Investors Sell or Stop Construction on PP Luxury Buildings

The global realtor CB Richard Ellis said yesterday it was helping JSM Indochina sell four projects in Phnom Penh, making the property fund the latest to distance itself from the local real estate market.

Two of the residential properties for sale are vacant lots originally proposed as sites for high-end residential buildings, and the third, Colonial Mansion I, is an operational apartment building.

JSM had intended to develop a fourth location that is now for sale, a riverfront plot at the corner of Sisowath Quay and Sothearos Boulevard, as a hotel.

“There has now been two years of consolidation in the real estate sector because of the financial crisis, but I think the market is probably ready to move forward,” David Simister, chairman of CBRE Thailand, said by telephone from Singapore.

Mr Simister said his company would market the properties to both Cambodian and regional investors, hoping that companies that had been purchasing undervalued properties in more developed nations might turn once again towards the developing world.

CBRE Country Manager Dan Parkes said he began receiving calls from prospective buyers shortly after the “For Sale” signs went up on the properties on Sunday.

The sale followed news that construction on Gold Tower 42, the 360-unit mixed-use skyscraper, has ceased. Cambodia’s would-be tallest building joined the growing number of proposed or half-completed projects that stalled in the wake of the global financial crisis and have not recommenced.

Construction has not resumed on the $1 billion, seven-skyscraper International Finance Center complex, which included two 52-story apartment building and was to resume construction this year after work stalled in late 2008.

According to Meng Song, managing assistant at developer GS Construction & Engineering, there is no timeline for construction to begin again.

“Nothing has been done,” said Mr Song.

“Companies like GS Engineering and Construction that have money to go elsewhere in many cases have,” said Soush Saroeun, executive director of Asia Real Property. “I think they are concentrating on China now and will start work when demand is up again.”

Mr Saroeun said he thought that the luxury rental market could be turned around by the passage in April of the new foreign ownership law, allowing for ownership of private property.

But earlier this month, executives at Posco Engineering & Construction company said the $300-million, three-tower Star River project would be postponed indefinitely for economic reasons. Work is also not currently scheduled to resume at River Palace 31, according to Socheata Long, an accountant for contractor AllPlan International.

Completed luxury buildings are also struggling. According to Maley Sak, an executive at the Bun Ches Groups Co, which completed construction on the Mekong View residential building in the capital’s Russei Keo district, 30 of the building’s 115 units have been sold, none to foreigners

“I’m just not sure condos are the right project at this time,” said Sung-hwan Kim, marketing manager for the contractor Hyundai Amco.

Mr Kim said his company’s current project, Phnom Penh Tower, had proceeded ahead of schedule because the demand for the office space the building will offer was higher than demand for luxury accommodations.


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