Loose real estate credit harms buyers the most, says expert

• 6 February 2020
• Local News
• 2761 Views

Real estate analyst and managing director of CBRE Cambodia Mrs Sothida Ann recently expressed her concern that real estate buyers in Cambodia are the most prone to risk from poorly regulated lending measures, in particular from project owners.

The concern comes after several international organisations urged Cambodia to tighten its lending measures on the real estate sector to avoid risk.

International Monetary Fund (IMF) is one such organisation, saying that lending to property developers in Cambodia remains largely unmonitored and unregulated and official data on real-estate prices is not yet available (Read more)

Similarly, the Asian Development Bank (ADB) has also recently warned that Cambodia should reduce the financial risk arising from lending to real estate. (Read more)

Regarding this issue, Mrs Sothida Ann explained that real estate loans provided by commercial banks is out of her area of concern since the National Bank of Cambodia is responsible for monitoring those banks. Besides, she said most banks have strict rules and perform rigorous profile screening before providing credit to customers.

However, what concerns her the most are the loans provided directly by the project owners or developers.

“Generally, most developers in Cambodia have direct mortgage loans for buyers. Due to the high competitiveness in the market, they have recently tended to provide those loans very loosely to attract more customers,” said Mrs Sothida.

“Some developers do not perform enough screening on buyers’ financial profiles since they focus more on sales targets. If buyers’ default on the instalments, they will seize the property. Therefore, the buyers are prone to risk the most here,” she added.

Given this risk, Mrs Sothida also urged buyers to carefully consider their financial status before deciding to purpose a property via a loan both directly from the developers or a bank, to avoid risk.

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