The Phnom Penh Municipality on Monday leased 14 hectares of land on Chroy Changva peninsula, located across the Tonle Sap from the Royal Palace, to Sokimex President Sok Kong for about $5.6 million, a price officials admitted was below market value.
Phnom Penh Governor Kep Chuktema and Sok Kong, the petroleum company and Sokha hotels’ chief, signed the 99-year lease at City Hall.
“Phnom Penh City Hall has no ability to develop this area, which is why we tried our best to look for private partners,” Kep Chuktema said afterwards.
Three other companies had competed for the lease, Kep Chuktema said, though he said that he could not remember their names.
The $5.6 million will go directly to the national budget, he added.
The agreed lease rate for the land is about $40 per square meter.
Sung Bonna, owner of real estate agency Bonna Realty, said the land should be worth between $80 and $100 per square meter.
“If there are no restrictions on what can be built…[then] that price is below market value,” he said.
Kep Chuktema agreed the lease was undervalued, but said that the government placed heavy restrictions on development of the land, which made it less attractive to developers and less valuable.
“Thousands of eyes including the eyes of the King, the prime minister and other high-ranking government officials, local and foreign tourists look closely at that area, so we could not allow the company to construct high buildings or do anything without getting approval from the government,” Kep Chuktema said.
Sok Kong said he did not know how long it would take to develop the area, which is currently used as a public park.
“I will develop this zone into a cultural and tourist center, commercial center, and provide other services to make the city more beautiful,” he said.
“The capital we spend will not be less than $50 million to $70 million,” Sok Kong added.