Will the Construction and Property Sectors Slow in the Next Five Years?

• 6 August 2018
• Local News
• 4635 Views

As thereal estate industry booms and development projects continuing to rise throughout the country, especially in Phnom Penh, the International Monetary Fund (IMF) has forecast that the sector may decline in the next five years.

On 2 October, 2018, the IMF released a preliminary economic report showing that Cambodia’s economy will continue to grow at high rate over a period of between two to three years, but it will fall by 6% due to a decrease in productivity growth, credit maturity and real estate cycles.

Speaking with The Phnom Penh Post on 4 October, 2018, IMF representative Mr JarkkoTurunen said that, “Currently, the real estate and construction sectors are strong drivers of economic growth, but five years [from now], other sectors will [drive] growth [more] than [real estate and construction]”.

Meanwhile, Mr Chiv SivPheng, General Manager of the Cambodia Constructors Association (CCA) and Director of the Ministry of Land Management’s Construction Technical Research Department, told Construction&Property Magazine on 5 October, 2018 that “[Construction and real estate] may fall because there are a lot of construction projects and if they [construction projects] have not sold out, they [developer] will not build more”.

However, real estate analyst and CEO of Key Real Estate Co. Ltd. Mr Sorn Seap, feels optimistic about the sector.

“The construction and real estate sectors will continue to have long-term potential because Cambodia is one of the ASEAN countries that will benefit from China’s Belt and Road Initiative”.

In fact, he added, “although there is a lot of construction, compared to modern cities, there is a lot more potential to go at least for another 10 to 20 years because we do not have many modern cities or skyscrapers yet. ”

“For me, even for the next five years, Cambodia’s real estate sector will remain stable and strong,” he said.

Meanwhile, the National Bank of Cambodia’s (NBC) semi-annual report released in July showed that construction sector alone contributed 11.5% of the national economic growth for 2018.

• Analysis