Land Plot Development Boom a Concern for Cambodian Economy

• 11 December 2018
• Local News
• 2429 Views

Despite the business of developing land plots continuing to show great potential in the local market, the activity nonetheless poses a concern for Cambodia’s economy.

A recent World Bank report ‘Cambodia Economic Update’ highlights a concern for the financial sector in Cambodia with the buying and selling of propertyamong the issues raised.

The report also pointed out the increases in both real estate loans and the trend of buying and selling land plots.The purchase and sale of land plots is in part a speculative activity with less obvious or justifiable investments returns in the foreseeable future.

At the same time, the Royal Government of Cambodia also voiced concerns over this activity with some regulations and measures put in place to avoid social problems that may arise from this business. In fact, in May 2018, the Ministry of Land Management Urban Planning and Construction (MLMUPC), issued a Prakas on land development aimed at ensuring the sustainability of land management and urbanisation, especially for the development of land plots.

In addition, many real estate experts have voiced their concerns regarding the challenges facing land plot development activity, such as financial problems when the property is not sold or there is a problem related to the transfer of ownership rights among others.

However, this booming business activity has showed no sign of slowing down despite the measures in place. Meanwhile, the World Bank report highlighted the property management policy that was successfully implemented in Singapore. The policy has put cooling measures on the property market through the increase of buyer’s stamp duty and tightening property loans.

The extent to which similar measure on land plot development might arise in the future, will feature in the next issue of Construction&Property Magazine.

• Analysis
• Business and Market