What if Chinese Investors Do Not Return to Cambodia? How Will the Real Estate Market Recover?

• 6 January 2022
• Local News
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Real estate and economic experts in Cambodia have expressed concern over the current real estate market in Cambodia, especially in Sihanoukville, which is now calling for a return of Chinese investors. What if they never return? How the real estate market recover?

Local economic and financial analyst Ngeth Chou said that this downturn is an important lesson for the whole Cambodian real estate market, which used to expect too much from foreign investors and forget about the real domestic demand.

Mr Ngeth Chou explained that before the pandemic Chinese investors poured huge amounts of money into Cambodia’s real estate sector, especially in Sihanoukville.

This large amount of money over-saturated the market, making land prices in Sihanoukville skyrocket past the actual market rate. After the Chinese left, 70% to 80% of high-rise buildings have been suspended, while local land speculators are also in huge debt as they did not take pandemics into their investment risks calculation.

“Given the high prices of property in Sihanoukville, it is already beyond the local investment capacity to save the situation. The hope is to wait for the Chinese to come back, but we don’t know when,” said Mr Chou.

Mr Chou called this type of investment reckless investment influenced by an oversaturated market or unsustainable and high-risk investments.

The next question is if the Chinese never return or return very late, what will the real estate market in Cambodia look like in the future?

“Lesson learnt, Cambodia should not expect too much outside money, but should shift the focus to the type of real estate that is for actual domestic demand,” said Mr Chou.

He suggested that affordable and mid-end housing projects with decent quality located around Phnom Penh’s outskirts are a sustainable investment choice.

“Phnom Penh will have to expand its radius by 30 kilometres by 2030. Every year, Phnom Penh needs thousands of homes given thousands of migrants moving to study and work in Phnom Penh,” said Mr Chou.

“The centre of Phnom Penh is a strong commercial economic zone. Thus, the suburbs should be the residential zone. This type of market will last long, even it seems full at the moment, it will take up fast and continue to grow,” he added.

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