Why is the Real Estate Market in Cambodia Not Severely Affected by COVID-19?

• 13 November 2020
• Local News
• 4958 Views

A real estate analyst and the CEO of Pointer Property has revealed that there are three main factors why the real estate market in Cambodia has been less affected by the COVID-19 pandemic compared to neighbouring countries.

First, most real estate developers in Cambodia have huge capital in hand, for example, Borey Peng Huoth and Chip Mong. Given that, they can keep their business stable by continuing to build ongoing projects as well as developing new projects as usual.

Developers in other countries often build their projects by heavily depending on bank loans. During the COVID-19 pandemic, the banks have tended to tighten their lending, which can possibly disrupt property market flow.

Second, the majority of buyers in Cambodia in most cases buy their property, residential property in particular, in cash. Most upper-middle-class groups tend to not use bank loans for buying their houses. Therefore, though COVID-19 may affect their income, it does not cause trouble to the property as they have already paid in full.

In other countries, most buyers are dependent on loans. Therefore, when they default on their debt, they have to undergo complicated procedures with banks, which results in market interruptions.

Besides the upper-middle-class group, for those who buy their property through instalment terms, most of them do it through the developers directly, not the bank. Thus, given that COVID-19 affected their income, negotiating with the developers is far easier than with the bank.

Third, the number of cases in Cambodia remains low due to effective government control. Both developers and buyers remain confident. In addition, most buyers believe that buying real estate during this time is an opportunity to make a good profit in the future.

Overall, strong developers’ capital, the lack of dependency on the banking sector, and the government’s good control over the spread of COVID-19 are the main reasons among others why the real estate market in Cambodia is not severely affected by the COVID-19 crisis, compared to neighbouring countries.

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