What are Chinese developers’ plans for unfinished construction in SHV?

• 6 August 2022
• Local News
• 1854 Views

After the Cambodian government shut down online gaming in Sihanoukville, combined with the arrival of the COVID-19 pandemic in 2020, Sihanoukville’s economy plummeted while the overheated real estate market in the province finally burst.

After Chinese investors left Cambodia, a total of 1,155 construction projects were left unfinished with the rental price of real estate in the province also dropping severely from over 5-digit numbers to thousands or even hundreds of dollars per month.

However, as the COVID-19 pandemic is slowly and the public infrastructure was been upgraded, hope arises, expecting those Chinese investors to return and complete their unfinished properties.

Nikkei Asian Review interviewed several Chinese investors asking what are their perspectives and future plans on those frozen projects.

Most investors expressed their interest in returning, but both social and economic obstacles prevent them from doing so.

One of the most important factors preventing them from resuming their projects is the lack of support from the Cambodian government.

In early July, a group of Chinese project owners met and discussed with Sihanoukville provincial administration officials​ over the issue. In order to return, they requested the government to help reduce some related taxes on their project and help establish the land prices index to prevent the locals from speculation.

One of the most demanding requests from the investors is the facilitation and involvement of the government in solving the land dispute between them and the locals.

Some Chinese investors have reported that the landlord has seized their buildings in exchange for overpriced rental fees, which stop them from returning and finishing up their projects.

“There was a lot of greed,” Zhang Jiawei, head of a Chinese business association in Sihanoukville, told Nikkei.

“Business people wanted to get money, even if they knew the prices of land or rent were too high. It was a bubble and people knew it would break, but you don’t think anything bad will happen to you,” he added.

Chinese developer Qiu told the Nikkei that he had invested in a US$3 million hotel in Sihanoukville in 2017. Construction was completed in 2020 but cannot be opened due to a dispute with the landlord, who wants to take complete control of the project.

“Business was so good,” recalled a developer named Gong, who arrived from Sichuan Province in October 2019. “People didn’t think. The market pushed them into making decisions.”

Australian National University researcher Dr Ivan Franceschini explained why unfinished construction projects and land disputes between landlords and investors in Sihanoukville seem not to be the focus of the Cambodian government.

Dr Ivan said in a country where corruption is endemic and land speculation by connected elites is rife, the developers’ proposals are unlikely to materialize.

According to his study, the Cambodian government might want to solve this issue; however, the solution must take time as the parties involved are elite and powerful individuals in the government sector.

Nevertheless, the trouble will be eased one day, he believed, explaining that the government has already spent its budget of US$300 million in upgrading the infrastructure of the province; thus, the long-vision masterplan for this province has already been planned.

Indeed, the Cambodian government and China’s Urban Planning and Design Institute of Shenzhen are working together to build up a master plan to turn the city into a multipurpose special economic zone and commercial, services and logistics hub.

Dr Ivan also believed that the Chinese will not return anytime soon given aforementioned the social and economical obstacles. The old Chinese investors are less likely to return, so the hope could rely on the new one.

“They still expect people to come back and invest, which is very unlikely to happen any time soon,” he said.

Meanwhile, the existing investors in Cambodia are also reducing their scale. For example, a Chinese developer initially planned to have a shopping mall and a 30-story apartment, but now only a shopping mall plan is executed, while also operating at loss.

However, some Chinese investors are still optimistic about the government’s multi-purpose special economic zone masterplan, hoping the market condition will improve.

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This article is solely the perspective of the Chinese investor toward the Sihanoukville crisis. The Construction & Property Magazine will publish a follow-up article analyzing the views of the Cambodian government and the local people of Sihanoukville on the same topic as well. 

 

• Analysis