Land Price Survey Unveiled

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PHNOM PENH MARCH 15, 2014: (Khmer Times) – After years of land transactions without research on land price data, now traders will have it. The capital’s first-ever land price survey initiated by property agency Vtrust Group will be a useful tool to propel the industry towards the boom times.
Released early March this year, the capital land price survey was taken from November to December 2013, led by Vtrust Property Co., Ltd., VTrust Appraisal Co., Ltd. and Vtrust Realty Co. Ltd. – all are Vtrust Group subsidiaries. It covered all of Phnom Penh’s nine districts in 96 communes by interviewing 660 property traders (About eight were selected from each commune for the survey). The land surveyed in the report was largely residential, accounting for 64% of total land, with the remainder either commercial, in industrial zones or developing areas. The majority of the land surveyed was already built on with vacant lots accounting for 38% of the total. The research found that the average asking price of land in Phnom Penh in the fourth quarter last year was $1,140 per sqm, the minimum asking price was about $10 per sqm, and the maximum was $5,900. 
The survey findings indicate that the average price of land in Chamkarmon district is $2,360 per sqm. The minimum is $1,010, and the maximum is $5,900. 
For Daun Penh district, the average land price is $3,628, the minimum price is $1,042 and the maximum is $5,830. For Meanchey district, the average price is at $830, and the minimum is $100. The maximum is $2,990. 
In Por Sen Chey district, the minimum price starts from $20 to a maximum of $1,810 while the average cost is $270. For Prampir Makara district, land prices start at $1,010 and go up to a maximum of $5,150. 
The average is $2,700. For Toul Kork district, the minimum land price is $1,000 rising to $5,340, and the average is $2,260. The cheapest land price area lies in Dangkor district, where the prices start from $20 and rise to a maximum of $920 with $160 as the average. 
In Russey Keo district, the lowest prices start from $30 to the highest rate of $4,470 with an average price of $630. For Sen Sok district, the minimum price is $10, and the maximum is $2,680 while the average price is $770. 
The survey found the top ten areas with the highest land prices are located in “deemed to be economically important residential areas” with good infrastructure central to major markets and on bustling streets where prices rank from $4,500 per sqm to almost $6,000. 
These zones are in the Boeng Keng Kang, Phsar Tmey, Phsar Daeum Kor, Chaktomouk, Chey Chumneah, Prampir Makara, Tumnum Tuek, Ou Ressey, Oulampik and Russey Keo areas. Land with the highest asking prices is located in Chamkarmon district’s Boeng Keng Kang Muoy (BKK1) commune, where asking prices go up to $5,900 per sqm. 
Land with the lowest asking prices is located in areas far from the bustling Phnom Penh center. They are deemed to be less economically important, undeveloped, without infrastructure and with grim opportunities for profit making with the prices ranging from $10 to $50 per sqm. 
The top ten areas with the lowest land prices are: Ponhea Pon, Por Sen Chey, Spean Thma, Samraong, Kamboul, Phleung Chheh Roteh, Trapeang Krasang, Prey Sa, Krang Thnong and Prey Veang. Land located in Sen Sok district’s Ponhea Pon commune, undeveloped and away from economically important areas, accounted for the lowest asking price of $10 per sqm.
The report also notes that land prices in Phnom Penh did not decrease in 2010 unlike in many other cities in the world where property bubbles burst. 
While the report reaches no solid conclusions about the trajectory of land prices in the Kingdom’s capital, it notes that land prices have consistently nudged north over the past few years despite a speculative bubble between 2008 and 2010 that resulted in over-supply.
Chit Uys Stevexo, CEO of Vtrust Appraisal, one of the research advisors said the findings serve as a critical tool for both property and business evaluators to clearly and transparently assess the real values in the current property market.
So far, the market price of properties is set and made known by evaluators, and that’s not based on the real prices asked by the sellers, he said. “As usual, people who want to sell land don’t know the real land price. 
They just listen to what other people say then set the land price too high or low compared to the real land price. As a result, they can’t sell the land because they have set the price too high, or they lose money because they set the price too low.”
But with this research report, he believes land sellers will know how much to ask, and land buyers know how much to offer forming an easier property trading environment that both sides can accept. 
However, the stated land prices above are generally included with the building costs on the land since, among the sample pieces of land chosen for the survey; all of them contain a building. 
Researchers point out that some major determinants affect the land price such as the sizes and types of the buildings on the land, location characteristics, land size and the occupations of the sellers (real estate or non-real estate). 
In the case of Boeng Keng Kang III, the data shows that the buildings on average accounted for up to 15% of the gross price of land. The minimum price percentage of the building’s share was 7%, while the maximum was 24% of the gross land price. 
However, the sizes of the effects of building on the land prices depend on the types of buildings, their built-up areas and floor levels. 
If the buildings are simply kinds of flats, they contribute a slight increase to the gross land price. However, if the buildings are apartment buildings, they would be valued at approximately $2,695,000 adding to the total price of the land. 
The total asking price of the land was $4,500,000 (which was $5,900 per square meter). The actual price of the land would then be reduced by $1,805,000, representing 40% of the gross land price. The average price of land would then be $2,300 per sqm, the report explains. 
Chrek Soknim, deputy director of Vtrust Properties, another survey research advisory leader, said he expected land prices will continue to increase for the foreseeable future and are unlikely to suffer from the same over-supply as in the 2008 boom-and-bust era.  Traders are now smarter and more scrupulous than before in terms of property supply and demand evaluation.
“I expect land prices will increase around 10% to 15% this year and that property transactions will also rise by around 25% to 30%,” he said. 
In 2015, I think that the situation will improve even more with ASEAN Economic Integration, which should lead to an increased flow of investors coming to Cambodia pushing land prices up by 20% to 25% more.”
With the success of this nascent land price survey, Vtrust Group has plans to survey land prices in the provinces sometime soon as well, he mentions. 
As this is a brand-new survey, the first of its kind, in Cambodia, observers believe it could be a big asset for the real estate industry as prices of land were merely assessed by techniques of comparison and calculation by property appraisers before to find out the approximate prices of properties.  
Anna Araki, CEO of AnnaCam Partners Co. Ltd, a Japanese investment consultancy that brings foreign investors to Cambodia, especially from Japan, agrees with that and says the survey is useful for her business.
She said her company has previously relied on its own land price database based on their own survey and merged with surveys from other property agencies which is not really comprehensive enough when broader land price surveys are not available.
 
“When Japanese investors come to Cambodia, they will study this land price survey to help make their investment decisions. We will keep this report in our company documents when we host the investment seminar in Japan to attract Japanese investors to Cambodia as well,” said Araki.  
However, this Japanese businesswoman recommends the survey be regularly and accurately updated and drawn up as a land price map, so that foreigners who don’t know about Phnom Penh’s geography can understand the report better. 

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