Sihanoukville, a once-sleepy seaside city in the Kingdom’s coastal province that has now become a ballooning enclave for Chinese-run construction and real estate, is now seeing house rental prices plummeting and land values stagnating.
Sorn Seap, CEO of real estate agency Key Real Estate, told Khmer Times yesterday that the rental segment, especially for flat houses in the city, has dramatically decreased, citing the major reason as the directive banning all online and arcade gambling operations in the country that took effect this year.
Sorn noted that the rental price for a flat house had previously been in the range of $8,000 to $16,000 per month before the ban was announced, but has now slumped to around $2,000 to $6,000 per month.
According to a realtyagency CBRE report, Sihanoukville land prices in the two months before the ban measuring 2,000 square metres (sq m) and above on a beach location cost between $800 and $1,200 per sq m. While land in the city centre was priced at $1,200 to $1,300 per sq m. However, after the ban, it is estimated these prices have dropped from 10 percent to 30 percent. “Land prices in Sihanoukville City, one of the most favoured destinations for investment in Cambodia … have had a high increase in recent years. So, it is impossible that the price will go up further – they are stagnant,” said Chrek Soknim, president of Cambodian Valuers and Estate Agents Association (CVEA).
“If we look at the last two years, it seemed that the city had faced a big challenge in the rental segment of the property market,” Chrek said.
Chrek argues that the rental price downfall in the city will not badly affect the real estate sector as a whole. “Despite there being some challenges I expect that the market will remain healthy from now until the next five years,” he said.
The General Department of Immigration earlier this month reported hundreds of thousands of Chinese nationals left the country after the gambling restrictions.
About 447,000 Chinese nationals left the Kingdom, including those who held long-term visas, spokesman General Keo Vanthan said.
“This is because of the low [tourist season] and the online gambling ban in the country,” he said, adding that most of them left from Phnom Penh and Sihanoukville.
Kim Heang, regional operating principal, Keller Williams Cambodia, said that the real estate sector in the Kingdom may be in decline, particularly in Sihanoukville, and there will be further problems relating to the banning of all online and arcade gambling in the Kingdom.
Kim added that Cambodia’s economic growth depends on real estate and construction, services, tourism, industry sectors and agriculture. These four sectors are the pillars of the Cambodian economy.
“Therefore, if one among the four sectors is weak, it will drive the other sectors down with it,” Kim pointed out.
Dr Raymond Choi, chairman of Prestige Homes, and Paul Ellender, manager of Freer Properties (Cambodia), told Khmer Times previously that while there will be negative effects at first, the Kingdom’s property sector, particularly in Sihanoukville, will eventually benefit.
“I believe the new policy is good for the long-term development of Sihanoukville because it is not healthy to rely on the online gaming industry to drive the economic growth of Sihanoukville,” Dr Choi said.
According to the Council for the Development of Cambodia from 2016 to 2019, investment from China into Sihanoukville amounted to $2 billion.