Sunday, March 20, 2011

cambodia property

6:02 PM seangkhun No comments



Property ups and downs

Between 2006 and 2008, property prices in Cambodia skyrocketed. By 2009 they had plummeted back to earth; furthermore several major projects were put on hold or cancelled, including the planned International Finance Complex.

At the height of the madness, prices for prime land in Phnom Penh reached $5,000 per square metre; Siem Reap reached $1,000 per square metre, and beach front land in Sihanoukville experienced similar rises.

By the end of 2009, prime land prices in Phnom Penh were down to around $2,700 per square metre and in residential areas prices were around $1,600 per square metre, down by 30-40 per cent.

While many investors and speculators were local; a significant number were foreign. This in turn required mechanisms being put in place to hold title to land in a country where there is a constitutional prohibition of foreign ownership. Local partners are required to hold 51 per cent of the shares of companies established to hold title (Land Holding Companies). Various ‘protection’ documents are then executed to protect the equity interest of the foreign investor and limit the liability/obligation of the local shareholders. This way of acquiring land is the most commonly utilised method by foreign investors currently in Cambodia.

However, interesting legal developments have occurred which make investment more attractive to foreigners. One is the advent of the long term lease registration system. Previously there was no effective mechanism to register leasehold on land titles in Cambodia. That has now been remedied with the introduction of the ‘lease certificate’. Long term leases of up to 99 years can now be registered at the national cadastre and duly noted on the Title Deed (for an investor it is pleasing to note that leases can be 100 per cent held by foreigners). In addition, the cadastre issues a certificate separate to the title deed which notes the lessee’s interests in the property. This certificate can be traded and used as security for loans.

The other development of note is the ‘co-ownership’ regulation. This allows for separate titles to be issued over apartments and condominiums with the land being jointly ‘owned’ by all the apartment owners.

In December 2009 the government approved the long-awaited draft law allowing foreign ownership of units in buildings from the first floor up. The new law was expected to be fully approved by Cambodia’s parliament and senate by the end of the year.

Developers have been eagerly awaiting the new law on foreign-owned apartments, anticipating it will boost sales.


High is not low
Cambodia’s first high-rise office building was completed at the end of 2009 in Phnom Penh and the capital’s first high-rise condominium complex was back on track. But high-rise property prices are not low. Phnom Penh is built on soft foundations which necessitate expensive piling for high-rise buildings, and so construction costs are high. In addition, almost all building materials need to be imported. But that hasn’t deterred the developers who feel that Phnom Penh has enough charm to attract foreign buyers...

Canadia Tower
Despite numerous delays, Cambodia’s first skyscraper opened at the end of 2009. Low occupancy rates at all other new office buildings in Phnom Penh seems not to have fazed the owners - who happen to be a bank - as they are asking for a rental rate of $30 and $35 per square metre. So in 2010 heads in Phnom Penh will be looking skyward to see what happens to local rental values and levels of demand.

Phnom Penh Tower
This 22-storey office development is being built by Hyundai Amco Construction, a division of South Korea’s Hyundai Motor group. The $34 million tower will be completed by mid-2011. Construction began at the site in December 2008.

PGCT Centre
The $9 million Cambodia-Korea Phnom Penh Gyeongbuk Culture, Tourism and Trade Promotion Centre (PGCT Centre) opened its doors in late 2009 and is offering rented office space at $25 per square metre.

Grand Phnom Penh International City
Indonesia’s Ciputra Group and YLP Group Cambodia are developing a mega-project called Grand Phnom Penh International City, which will consist of 4,000 residential units (villas and apartments), shopping centres, schools, hospital, hotel, and sports and leisure facilities, including an 18-hole golf course. www.ciputra.com.

Camko City
This 119-hectare development on the outskirts of Phnom Penh is a $2 billion joint venture between South Korea’s World City Co and Cambodian companies. South Korea’s Shinhan Bank is providing $65 million funding to the first phase of the project which includes villas, townhouses, high-rise apartments and a shopping mall. According to Kheng Ser, marketing counsellor for World City, 73 families have already moved into their properties on the first phase of the development in which 85 per cent of the properties have been sold ? 164 townhouses and 18 villas. The total development is expected to be completed in 2018 and will consist of 827 apartments, 18 villas, 164 townhouses, schools, university, hospital, hotels and shopping centres. The 118-225 square metre apartments were being offered for sale off-plan from $108,000 a unit - $910-$955 per square metre. www.camkocity.com.

International Finance Complex
South Korea’s GS Engineering and Construction Co was planning to construct a 53-storey international financial complex on 7-hectares of land next to the Tonle Bassac River. Due for completion in 2012, the complex was to house supermarkets, shops, offices, schools, and apartments. Plans for the International Finance Complex included 3 luxury residential blocks, a first-class office building, a five star hotel, private clubhouse and large shopping mall. The development broke ground in June 2008, but the project has now been postponed.

Gold Tower 42
South Korean developer, Yon Woo Co., working with fellow Koreans, Hanil Engineering & Construction Co., is constructing two 42-story golden towers which are set to dominate the city skyline. Due for completion in 2012, the $240 million project will provide apartments and commercial space. ‘Off-plan’ prices for the 200 square metre apartments were marketed at $360,000 a unit ($1,800 per square metre). Construction is continuing and is on schedule for completion in 2011.

Koh Pich (Diamond Island)
In 2006, OCIC (Overseas Cambodia Investment Company) signed a $50 million 99-year lease with the city of Phnom Penh to develop and manage Diamond Island. Sales of apartments, villas and houses began in late 2008. At the same time the developers also began building a bridge to the island. With units priced at $1,500 per square metre initial sales were poor and OCIC offered various promotions, including discounts of up to 35 per cent on villas and houses in the first phase of the project, and payment period incentives. Units are available from $200,000 to $1 million. When completed in 2017, Diamond Island City will occupy 75-hectares of the island overlooking Phnom Penh. The project was originally planned to be completed by 2016, but work was delayed because of the downturn in the economy.

Bellevue Apartments
A $30 million apartment building overlooking the Tonle Bassac River in Phnom Penh is being constructed by Japanese developer Arakawa Co. The 16-storey apartment building will have 143 executive apartments. The developer says the apartments will be for rent only and rental prices will be based on the market at the time of completion.

Posco Star River
In November 2009 South Korean builder Posco E&C announced it would shortly begin selling units in its Star River apartment complex development. Construction began in October 2009 following a feasibility study and a detailed survey of the land, which requires extensive piling. The $300 million, 237,500 square-metre riverfront complex, will consist of 1,000 apartments in three apartment blocks – one 45-storeys tall and the other two 42-storeys each. As well as the apartments, the towers will include retail and commercial space, fitness centre, swimming pool, and seven floors of car parking. The project is planned for completion in October 2013. www.poscostarriver.com.

De Castle Diamond
The De Castle Diamond condominium complex is due to open at the beginning of 2010. The development consists of 178 units and is the third De Castle project in Cambodia by Technology Innovation Construction (TIC) of South Korea. Basic one-bedroom units of 109 square metres are priced between $87,000 and $89,000; three-bedroom 212-square-metre units at $170,000 ($200,000 for the 243-square-metre option); and the 270 square-metre four-bedroom units are priced at $220,000. www.decastle-diamond.com.


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