Tuesday, April 28, 2009

The Future of Cambodia

Welcome today’s guest contributor John, my little brother who currently lives in Singapore south of Cambodia. He assists in the asset management of real estate investments within the Asia Pacific region. Although the assets within his portfolio are all in Thailand, he shares his research of the current real estate development in Cambodia, the future of Cambodia.
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Property Market Overview
Since 2000 Cambodia's economy has grown at an average rate of 9.5 percent, driven largely by an expansion in the garment sector and tourism. Due to pressure on US led exports in the wake of the sub-prime crisis and ensuing slowdown, coupled with the negative impact of higher energy and commodity prices, the IMF, World Bank and EIU are forecasting economic contractions of 0.5% to 3.0% in 2009. All three organizations agree a slowdown in garment sales, construction and tourism will drag down 2009 growth. The EIU expects a recovery by 2010 with economic growth of 2.2%.


Cambodia's private sector has urged the government to allow foreign ownership of real estate in a bid to further promote economic growth. Cambodian investment law was amended back in 2005 to allow foreign ownership of permanent fixtures, but as yet has not been enforced. The non-implementation of the act has in fact rendered the amendments out dated and in need of review. In the current legal understanding, the old law will only allow a property investment in the name of a Cambodian national. Nuth Nurang, Secretary of State at Cambodia's Ministry of Land Management, Urban Planning and Construction has admitted that the government is still considering an amendment to Cambodia's law that would allow foreigners to buy property in the rapidly emerging market freehold. To date, foreign investors have only been permitted to buy on a leasehold tenure of up to 99 years - an option which has proved popular with buyers seeking to invest in Southeast Asia.

Vast new building projects have increased over the past few years, including a great number of satellite cities worth billions of dollars that when completed will fundamentally alter the appearance of the capital. After years of disorder within Cambodia, the country is now turning things around as a growing economy posting a steady 11 per cent growth over the last three years, fuelled by a strong tourism industry and clothing manufacture. That said, Cambodia still relies on international aid for half of its annual budget.

Major property investment regions
Phnom Penh, Siem Reap

Upcoming Markets
Sihanoukville, Kep

Phnom Penh
Phnom Penh became Cambodia's capital when the seat of government was moved from Angkor Thom in the wake of a Siamese invasion. French colonialists expanded the canal system to control the wetlands, constructed roads and built a port. By the 1920s, Phnom Penh was known as the Pearl of Asia and over the next four decades continued to experience growth with the building of a railway to Sihanoukville and an international airport. When the city fell to Maoist Khmer Rouge rebels in 1975 Phnom Penh's entire population was deported to labour camps where disease, hunger and murder claimed somewhere between 1.5 and 2 million Cambodian lives. The Khmer Rouge were driven out of Phnom Penh by the Vietnamese in 1979 and people began to return to the city. Reconstruction began, spurred by continuing stability of government, attracting new foreign investment and aid by countries including France, Australia, and Japan. Loans were made from the Asian Development Bank and the World Bank to reinstate a clean water supply, roads and other infrastructure. By 2001 Phnom Penh was estimated to have finally reached its pre-conflict population level of one million and today it is the undisputed economic, industrial, commercial, cultural, tourist and historical centre of the fast-recovering country.

Phnom Penh is the centre of a stunning property boom currently underway in Cambodia. The entire tourist-orientated waterfront area of Sisowath Quay is currently being redeveloped and the country's first ever skyscraper is under construction. The boom has been put down to a range of factors but comparative political stability under Hun Sen, an improving regulatory and legal framework and a lack of alternative investment options in the country are the main triggers.

The gold rush however, has not come without its victims and real estate development has seen many ordinary Khmers evicted from their homes.

The government has also been contributing to growth not least by the announcement of a master plan for the city's development. Along with socio-economic development and improvement of physical infrastructure, the government has pledged to overhaul public services and housing while preserving the environment of the city and its environs. The Bureau of Urban Affairs of Phnom Penh Municipality is aiming to expand the city and build major new infrastructures by 2020 in order to accommodate Phnom Penh's growing economic activities and population. The Phnom Penh area will be broadened north, south, east and west, with Wat Phnom as the central point and city limits forming a radius of 30 km. The area opposite Chaktomukh River will be developed as an economic and residential centre while a number of urban zones will become Phnom Penh affiliated towns. Necessary infrastructure to be built includes roads, boulevards, canals and a railway system to link the city's growing and dispersed areas, according to The Cambodian Press Review. The Phnom Penh 2020 plan has already been approved by the Ministry of Land Management and now it needs to be ratified by the government.


Key Projects Under Development ~ Camko City
The first and largest urban development project in Cambodia is being developed 3km north from the heart of Phnom Penh at a cost of US$ 2 billion. Camko City will include thousands of residential units, a Trade center, Convention center, Exhibition center, Financing center, Office buildings, Shopping centers, Hotels, Serviced Residences, a university, a hospital and schools and infrastructure for the development, which is expected to take between 11 and 15 years to complete.

The first of six phases is due for completion in two years and the entire project is expected to be complete by 2018. Construction of CamKo City is progressing on schedule and the first phase of Townhouses and Villas have been scheduled to be complete this spring.

As of February 20, 2009, construction of the 1st phase is 56% complete.

{above 3 photos of buildings in contruction in Camko City}


Links
http://worldcitycambodia.com/master_01.html
http://www.camkocity.net/

Gold Tower 42
Gold Tower 42, a $US300 million South Korean apartment block currently dominates the high end of the market which, at 42 storeys, will be three times higher than Phnom Penh's current tallest building. The completion date has been set for 2012 but buyers are already purchasing many of the development's 360 units. The project will form part of a larger two-tower development which on completion will be Cambodia's tallest building at 52-storeys. GS Engineering and Construction, the largest real estate developer in South Korea, will take 45 months to complete the billion-dollar project near the Tonle Bassac River. As well as the residential aspect, the 68,461sqm project will include a 52-story office block, an international school and a shopping mall with 1,064 units.


Siem Reap
Siem Reap was little more than a village when the first French explorers re-discovered Angkor in the 19th century, but this soon changed as it began to absorb the first wave of tourists. The Grand Hotel d'Angkor opened its doors in 1929 and the temples of Angkor remained one of Asia's leading draws until the late 1960s, luring visitors like Charlie Chaplin and Jackie Kennedy. In 1975, the population of Siem Reap, along with the rest of the cities and towns in Cambodia, was evacuated by the communist Khmer Rouge and driven into the countryside.As civil strife slowly ended the tourism industry built around Angkor rapidly developed. Today, Siem Reap is undoubtedly Cambodia's fastest growing city and it taking full advantage of its status as a gateway town to the world famous heritage site.

Sihanoukville
Sihanoukville is nestled on a small peninsula with beaches and tropical islands off its south and west coast, and the commercial port to the north west. Beaches that line the west contour of the city from north to south are Victory Beach, Lamherkay Beach, Koh Pos Beach, Independence Beach, Sokha Beach, Serendipity Beach, Occheuteal Beach and Otres Beach. The most popular beaches are Occheuteal, Sokha, Independence and Victory. Also known as Kampong Som, Sihanoukville was developed as a port city in southern Cambodia on the Gulf of Thailand. Like elsewhere it was devastated by the Khmer Rouge regime but as peace returned to the country, Sihanoukville quickly staked out its claim as the nation's most popular beach resort town.

Kep
Kep, located just a few kilometers from Ha Tien in Vietnam, was once Cambodia's most popular and prestigious beach town. From the early 1900's through to the outbreak of conflict in the 1960's Kep was a thriving resort for the rich French and Cambodian elite. During the Khmer Rouge years, much of Kep's French colonial era mansions and villas were destroyed. Although Kep's coastline lacks the volume of high quality beaches dotted around Sihanoukville, it does have its attractions. The island of Koh Thonsy, with its white sands and notable natural dive sites, is just a short boat ride away. The town's seafood is cheap, plentiful and delicious - particularly the crabs. In addition, Kep is home to an extensive national park.

Sources
http://www.property-report.com/property-search.php?txtsearch=cambodia
http://news.bbc.co.uk/2/hi/asia-pacific/7207030.stm

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Thanks John! We are so proud of your accomplishments and so jealous of your adventurous life in beautiful Southeast Asia. He is packing for Phuket, Thailand as we speak. {John in photo above in Malacca, Malaysia. He is also a pretty good photographer as you can see in his photo below of the Malacca cityscape.}

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