Cambodia construction sector to slow down in 2020, say experts

• 4 February 2020
• Local News
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Despite ongoing GDP growth, local leading real estate analysts foresee that the construction sector in Cambodia will see a slight slowdown in 2020 due to three significant factors.

Given the current economic situation, experts came up with three primary factors being the causes of a real estate slowdown in the kingdom including the outbreak of coronavirus that strongly affects the Chinese economy, the closure of online gambling in Sihanoukville, and the slight decline in the number of construction permits issued in 2020.

Mr Sorn Seap, CEO of Key Real Estate Co. Ltd., and one of the well-known real estate analysts in Cambodia said that the coronavirus outbreak is the most recent and major factor, as Cambodia’s construction sector is mostly dependent on Chinese investors.

“Since the outbreak slows down the Chinese economy, it will soon affect Cambodia, especially in the investment sector. During this period, investors have less incentive to invest,” said Mr Sorn Seap.

“Considering if the epidemic goes on for another two or three months, it will be about a quarter or equal to a 25% loss of investment opportunity for Cambodia. What if it continues longer? This indeed will result in a reduction in new projects for this year,” he added.

Besides, Mr Sorn Seap also cited the problems caused by the closure of online gambling in Sihanoukville, which was also another factor causing a large number of Chinese investors to leave Cambodia.

“Following the closure of online gambling in Sihanoukville, the economy in Sihanoukville is falling, especially for the land and apartment renting. Most of them are in trouble at the moment. Given this situation, who would want to invest in a new project? This is another problem to consider,” he said.

An Thida, Director of CBRE Cambodia, also projected that the construction sector in Cambodia for the year 2020 might be slightly weakened.

“There were quite a lot of major projects receiving construction permits in 2018 and 2019, bringing the figure for both years up quite high. As a result, there are a lot of unfinished projects remaining for 2020. Thus, investors are yet to apply for new construction permits,” said Ms Thida.

“In addition, the market needs some time to absorb, which means they need some time for the project to be sold to some extent before kicking off new projects,” she said.

Regarding construction in Cambodia, 4,446 projects construction projects were approved in 2019, a 55% increase compared to 2018, according to the annual report from the Ministry of Land Management, Urban Planning, and Construction. (Read more)

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