Cambodia is experiencing a runaway property boom that must be constrained by laws and regulations in order to draw investment from European developers, which are largely absent in the country, experts said at an industry conference in Phnom Penh on Wednesday.
Simon Griffiths, senior manager at real estate firm CB Richard Ellis, said Cambodia’s property sector has experienced a major transformation over the past five years as favorable laws on foreign ownership were established and the economy prospered.
“In 2013 I could’ve named all of these condominium developments. In 2014, 2015, going forward, I can’t keep track of all the new developments. So there is a huge amount of investment,” he told attendees of the conference, which was hosted by the European Chamber of Commerce.
Mr. Griffiths said that in 2009, there were virtually no condominiums in Phnom Penh and that by 2017, there are expected to be more than 5,000.
“There is a construction boom. It’s a very interesting time in terms of condominiums and the residential sector,” he said.
In 2013, approved investment in the construction sector totaled $2.8 billion, a 31 percent increase on 2012, according to the Ministry of Land Management.
But the bulk of this investment is flowing in from Asian countries, while only a fraction comes from Europe, said Guillaume Massin, managing director of law firm DFDL, explaining that European investors are hesitant to bring their business to Cambodia, as building regulations are not up to scratch.
“In Cambodia, laws and regulations are not yet harmonized, may be incomplete or not thoroughly implemented,” he said.
“Standards appear to be the key for European investors and developers,” he added. “No standards and rules means a lack of confidence for those developers.”
Phuoeng Sophean, secretary of state at the Land Management Ministry, told the audience that a law to hold construction firms liable in the event of building accidents would be drafted by the end of next year.
European developers “looking to invest in our country care about the law because they are experienced in development and have faced dangers like building collapses, fires and worker injuries,” he said.
“Currently, there is very little construction investment from Europe…. If we have laws, they will come; if we don’t have laws, they will not come.”