Cambodia will have to wait until next year for the real estate market to rebound, real estate experts said yesterday, repeating similar predictions offered in 2009 that recovery was six months away.
The real estate sector, which saw high growth before the economic crisis only to see some property values drop by as much as 50 percent, has yet to rebound, unlike garments, tourism and agriculture.
“Nothing really happened during 2010. We should expect some improvement next year,” said Tan Hong Kiat, country manager for global realtor Knight Frank, acknowledging that many in the sector had expected a rebound at the end of this year.
He said further recovery in other segments of the economy would contribute to the return of real estate sales and construction.
Still, he said delays at Gold Tower 42 and the three-tower Star River complex on the Tonle Bassac had hurt confidence in the sector.
Construction on the $300-million Phnom Penh skyscraper Gold Tower 42 stopped at the 30th floor in September after Seoul-based builder Hanil Engineering & Construction began financial restructuring.
“We strongly believe it will start the construction soon but we cannot tell you the clear date,” Kim Tae-yun, assistant manager of the developer Yon Woo Cambodia, said yesterday.
In August, Posco Engineering & Construction stopped construction on Star River, citing the slow real estate market. Project officials could not be reached.
Experts say the construction sector is in the process of correcting itself after years of speculation and inflated buying trends.
“Pre-crisis activity was not demand and supply driven. It was speculative,” said Daniel Parkes, country manager for realtor CB Richard Ellis. “There still needs to be more activity.”
Mr Parkes said, however, that demand for shophouses, which ground to a halt during the financial crisis, was slowly coming back to life again.
And while construction on Star River and Gold Tower 42 might be halted, he expressed optimism for those projects’ long-term futures and noted that the 36-story Vattanac Capital building was still under construction and slated to be completed in 2012.
Sung Bonna, CEO of Bonna Realty, compared this year’s real estate market activity to 2004, just before the construction boom took off. He said speculation had decreased and he expected more growth next year.
“It was almost like non active [in 2009] but this year is starting to increase,” he said.
Khaou Phallaboth, president of Khaou Chuly group, which owns K-Cement, said sales were up only slightly from last year.
“It’s not something we expected. We expected a better rebound. It looks like it is more likely to happen in 2011,” he said.
Lao Tip Seiha, director of the construction department at the Ministry of Land Management, said that permits for residential buildings increased more than 10 percent in the first ten months of this year compared to last year, when hardly any projects were initiated. Mr Seiha said he did not have any data on construction in progress or the number of permits issued.
(Additional reporting by Simon Marks)