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Sharp decrease in approved construction projects

Sum Manet / Khmer Times Share:
Despite the drop in the number of approved projects, Phnom Penh’s skyline continues to expand quickly. KT/Chor Sokunthea

The Ministry of Land Management this week reported a 19 percent drop in the number of approved construction projects for 2018, with only 2,867 projects being greenlighted, compared to 3,052 last year.

Total investment in construction projects this year totalled $5.2 billion, down from 2019’s $6.4 billion.

Local real estate experts, however, are not worried by the dip.

Chrek Soknim, president of the Cambodian Valuers and Estate Agents Association, said, “Construction activity continues strong, as you can see by just walking around the city.

“There is still a lot of demand for residential projects because young people, particularly newly-weds, are now looking for their own house.

“I believe in the future more investors will come because there is still plenty of land to be developed. Our economy is growing fast, which will continue to attract investors,” he said.

Mr Soknim said 2019 augurs well for the property sector, with experts expecting strong economic growth and political stability.

Po Eavkong, CEO and co-founder of Advance Real Estate Company, said the decrease does not reflect the real situation of the sector, explaining that projects that are waiting for approval are not including in the statistic.

“2016 and 2017 saw tremendous growth in the number of registered projects, so it makes sense that in 2018 this growth would slow down.

“It doesn’t mean there is a problem. Big projects take between 2 to 3 years to finish, so it makes sense that we see some years where the registration rate is slower,” Mr Eavkong said.

According to the ministry, of the total number of approved projects, 245 (approximately $4.8 billion in investment) were registered with the ministry, while 2,622 ($400 million investment) were approved by provincial authorities.

There was a total of 2,420 residential projects, amounting to 18,471 units, and an investment capital of $1.8 billion. 110 high-rise buildings (more than five floors) were approved in Phnom Penh, as well as 28 borey projects.

Hoem Seiha, director of research at VTrust Appraisal, said it will take a long time for the market to return to normal levels.

“From 10,000 to 13,000 new homes are joining the market every year in our country, which is low compared to other countries,” he said, adding that, “The real estate sector needs more investment. There are not enough condo units to house the people that will come to the country in the future.”

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