Cambodia Faces Mounting Debt Challenges in the Real Estate Sector

• 16 December 2024
• Construction Focus
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The real estate sector in Cambodia is grappling with mounting financial concerns, as total housing debt nears USD 1 billion, according to insights shared during the recent roundtable discussion, The Debt Situation in Cambodia, organised by the Real Estate and Mortgage Regulatory Authority.

Mr Chou Vannak, Director General of the authority, revealed that homebuyers owe between USD 800 million and USD 900 million in instalment payments through licensed real estate agents, highlighted the growing strain on homeowners and the broader economic challenges faced by the sector.

Adding to the gravity of the situation, 83 residential development companies have collectively accrued approximately USD 1.5 billion in debts owed to banks, while individual borrowers account for an additional USD 500 million in housing-related debts. This brings the total housing sector debt to around USD 2 billion, a precarious scenario that impacts both property developers and potential homeowners.

The National Bank of Cambodia further reported that overall debt in the construction and real estate sectors has soared to over  USD 18 billion as of September 2024. This escalating debt significantly affects the economy, creating ripples in both personal and business loan segments.

In addition, alarming figures were presented by Mr Kong Chhayleng, founder and director of HRTS CONSULTING, who disclosed that Cambodians currently owe a staggering USD 50 billion in personal loans and USD 7 billion in business loans, amounting to USD 57 billion owed to banks and microfinance institutions. This figure excludes informal debt, which remains untracked by Cambodia’s banking system.

Delinquency rates have also surged, with 7.5% of debts overdue by more than 30 days and nearly 6% in arrears for over 90 days. These statistics underscore the growing financial distress among borrowers and have prompted calls for urgent action.

Experts at the roundtable emphasised the need for immediate measures to address the challenges, including enhanced financial education, improved loan management practices, and regulatory reforms to boost transparency within lending institutions. Such initiatives are vital to easing the financial burden on individuals and fostering economic stability.

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