for the construction industry.”

Ministry of Labour spokesman Heng Sour said the country may soon set a national minimum wage standard that would be used across all forms of employment.

“In fact we’re currently in talks with the Ministry of Land Management, Urban Planning, and Construction as well as the Cambodia Society of Architects to push all construction companies to obtain permits from the ministry and the construction company must also have a technical expert to ensure adherence to the country’s safety laws,” he added.

Commenting on the topic of minimum wage across the construction industry, Heng claimed the government should not be solely responsible for determining a benchmark amount.

“There should be a three-way discussion mechanism whereby the employers, associated parties, and the government negotiate hand in hand,” he said.

Earleir this week, Labour Minister Ith Sam said a universal minimum wage law would be passed later this year. The current minimum wage of $153 a month only applies to the garment and footwear sector.

Unlike other new real estate pojects in Cambodia that invovle residential condos or luxury shopping malls, Oriental Entertainment co.,ltd is taking a different approach and will instead focus on creating a culutral precinct that will sell items relating to tourism and culture.

Oriental Entertainment general manager Shu Wen He said it would be the company’s first investment in Phnom Penh. The company, which is headquartered in China, already has succeeded in numerous theatre and mall projects in Beijing and other Chinese cities.

Oriental’s project, which kicked off construction last month, sits on about 5,000 square metres of land on Kim Il-Sung Street in Toul Kouk’s commercial zone. Wen He expects the 7-storey multi-cultural hall will be able to house about 500 audience members once it is complete.

“Once built, the whole project will sit on 24,780 square metres with 5,000 square meters dedicated for the theatre. We will also have a hotel and a classic shopping mall,” he said.

“All up the project will cost about $32 million to complete and will open in the fourth quarter of next year.”

The project will consist of traditional-themed shopping malls, restaurants and an elegant hotel.

He added, “Oriental hotel will only have 56 rooms, but each room has a big space and is decorated with different Asian traditions and cultural themes, including the culture of the Khmer people, Chinese and other ASEAN countries.”

“The company expects to welcome many national and international audiences to watch historic and cultural shows relating to Cambodia’s history and traditions.”

Thai Noreak Sathya, secretary of state at the Culture Ministry, said he was optimistic at any development project that emphasises cultural awareness.

“Investment projects related to tourism and culture are also propping up in Siem Reap and receive a lot of support,” he added.

Korean-backed real estate projects in Cambodia have struggled to get off the ground over the years, but the tide could be changing, albeit only slightly.

The stalled $1.1 billion Booyoung Town residential and commercial development on Russian Boulevard in the Sen Sok district which kicked off construction in 2013 but halted work only months later is slowing making progress. Meanwhile, Camko City’s massive residential project, which has previously faced delays, looks set to be back on track with the developer World City telling Post Property that the condos would be completed next year. The initial timeframe for completion was 2017.

“Simultaneously, the company is in the stage where it is negotiating with other partners in Korea to start on other projects in this satellite city,” Kheng Sae, head of project management and legislation at World City, said.

As for Booyoung Town, the South Korean company behind the $1 billion project is understood to be on track to finish the first stage of the project in 2019.

[img]

A member of the Booyoung Town management team who asked not to be named told Post Property the company was completing the groundbreaking of four buildings and plans to build another four, 23-storey residential complexes as well as a 3-storery shopping mall.

“For the condo units in this project, we will focus on [selling to] just Cambodians, and we are working on the price of the units very carefully,” said the manager. “The sale of the residential units might start after the 2018 national election.”

While the pace looks to be picking up for Booyoung Town and Camko City, the dormant Gold Tower 42 project along the crossing between Monivong and Sihanouk Boulevard is still yet to resume construction.

Korean owner Yon Woo Co. Ltd has made numerous promises to the Ministry of Land Management, Urban Planning, and Construction (MLMUPC) to restart construction in recent years to no avail.

A representative for Yon Woo Co. Ltd refused to shed any light on the state of Gold Tower 42.

“We don’t have anything to say to the press yet. Once we do, we will inform them,” he told Post Property.

The Gold Tower 42 project was once tipped to be Cambodia’s tallest building – at 192 metres high – when it initially broke ground in 2008. While construction came to a halt at the height of the global financial crisis in 2009, the development has been stop-start for years.

Phnom Penh resident Kong Malin, who frequently drives past Gold Tower 42, said the unfinished building was a bad look for the city’s real estate industry.

“I don’t know the reason behind the postponement of its construction, but I want this building to resume its construction, not be abandoned like this,” she said.

Chrek Soknim, CEO of Century21 Mekong, urged the owner of Gold Tower 42 to inform investors on the status of the development and shed light on future plans for its completion.

He added, “Whether or not trust is lost, I don’t know how to say this, but whatever the project’s owner is facing, they should solve it. Korean investors were the first to come and contribute to the sectors growth.”

Thida Ann, associate director of CBRE Cambodia, didn’t believe the stagnation of various real estate projects in the capital triggered the loss of trust in the market.

“Any investor from anywhere could face problems and prolong the schedule. It’s normal,” she said.

Land Management Ministry spokesman Seng Lot refused to comment on the stop-start nature of real estate projects in Cambodia when contacted by Post Property.

Being the president of the Cambodian Valuers and Estate Agents Association (CVEA) is a busy but rewarding job for Kim Heang. The organisation, which represents valuers and real estate agents, has helped open up Cambodia’s real estate industry to international investors. Heang sat down with Post Property to talk about the risks relating to unlicensed operators and the current state of the local market.

Non-licensed real estate companies still operate in the Kingdom. How can people distinguish between reputable and non-reputable firms?
I want to clarify that licensed companies are the ones that have already registered with the Ministry of Commerce. That’s what we call a company. For a real estate company to be legitimate, it has to be registered at the Ministry of Commerce (MoC) and hold a license from the Ministry of Economy and Finance. The license enables the rights for buying, selling, renting, evaluating and developing real estate properties. Only a company with this license is counted as a real estate company.

What I’m seeing now is that some companies are putting up a banner at the office, calling themselves companies, though they haven’t registered at the MoC yet. These kind of companies seem to have the intention to scam customers. It’s an issue. Still, there are those companies that claim they have already registered at the MoC with legal names as real estate companies, but when we check it at the Ministry of Economy and Finance, they haven’t even registered yet.

What are the risks with a real estate company not registering with the Ministry of Economy and Finance?
It’s very risky if a company is not registered at the MoC or at a relevant ministry. If there is an issue or they run away, people will judge all such real estate companies as being the same based on that one company. Some companies have built boreys without having acquired a license from the Ministry of Land Management, Urban Planning and Construction. If a potential buyer or investor wishes to know about which companies have registered they can check with the MoC and if people would like to know which boreys have been licensed they can ask the General Department of Industrial Economy of the Ministry of Economy and Finance. Additionally, people can also contact CVEA.

How should the Ministry of Economy and Finance intervene to reduce risk in the real estate sector?
I once proposed a new law to regulate all the selling and buying activities that would require compliant real estate companies to put a banner on their offices. The law would ensure proper regulation in the market and stop sellers from inflating prices. I am still yet to hear back from the ministry, however.

What is your opinion on the state of the real estate market at present?
Currently there are more sellers than buyers in the market. Pricing is becoming a problem because as sellers believe they can ask for any price they want, leaving the properties sitting unsold for almost a whole year sometimes. But now, buyers are the kings since there’s only about one buyer for every ten or so houses for sale. Therefore, the buyer has the upper hand in the market and has more choice.

What are the predicted market concerns for 2018?
We don’t believe land prices will increase and from this year onwards there won’t be any new, major real estate projects announced. What is happening now is that prices have reached their peak so now customers are struggling to buy because prices are so high. So there is a bit of a situation now where sellers can’t sell and buyers can’t buy.

What is the status of the real estate school CVEA was interested in opening?
This Friday, we will hold a meeting with the members of the association to discuss this school plan. We have to acquire a memorandum of understanding with a Malaysian real estate association. However the question remains about where we will acquire funding to open this real estate school.

The charming village of Koh Klang south of Thailand is a relatively unspoiled hideaway that is working on improving the livelihoods of the locals via community based tourism.

Taking a traditional long-tailed boat through the mangroves from the Chao Fa pier, tourists can soak up the laid back country lifestyle of Koh Klang village which is inhabited by about 5,000 people. Tie-dying fabric, fishing and riding around the island on a personal tricycle are among the variety of activities on offer on at Koh Klang.

Sopha Koh Klang, 45, a community representative who supervises development of community based tourism in Koh Klang, said there are 15 communities in Krabi province which are under the support from the community based tourism project within Thailand’s tourism ministry.

Community based tourism involves local residents inviting tourists to visit their communities. The tourists receive accommodation while the residents are able to earn an income via tourist activities that take place within the community.

Sopha said tourists venturing to Koh Klong get the chance to see how local people live their lives in a way that is sustainable and community-friendly.

Paramatta Chuaykarn, an owner of Kidthung Cottage homestay on Koh Klang, told Post Property that community based tourism had assisted locals find employment in homestays, restaurants and elsewhere in the community.

“I expect that the local villagers can keep their way of life while tourism and investment continues to flow to this area,” he said.

Pansita Sasirawuth, a public relations executive from community based tourism group Local Alike which matches travelers with local communities and responsible tour operators, said the Koh Klang community was getting stronger as more and more locals were getting involved in tourism.

“Co-creation can be the answer from our experience because the traveler can help assist the community grow as well as create a positive impact for the establishment of enhanced tourism development practices,” she said. “It also helps locals manage their community in a sustainable way.”

Local Alike is currently undertaking tourism capacity building programs in seven communities around Thailand.

[img]

While community based tourism in gaining traction in Thailand, Cambodia is also no stranger to this sustainable tourism concept.

Bou Chan Serey, deputy director general of Cambodia’s tourism development and international cooperation, told Post Property that Cambodia started community based tourism and ecotourism many years ago to improve the living standards of locals.

One of the community-based ecotourism examples is Chambok, a community of nine rural villages where visitors can experience village life, and explore the area’s beautiful natural surroundings in Kampong Speu province.

Chan Serey said “The Ministry of Tourism and some independent organisations have organised community based tourism and ecotourism projects with 56 local communities recently.”

Associate Professor Chavanee Tongroach, who is also Thailand’s deputy Minister for Tourism and Sports and recently presided over the opening of the ASEAN Travel Journo Camp in Bangkok, encouraged the ASEAN region to work closely together to develop more community based tourism projects.

This reporter recently traveled to Thailand to attend the ASEAN Travel Journo Camp.

Almost nine months after receiving government approval for the Kingdom’s first low-cost housing project, WorldBridge Land chairman Sear Rithy’s dogged determination to get the project off the ground hasn’t waned. The affordable housing project in the city of Takhmao gives low-income civil servants and families earning less than $500 a month the opportunity to own their own home. Talking to Post Property, Rithy provided insight as to how the project was progressing and also spoke about the status of WorldBridge and Oxley International Holdings’ luxury condominium developments in Phnom Penh.

What is the status of the affordable housing project?
Our affordable housing project is currently occupied with developing its infrastructure. However, due to constant heavy rain, the progress is moving along very slowly. The construction will at least start at the end of this year, but the completion won’t fall behind schedule. Right now, I just want all the customers who have signed up to purchase a home to be calm and believe that this project will continue forward. There has been a spread of information on Facebook that this project isn’t going to move along, that’s why I want to clarify that this is not true because I will not fail what I set out to do. Only the land filling process has been slow and we’re still waiting for legal procedures set out by the government. Works associated with the government and its policies have been completed, we’re just waiting for the approval by the council of ministers.

How has the government assisted with the public housing development?
I’m really grateful with the government’s response to our proposals. The government will give a hand in establishing required infrastructure for our project, such as installing a clean water system, and electricity, as well as certain tax reliefs for our public housing project – they seriously have helped a lot.

What are the features of the project?
This project sits on a 20 hectares land, has a total unit of 2,400 units, and will be constructed in one stage. What’s important right now is that the government keeps its promise of tax relief and infrastructure installment, or else we would not be able to sell them [the units] at the cheap price.

Looking at the condominium sector, how is The Peak project progressing? Has the project, being developed by Oxley WorldBridge, received the same positive sales reception as The Bridge project?
If we’re only referring to the condos in this unit, we’ve already sold about 64 percent of the total number; however, our supermarket is not yet open for sales. The 5-storey supermarket is a franchise we obtained overseas. The project also contains the 5-star Shangri-La hotel. The Bridge, on the other hand, contains small office spaces. This is different from The Peak, since The Peak has a hotel, and it’s much more luxurious than The Bridge.

What is your view on the current residential market in Phnom Penh?
Discussions about condos are repetitive. However, I will say that before, we didn’t have condos; and now that we do, everyone is going out of their minds thinking that the there’s an oversupply. There are two sets of buyers in Cambodia, those who buy condos, and those who buy houses in boreys Condominium sellers have a wider range of customers because there are buyers from Cambodia and overseas. If we look at the present landscape, there is indeed an increase in condominium construction, but condos take at least two years to complete therefore condo supply hasn’t overridden demand yet.

Cambodia’s national elections are less than a year away. Will next year’s elections have an adverse impact on the real estate market?
I’m not a politician, but I implore all parties to be patient. I hope that under the leadership of our prime minister, the election next year will go forward without any problems. For me, I have absolutely no worries that next year’s election will go very smoothly without any problems at all. Investors know the situation regarding the elections well, only they won’t speak out about it, because competent investors are opportunists. Those who are brave are generally the successful ones.

The competitive accommodation climate is showing no signs of cooling as new figures from Bonna Realty Group reveal the number of hotel rooms in Phnom Penh and Siem Reap continue to rise, with the increased supply placing renewed financial pressure on many hotels.

According to a recent hotel study by the real estate firm, the number of two-star accommodation premises in Phnom Penh increased 23 percent year-on-year when compared to June last year. Overall, the number of hotels in the city jumped from 355 to 437. The data revealed that 4-star hotels equate to supply of 6,158 rooms available in Phnom Penh while 5-star hotels occupy 2,830 rooms.

As for the hotel situation in Siem Reap, 3-star hotels increased from 5,987 rooms from last June to 6,709 rooms as of June 2017. For hotels deemed to be 4-star, rooms in this category jumped from 8,132 rooms to 8,962 year-on-year. Meanwhile, 5-star hotels witnessed a decrease in room numbers, dipping from 6,699 last year to 6,131.

Pen Sokea, director of evaluation at Bonna Realty Group, stated that the number of hotels in Phnom Penh was increasing at a significant rate when compared to Siem Reap. Despite the uptick in accommodation, Sokea said investors were still going ahead with new hotel projects due to tourist demand.

“There are a lot of risks involved from an investor stand point, and investing in the hotel industry doesn’t yield immediate benefits,” Sokea cautioned.

Ho Vandy, deputy secretary-general of Cambodia’s National Tourism Alliance, told Post Property that competition in the Kingdom’s hotel market is at an all time high due to more supply coming onto the market. As a result, Vandy said a lot of the smaller boutique hotels in Siem Reap and Phnom Penh were struggling to make a profit, with some having to resort to closing their doors.

“What is also concerning is that some wealthy hotel owners are dishing out rooms at such low and unfair rates, making competition in the market lack transparency,” Vandy said.

He continued, “Lack of transparency in a competitive atmosphere and grossly discounted rooms have become a huge challenge that associated institutions need to pay attention to.”

Minister of Tourism Thong Khon acknowledged the challenges facing Cambodia’s hotel industry and suggested that vested organisations needed to collaborate and communicate in order to help solve the issues at play.

“This is hard work, and it’ll only succeed if the accommodation industry bands together,” he added.

The recent innagruation of Cambodia’s first Baha’i temple in Battambang definitley didn’t go unnoticed as hundreds of people decended to Odambang commune to mark the Kingdom’s newest house of worship.

Hou Sopheap, Baha’i House of Worship’s director who has been involved in the temples construction from the begining, said he was delgightesd to see the project officially open to the public earlier this week..

“The house welcomes all people, regardless of race or religion,” he added.

According to Sopheap, the Baha’i House of Worship was initiated in 2014 when the Universal House of Justice – the supreme body of the Baha’i faith based in Haifa, Israel– chose Battambang as the perfect location for the temple given the province has the largest Baha’i community in Cambodia.

Since the 1920s, Battambang has slowly amassed a Baha’i following of more than 12,000 believers.

[img]

The Baha’i community follow the peaceful teachings of the 19th-century Persian prophet Baha’u’llah.

While the entire site of the temple is located on 9 hectares of land and also consists of a meeting hall and administrative building, the Baha’i House of Worship has been built on a 1.5 hectare plot of land about 7 kilometres from Battambang city.

Sopheap said at its core, the Baha’i House of Worship is a sacred space that is a center of solidarity and symbolises the unity of all religions and mankind. At a cost of $1.5 million, the open-air building, he added, was built so that prayers take place facing the northwest, which is the direction of the Bahá’u’lláh residence in Israel.

Tang Sochet Vitou, a longtime architect who was involved in the temples design phase, said the Baha’i House of Worship was a unique architectural feet for modern Cambodia.

“I am very proud of my Cambodian ancenstors who have built different temples, so I think that as an architect, I should share my passion and art in the 21st Century so as to contiue the rich heritage of the country,” Vitou said.

“The goal of this Baha’i temple is to unite all religions without prejudice to build a place of love and harmony,” he added.

Vitou said that as an architect, one needs to design a building that embodies the meaning, culture and beauty of what it symbolises, which the architcturiral team was dedicated to achieve throughout the design process. Following the design work, the construction of the temple took about two years to complete.

[img]

“I’m happy with everyone’s creativity and the achievment of building the Baha’i House of Worship,” Vitou said with a smile.

While the temple itself adheres to the Baha’is central aesthetic principle of favouring nine-sided designs, the round building’s winged parapets are reminiscent of Vann Molyvann’s Chaktomuk theatre.

The Baha’i House of Worship in Battambang is understood to be the first local house of worship in the world. There are now nine Baha’i House of Worship’s which have been built in countries including Kenya, Chile and India.

In the future, Sopheap hopes the site will get involved in wider community social programs, such as providing a place to assist the elderly and orphans and even provide education opportunities for children.

Sopheap said that while the Baha’i House of Worship welcomes people of every religion from all walks of life who require a spirital sanctuary, he said the worshipers did have to follow some rules, such as no eating or drinking in the shrine or taking photographs inside the temple.

In an increasingly competitive marketplace, it pays to stand out from the crowd. Since its inception, and with the direct support of our property owners, this has been the singular goal of Urbanland. What started off as a passion for architecture and design led to Cambodia’s first international styled cafe chain, Brown Coffee. Since then, we quickly caught the eye of local and international investors, and from this spawned our first commercial and condominium developments.

[img]
This year, Urbanland crossed international borders and is now representing Cambodia on the international stage, receiving the prestigious Best Office Development at the International Property Awards Asia Pacific Region for our boutique office Raintree. Following hot on the heels of last year’s Cambodian Property Awards, Embassy Residences bagged the Best Condominium Development award followed by Embassy Central’s Best Residential Architectural Design award. Founder and Managing Director of Urbanland Asia Hok Kang said, “This is a big moment for Urbanland and it’s a real honour to receive our third award, not only on behalf of myself, but for the whole Urbanland team. It’s only with the unique abilities of the team that we work with that we have been able to drive Cambodian architectural design and development market to new heights and now, with this award be recognised on an international stage.”

[img]

For over 20 years, International Property Awards recognise world-class standards in development and design, in association with the Telegraph UK and Emirates Airlines. Always passionate about the spaces we craft, we were delighted that Raintree was highlighted by the judges for its ‘commitment to the local community and our collaborative design’.

Urbanland would also like to thank our diverse tenants for helping us achieve an occupancy rate of over 80% for Raintree in less than a year and for recognising Raintree as Phnom Penh’s most exciting and design-led office development. Something that is now reflected in its being home to the full spectrum of Cambodia’s business. From design and tech firms, through to non-profit and multinationals such as Microsoft, Imperial Tobacco, Havas Media, all the way through to innovative start-ups like Alchemy and 3E Advisory.

Urbanland’s first residential development, Embassy Residences has also garnered its share of accolades. After taking the Cambodian Property Award’s Best Condominium Development title in 2016, the first wave of homeowners has taken up residence. The residents represent the full diversity of the city’s populace, with Khmer, European, Asians and returnees, all building new lives for themselves in Tonle Bassac. “The residents are giving us great feedback. It was great to hear one Khmer-French couple saying that not only was it their first choice of all the projects they viewed, but that they were also ‘impressed by it being designed and built by a Khmer company, it gave [them] a sense of national pride”, Hok added.

[img]

Urbanland’s second residential project, Embassy Central, is already under construction. Having received the Cambodian Property Awards accolade of Best Residential Architectural Design, Embassy Central takes Urbanland’s vision of location and quality to the next level. Embassy Central is nestled in the heart of Phnom Penh’s famous Boeung Keng Kang 1 community, the city’s most vibrant restaurant and shopping districts. Its central location is complemented by the openness of the communal spaces continues through apartment interiors that are fitted with cool European fixtures.

For more information, please visit urbanlandasia.com

In a market experiencing rapid growth like Phnom Penh, professional property management can make a project standout. Experienced buyers, occupiers and developers recognise good property management is vital to maximise and sustain the value of an asset as well as promote the building’s image, reputation and value proposition through the maintenance of facilities and delivery of high quality services through the employment of industry best practices which enhance the building’s environment.  

In an increasingly competitive market in which new buildings are being launched and delivered, in order to ensure the success of a project it is important for the developers/landlords to be market driven, flexible and take a holistic customer centric approach. A common mistake of being too product driven, adopting a build it and they will come mentality, can result in a lack of foresight on the handling of property management services, which in turn, can weaken the confidence of tenants and buyers as they have an increasingly wide selection of building options to choose from.

At CBRE Cambodia, we take a tailored approach to property management services, building a bespoke package that fits our client’s needs and that of their property as closely as possible. Expert market and customer knowledge must combine within a property management team built specifically to meet the needs of the building stakeholders. Good property management aims to reduce operating costs and maximise revenue without compromising either the building’s integrity or by weakening the services and facilities provided.

Developers who consider property management from an early stage in the development process are able to avoid design flaws and optimise space usage. This will usually involve property management consultancy by an experienced team who will review the space layout and technical design of the building including the parking and traffic circulation, mechanical and electrical systems and common areas with the aim of optimising the use of resources, reducing waste and minimising excess construction time that can lead to budget over-runsand construction delays. If implemented at an early stage the consultant has time to work with the project team to identify and solve potential problems, or create a work-around in order that they are prepared and able to deal with any issues upon completion.

Many developers/landlords rely on guesstimates of management fees or try to benchmark with other developments which can often lead to insufficient income to cover operating costs. This results in poor standards of property management and dissatisfied customers. Developers can avoid this scenario by seeking advice to analyse and estimate operating costs and revenue streams through the preparation of operating budgets and the calculation of realistic and sustainable management fees. Accuracy in service charges should leave buyers, tenants and developers with no nasty surprises such as operating budget deficits which can lead to fee increases and/or reduced levels of service.

Overall, property management is based on the ability of the managers to build long term, mutually beneficial relationships and provide dedicated, responsive and professional property management teams to ensure the success of the project, thereby maintaining its value including its financial worth over the long term. For more information about property management contact CBRE’s dedicated property management Team by email at david.brunt@cbre.com or visit www.cbre.com.kh.

Author – David Brunt | Asset Manager | Property Management

The government is still seeking investment partners from the private sector to cooperate in the building of a brand new city close to Phnom Penh, a minister has said. However, the project is still at the concept stage and some observers remain skeptical about its prospects.

Sophorn Phoeung, secretary of state at the Ministry of Land Management, Urban Planning, and Construction, said the government has been searching for investment partners from the private sectors to build the new city, and now he wants to see “dollar signs” in the form of money on the table.

The city, to be named after Prime Minister Hun Sen’s zodiac animal, the dragon, will be built on up to 300,000 hectares of land at an as-yet undisclosed location between the Tonle Sap and Mekong rivers.

The project will soak up about $80 billion in investment capital. Up to now, only three Chinese investors have expressed interest. Phoeung said: “There’s yet to be any certainty; and if they’re really sure, they need to show the dollar signs to mean it.”

He continued: “The construction of this new city will proceed once there’s enough money, since the government doesn’t look too favorably upon spending such a big amount of money.

“That’s why we need cooperation from the private sector.” He added, “This new city might need about ten years in order to finish it when we get sufficient capital; however, the master plan has already been mapped out.

“For 580 years Cambodia never had any construction of new cities, that’s why we’re building one, and naming it Samdech Decho Dragon City, which is prime minister Hun Sen’s zodiac animal. In the city, there will be a building looking like a dragon bursting forth from underground.”

Phoeung claimed that the ministry’s plans would ensure that the new city would not cause traffic jams. “We have already mapped out the infrastructure for the underground route, the water route, and the dry route in the master plan, ensuring that there will be no traffic congestion problems 500 years forward.” He added that the city’s design would have a “contemporary Cambodian style” to it as well as a “modern feel”.

Ly Hour, director of the Housing Development Association of Cambodia (HDAC), is one of those who doubt the project will come to fruition. He said: “I welcome this project because if it really is built, it can participate in the development of the country.

“However, I don’t have much optimism for the construction of the city, because I lack faith in its completion. But we’ll see. If it can really be completed, I will have nothing but congratulatory words.

“Talking about building a city is easy and writing about it is easy. The real hardship is actually building one. In fact, look at Tbong Khmom and its progress as proof of how hard it is.”

Chrek Soknim, CEO of Century21 Mekong, is more optimistic, but said that any city building project can’t be considered a short-term project. “It won’t be completed in one or two years, it needs at least ten years or more. This is a suitable duration due to the increase in population as well as higher GDP per capita.”

Soknim believes that the location will be crucial. He added, “If this city is built adjacent to the National Road 6 that would be great because there are already two or three satellite cities along this road. If there’s an additional satellite city, there will be the potential to consolidate.”

Vann Vat, an expert on urbanisation, said the location for the project would most likely be low-lying and would require robust research into any potential for flooding.

He warned against further major urban development in the greater Phnom Penh area, saying that any new development should be directed towards the regions.

“The government building the city will encourage economic development and provide additional employment. However, the government should focus on other provinces, because if this project is built near the city, it will add more pressure to Phnom Penh.”

He added, “If we build the project near the city, traffic congestion will be even worse, as well as further environmental pollution.”

Developers’ efforts to target local buyers have resulted in reduced prices for mid-range and affordable condos, according to a recent study.

Prices of mid-range and affordable dwellings in condo developments dropped by one percent in the first six months of this year, compared to 2016.

The study, prepared by property and investment firm CBRE, examines price trends in new-build developments in Cambodia. It found that the lower end of the condo market had seen a small price dip, as sales teams offer incentives to local buyers.

Purchasing habits also appear to be changing, with many more people buying units in completed projects rather than buying off-plan.

The study also says that those who do buy are intent on occupying properties themselves rather than ‘flipping’ them or renting them out.

Sunn Huot, marketing director of the Olympia City project, said that in his developments most of the buyers are local. “Out of all the condo buyers, 70 percent are Cambodian who bought them to either establish the units as a living space or to rent them out.” Sunn also added that the state of this year’s market is not significantly different from last year’s.

The CBRE study found that average prices of high-end condos remained stable at $3,108 per square metre, with mid-range condos averaging $2,659 and $1,498 per square metre for condos at the lower end of the price range.

Sales have been slowing, but not too significantly. Given the looser market conditions, some developers have switched to increasingly commercial marketing strategies, including discounw ts on quoted prices of between two and ten percent.

As you travel on Sothearos or Norodom Boulevard, you might spot brand new blue and white “houses”. Phnom Penh’s residents are wondering quite what these huts, which bear the legend of the traffic police, are for.

Phnom Penh city hall spokesman Met Measpheakdey told Post Property that the police boxes were sponsored and provided by private company ISI Steel at more than 10 locations in Phnom Penh.

He said the huts are a social contribution by the company to provide shelter for the traffic police who help to maintain social security. Most of the police boxes are located in traffic hot spots to help shelter traffic police from the sun and rain.

A representative of ISI Steel in Cambodia said, “The company cooperated with the National Police Commission to provide traffic counters this year to traffic police officers in Phnom Penh.”

He said that each box costs more than $1,000. The company has yet to promise to make more.

Nov Chanthol, a Phnom Penh resident, said he had seen one of the new police boxes last week but did not know exactly what they were for.

However, he added, “I hope that more shelters for traffic police can further improve urban safety.”

As the population increases in Phnom Penh, fly-tipping is coming increasingly under the spotlight. City bosses aim to crack down further on the problem in a bid to change people’s habits.

They’re also aiming to target illegal parking, a major problem in the city.

A number of locations in the capital are under scrutiny, with fines imposed for any tipping or parking offence. The fines range from $2.50 to a $50 maximum. Officials admit that changing public habits will take time.

They aim to take a carrot-and-stick approach to the issue that combines fines for littering with education and publicity campaigns. Phnom Penh’s city representatives want to see the public participating in promoting public order and beauty in the city by keeping it clean, even as the capital’s real estate is being developed at breakneck speed.

A 2015 inter-ministerial sub-decree, jointly signed by the Ministry of Economy and Finance and the Ministry of the Interior, imposes fines on individuals who discard garbage and park illegally in public places. Yet enforcement has been lax. But recently, a number of areas in the city are under extra scrutiny, with city police briefed to impose the fines for littering and illegal parking.

City Hall spokesman Met Measpheakdey said authorities were focusing on cleaning up bad public habits in the areas, which he did not name. Measpheakdey added: “We have a good decree on throwing away garbage in public areas, but we have not implemented it everywhere yet. People are still throwing away garbage and parking in public places without permission.

“In relation to this city, we need to do campaigns and promotional work to educate people to stop throwing rubbish, and to pack it properly or put it into the bin.”

[img]

Measpheakdey said that to have a clean city with beautiful infrastructure, citizens needed to work together to maintain the urban environment. He said: “We have sorted different types of garbage and garbage collection team to clean in different locations.

“I ask the people of Phnom Penh to value the environment because the city is our home, and a symbol of their identity.”

Measpheakdey acknowledged that changing public habits can be hard work. “Even if we have a good campaign, the people do not understand and do not participate. It’s very rare to have success in this area.”

The spokesman added that part of the problem lies in enforcement. “We don’t have authorities everywhere to do the monitoring and we don’t have enough garbage bins. Essentially, the people must be responsible for the disposal of their waste in public places. For example, even though parks have garbage bins, some people still don’t use them and make their contribution to the environment.”

Measpheakdey also commented on changes to parking regulations aimed at alleviating the capital’s traffic woes. “We have participated in the implementation of education campaigns. We have also removed the on-road parking from the Freedom Park area to reduce traffic congestion and we plan to implement similar schemes in more than 11 locations in the city, of which Chbar Ampov district is one.”

Neak Chanmonyneath, a university student in Phnom Penh, told Post Property that in some public places, parking signs and banners were ripped up and thrown away, especially in front of houses and bridges.

It’s the city government’s responsibility to deal with waste management in public places such as streets and bridges. Chanmonyneath said: “I think only social promotion and good publicity can make people fearful of their actions and start to clean the city so it can have better infrastructure.”

Some city dwellers still fail to give their rubbish to garbage collectors, and instead, throw away their rubbish in public areas, making the city a dirty and uncomfortable place to be.

“I feel bad when the urban infrastructure is covered in dust and waste, because it seems like a disorderly town, so the relevant authorities should implement a plan to clean the city,” she said.

Another resident of the capital, Kalvin Hang, called for better policing of stallholders and street merchants. “Over 30 percent of the downtown area continues to be crowded with a lack of parking because sellers are on the street, and buyers park without restriction.”

He added that when an area becomes a development zone, including large houses, markets, offices, and schools, the roads need proper signage to ensure parking regulations are clear and well-understood.

A local environment official declined to comment on the rubbish issue.

Cyclos have always been a feature of Phnom Penh life. Locals love to use them to ferry their shopping home from the market. But for the drivers, their cyclos are more than just a source of income. Often, they’re the drivers’ homes, too.

This vintage mode of transportation made a comeback when Cambodia escaped from the grip of Pol Pot. Sadly, sightings of people employing this mode of transportation have become less and less frequent, and many cyclo drivers have added a new role to their beloved vehicle – a home for them to sleep at night.

Hen Moeurn, aged 59 years old, is a farmer from Kompong Trobek district, Prey Veng Province. He left his farm to pedal a cyclo taxi in Phnom Penh in order to find additional income for his family of 5 children, since he owns only a small plot of land of 0.50 hectares. Now, his home in the city is his cyclo.

He said that, like the majority of cyclo drivers, he came to Phnom Penh with only a small pack of belongings. “I had two outfits, one krama, and a budget of 30,000 riels.”

He added that, in Phnom Penh, “Most cyclo drivers spend about 3,000 riels per day on their cyclo rental fee.” As for daily income, “We can get between 10,000 and 30,000 riels for an average day. If we’re lucky we get 40,000 riels.” This compares to his daily expenses of between 12,000 and 16,000 riels.

Like his cyclo-driving confederates, Moeum works from 5 a.m. to 7 p.m. driving customers around and trying to find more customers.

“At five in the morning, we wake up from a night’s sleep on our respective cyclos, and then we rush to the market or elsewhere to transport goods for our customers. For one customer we usually get about 2,000 riels to 3,000 riels, but still, it depends on the distance,” said Moeurn. He continued, “When the day is finally bright, we pedal the cyclo around to look for people in need of travelling within the city; and on days that we get a lot of customers, we fare better than normal days.”

Yann Sarin, aged 78, hails from Koh Thom district, Kandal province, and has spent the last 20 years as a cyclo taxi driver. He reminisced, “Our family spent about $1,000 to purchase a brand new cyclo back in 1990, and we have been in this line of work ever since then.” He continued, “Right now, my cyclo is old, and it wouldn’t even be possible for the city authority to provide me with a new one even if I wanted one.”

As Sarin gets older and older, he can only pedal very slowly to nearby places, “Every day, I only have about 10,000 riel to 20,000 riel after my food expenses.” Nevertheless, Sarin and his family have a small house near Steung Mean Chey, and he doesn’t have to rent his cyclo as others do.

Prum Dean, aged 71, from Svay Rieng, has also spent many years plying the roads of the city with his bicycle-taxi. He said, “Back in the day, I could peddle my cyclo to feed my wife and children. However, these days I can only get enough to provide for myself, because after deducting food expenses and the money for public toilets, I only have about 10,000 riels. It’s impossible to provide much for my family.

“That’s why I don’t see many young cyclo drivers like before, because the job barely provides enough to live on. I think this might be the end of an era for cyclo drivers,” said Dean.

[img]

Considering the many expenses that cyclo drivers have to bear, the three cyclo drivers implore the government to help, “We’d like the government to build public housing with low rental fees, and also we’d like more public toilets, as well as lower entrance fees for the ones there are now. 500 riels is a bit much.”

Em Sambath, the head of the Cyclo Conservation and Careers Association, said there are about 70 cyclos in his association and about 130 cyclo drivers. The Association provides cyclos for a rental fee of about 50,000 riel per month – half the market price. He continued, “One bonus for the members of the association is that they can get about three dollars per one or two hours for a tour of the city, and about seven dollars for four hours.” The Association administers these tours, and locals and tourists alike are often treated to the sight of a long convoy of cyclos touring the riverside area.

“However, there is only substantial foreign custom during the high season. That’s when our cyclo drivers can get about $150 dollars per month,” said Sambath. “Normally, cyclo drivers who come from the provinces use their cyclo as a home to sleep in at night, because they don’t have enough money to rent a place to live, and the Association lacks the budget to help find a suitable place. In short, we are unable to find land to build a residence for cyclo drivers and the government also can’t afford to help us.”

Hen Moeurn said the drivers group together for safety at night. “People who come from the provinces to drive a cyclo, like I did, usually set up their cyclo as a home to sleep at night. We usually choose a public space somewhere and sleep in groups of four to ten people. Some have cradles, and some sleep in their cyclo. On nights where there is rain, we build a makeshift roof out of plastic sheeting and rubber bands and sleep under that.”

Em Sambath added, “All across modern-day Phnom Penh, the number of cyclo drivers is dwindling fast, which is a cause for concern as it might point to a future without cyclos – a beloved mode of public-private transportation that was once the go-to way of travelling about the city. Don’t forget too that cyclos have zero emissions. That’s why we strive to create a community that can help them.”

Garment workers in Cambodia face extreme hardship in their private rented accommodation, as they struggle to provide for their families in the provinces.

Where some factories in Cambodia provide accommodation for their workers, others must shift for themselves in the local rental market. With the official minimum wage set at $153 a month, margins for many workers are so tight that they skimp on their housing so they can afford the basics.

Cambodia’s manufacturing sector, mostly located in and around the capital, has created hundreds of thousands of jobs since the mid-1990s. Garment factories receive a steady flow of new workers, many of whom are women from the country’s outlying provinces.

[img]

Yem Chhailim, aged 35, comes from Prey Veng province near the Vietnamese border. She spends just $30 dollars a month on a tiny shotgun shack surrounded by piles of rotting garbage in Chakangre Leu commune. It’s about a kilometer from the factory where she works, on National Road 1.

Chhailim has worked in garment factories for 20 years. She spoke of her daily life, “I’ve been living and working as a factory worker for nearly 20 years, but my life is not good because I decided to live in cheap room.”

Chhailim earns a basic wage of $153 and sends $100 of this to her family in the province: $70 for her five-year-old daughter and her son aged six, and $30 for her mother, who looks after them. Her decision to spend just $30 on monthly rent was dictated by these hardship numbers. She can earn extra money doing overtime, but rarely takes home more than $200 each month.

Her journey home ends at a rickety boardwalk raised above the rotting garbage and stagnant water. Still, the home she shares with her husband, 36-year-old Vinh Sienghout, is much better than her former residence, a “rented” mosquito net in a room full of other workers, which cost her five USD a month.

Talking to Post Property as she prepared a meal in her zinc-roofed tumbledown room, Chhailim said, “We spend about $30 living in this small room, which is not strong enough under the rain and sun. The garbage thrown at the bottom of the house smells, too.”

She’s relieved to be out of her former dormitory mosquito net accommodation, however. “Back then I was worried that when it rained, it might have flooded. Some workers were in even worse accommodation than me.

“I always wanted a big wooden house to live with my family in my hometown, but I have not been able to do so yet,” she added. “The life here is hard, but the people are friendly, so it seems a bit like my home town.”

“I always dream that each factory could provide comfortable living space for workers, but since I’ve been working, almost 20 years in this factory, I haven’t ever had a good place to stay.”

[img]

Few garment workers have the funds to rent a room that is properly constructed and clean. Some get accommodation at the factory itself, but many have to find their own room and spend their own money doing so. They often rent the cheapest available so they can maximize their remittances home.

CheaSokLeang, aged 42, a garment worker at a different factory in Chakangre Leu commune and also comes from Prey Veng province. He told Post Property: “I would love to live comfortably in a decent rented house with a bathroom and plenty of space, but it’s hard for low income people like us.”

Sieng Ny, a landlord in Kien Svay district said she rents 20 rooms at $40 a month each for garment workers nearby. She added, “I try to build large, en-suite bedrooms with separate bathrooms, because sanitation and security are important for these workers.”

She said that although her rooms did not meet normal construction standards, her rooms were better than other places.”I know the standard of construction and I want to help the workers have a standard living space, but they don’t have the capacity to rent a high-end room at all,” she adds.

Yang Sophorn, President of the Cambodian Alliance of Trade Unions (CATU), said that garment workers were still struggling to find good housing, hygienic food, and decent conditions for their families. “Some factories provide accommodation for garment workers, but some large factories don’t have these facilities yet, which makes it difficult for workers who work overtime and who have little security on their way home. Most of them share bathrooms, which can cause a lack of hygiene.”

Sophorn said that in order to provide workers with decent accommodation, the government or the landlords should think of constructing large-scale housing with clean bathrooms. She said that sometimes even factory-provided housing can be out of reach for workers who are charged rent:“We still have problems with the living conditions of workers because when the owners build on-site accommodation, workers are not able to afford to rent as well as their living expenses.

Workers’ salaries have increased, but their purchasing power has declined due to higher prices. Generally, the unions have helped them to a better working and living standard.Sophorn added, however, that government housing law needs to be implemented more firmly. “We have a rental contract law on housing standards, but I don’t think it is implemented in practice, and they don’t seem to understand the wording of the law announced by the Ministry of Labour” she said.

Cambodia’s real estate industry is entering new waters as the Kingdom’s expanding middle classes look to get on the property ladder.

Meanwhile, canny developers are starting to target this market with a slew of new developments in the $20,000 to $60,000 range.

Ly Hour, president of the Housing Development Association of Cambodia and CEO of Borey Vimean Phnom Penh, told Post Property that the success of a housing development project depends on which target market investors and developers choose.

He said, “The success of a housing development project depends on whom investors choose as their target consumers, as well as the location of the project.

“Constructing a high-end housing project is reliant upon the location. If the location is good, then it will be successful. However, developing housing for people within the middle income bracket does not warrant a good location or an expensive plot.

“I invested in a mid-price housing development located along National Road 6A valued at $30,000 and the property is doing very well now.”

[img]

Nuon Rithy, CEO of the property agency Khmer Foundation Appraisal, believes that Cambodia’s rising living standards are due to the Kingdom’s sturdy economy, which has seen year-on-year GDP growth consistently top seven percent. This has propelled many locals into the kind of income bracket where they can start investing in property.

Rithy said: “The increase of the middle income population has resulted in their ability to afford a house, especially houses within the middle price range. It has even made it possible for some folks to consider purchasing additional properties for their children and grandchildren in the future.

“Demand for housing, especially for those within the middle income bracket, has increased, and many new investment ventures are starting to turn their focus towards these people.”

Figures released by the Ministry of Land Management, Urban Planning, and Construction predict housing demand in the capital, cities, and provincial centres of 50,000 units per year, a total of almost a million units up to 2030. The ministry reckons the urban population will rise from 4.5 million people in 2014 (27.1 percent of the total population) to 7.92 million people in 2030 (44 percent of the total population).

An Socheata, director of CBRE Cambodia, said that the demand for suitable housing from middle-income people has risen, because the numbers of people in this bracket are also rising. She thinks the mid-range property sector is a market that investors should get into as soon as possible. “Investing in cheap and affordable housing is the right investment choice.”

Housing for people within the middle income bracket usually sits in the $20,000 to $60,000 price range. Major developers WorldBridge Group have moved into the mid-range sectors and are in the process of constructing a housing project with units tagged at $20,000 to $30,000. The project, as yet unnamed, is south of Phnom Penh in Rokarkhos comnune, Saang district, Kandal province. Other locations, such as Borey Piphup Thmey and Jet Group’s Skyland City, are also catering to this sector.

[img]

Hong Vannak, a professor at Phnom Penh’s University of Economy and Finance, has identified two main drivers of the kingdom’s current real estate market. First, collaborations between foreign and local investors, which can often be at the higher end of the unit price range and second, projects initiated solely by local investors, who are focused at the moment on building housing for people in the median income bracket.

Vannak added, “In developed countries the people in the middle income bracket occupy the major part of the total population, and they are the ones who can push the economy forward.

“When a country has strong economic development, the numbers of middle-class people will also increase, and that’s when demands for housing and other services also rise.”

Hong Vannak stated that, additionally, the finance industry such as banks and microfinance institutions, should try to loosen their conditions of providing credits to people, to make it even more possible for them to find a suitable residence.