Small & Medium-Sized Borey Developers Vulnerable to Liquidity Shortages, Projects Facing Delays

• 12 October 2022
• Local News
• 3355 Views

CBRE Cambodia has predicted that the borey market is facing more challenges that could put small and medium-sized borey developers in a cashflow crisis and have no choice but to even suspend their constructions.

CBRE Cambodia Associate Director Kim Kesa said some small and medium-sized developers may face liquidity shortages leading to construction delays, but not on a large scale.

She explained that the cost of construction materials continues to rise, leading to higher construction costs. Combined with the increase in supply, the market has become more and more competitive.

In such competitive circumstances, developers cannot sell houses at such high prices as before with even lower numbers of transactions.  This could cause developers to have cash flow issues, she added.

Besides, the Cambodian economy and the global economy have not improved and are not expected to grow much in 2022, which will affect consumer spending. As a result, some small and medium-sized developers will have no choice but to suspend construction or build only blocks that have the most buyers.

However, large developers remain stable as they have a lot of capital. In addition, the borey sector as a whole is still robust as the debt-to-equity ratio of borey developers, in general, is not very high.

The most concerning sector is condominiums which will continue to be stagnant. Condo projects are at a higher risk of construction delay than boreys as developers cannot build in blocks like boreys. They are required to complete the whole building regardless of the percentage of units sold.

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