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Construction investment rises to $5.63b

By Sum Manet / Khmer Times Share:
The new Naga hotel and other buildings under construction in Phnom Penh’s rapidly changing skyline. KT/Mom Sophon

Construction investment during the first nine months of the year reached $5.63 billion, up 22 percent over the same period last year, with a total increase of $5.636 million, according to a senior official at the Ministry of Land Management.

Lao Tep Seyha, an undersecretary of state at the ministry, said in an interview with a local television station on October 11 that the ministry approved 2,522 projects worth about $5.63 billion, an increase of 22 percent on the same period last year.

“The majority of projects approved this year were condominiums, housing, factories, enterprises, hotels and office buildings,” Mr Seyha said.

“And increasing investment in the sector is due to factors such as peace, political stability and favourable investment laws that many investors have looked into Cambodia and Cambodia has become an attractive market.”

Sear Chailin, the CEO of CL Realty, is optimistic about the increase in construction investment capital and said it is a good sign for the construction sector, having more investment in such things as high-rise buildings.

“As many high-rise buildings pop up in Phnom Penh, it is a factor that helps increase the investment capital,” Mr Chailin said. “The supply and demand for the high-rise buildings does not cause any problems now.

“However, in the future the supply will increase, so it needs time to fill the supply of rooms,” he added.

Real estate has become one of the four pillars supporting the country’s growth and now accounts for more than 10 percent of gross domestic product (GDP), according to official figures.

As the construction industry has become the most dynamic engine of economic growth in Cambodia, industry players are calling for enhanced legal protection as well as shifts in policy to protect the vital industry and ensure home ownership becomes a possibility for more middle-income families.

Chrek Soknim, the CEO of real estate company Century 21 Mekong, said the reason the housing market was still seeing growth was because of support from the banking sector plus demand from newly married couples and middle-income Cambodians.

Addressing the housing sector growth in Phnom Penh, Mr Soknim said: “The greater part of Phnom Penh is the capital’s central business area, the population has increased year-on-year and the housing demand has seen an increase also.

“Seeing the GDP growth every year, the number of middle-income people is increasing, leading to the increase in demand,” he added.

“If comparing the city’s population with the number of houses, the population is more than the housing number, so housing demand is okay.”

When asked about the future prospects and the upcoming elections, James Hodge, an associate director with CBRE Cambodia, said it is likely that investors will display a weaker appetite for investment in the run up to next year’s elections as happens in all property markets when such events occur.

“It is important that Cambodia builds professional capacity in its property market. This means greater clarity for investors in, for example, property measurement standards and the application of service charges.

“In addition, workforce skills should be developed to ensure a ready supply of trained property professionals who are able to manage property and advise all interested parties effectively.

“Infrastructure improvements which facilitate greater connectivity across the country and the wider Asean region, as well linking Cambodia’s markets more closely to the global economy, will continue to help grow the property market by improving the prospects of people and businesses in addition to supporting economic growth,” he added.

“Furthermore, effective property laws and their subsequent enforcement, including in the matters of finance, tax, planning and investment, will help to ensure that all investors, occupiers and market participants have clarity about the impact of the choices they make.”

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