Slump forces closures in real estate industry

Photo by: Tracey Shelton
A closed real estate agency office lies unoccupied on Norodom Boulevard on Monday.

The Phnom Penh Post

Written by May Kunmakara
Tuesday, 31 March 2009

With property investment drying up, more than 50 percent of real estate dealers may have already gone out of business, say sector sources

THE real estate downturn has forced mass bankruptcies among the country's property agencies, with the industry reporting that 50 percent of businesses in the sector had gone bust since the crisis hit Cambodia.

"The sector is in deadlock and many companies are going out of business," said Sung Bonna, president and CEO of Bonna Realty Group and president of the National Valuers Association of Cambodia.

He added that bankruptcies would be even higher if unlicensed companies were factored in. He said that 80 companies were licensed nationwide, but hundreds operate illegally.

"Most real estate companies are changing from companies to freelancers to stay afloat," he said, adding that his company has also struggled in the current environment.

"I have no plan to lay off staff ... although income is decreasing," he said, "My company closed last month because we could not afford to pay for staff and other expenses - how can we survive if we don't have income?" said Leng Chanthoeun, marketing manager of Golden Real Estate.

He said that his company was licensed last July, just when the sector began its gradual slowdown during the general election, but tough times continued with the Thai-Cambodian border spat and the global financial crisis, he added.

"It is not only my company that has closed.

"There are a lot more real estate agents who have been bankrupted as well," he said. "However, when the sector recovers, we will resume our business," he said.

Kong Vansophy, the administrative manager of the Real Estate Developers Association of Cambodia (CRDA), said "a lot of property owners are trying to quickly sell their property at low prices".

But other owners are acting as if the downturn never occurred. He said that landowners in Tuol Kork district are desperate for money and have dropped prices from about US$700 to $300 per square metre.

The manager of Say Group Realty, Uk Sophen, said that the downturn had cost thousands of jobs.

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My company closed last month because we could not afford to pay for the staff.
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"We don't have any customers coming asking us to buy or sell property or even asking for information," he said.

"I don't know how we will survive," he said, reflecting fears across the industry. "I think that my company will fold soon."

Sung Bonna blamed the government for waiting too long to help the struggling real estate sector.

"We just want the sector to operate normally," he said.

The government has loosened some real estate regulations and hinted that it has further plans to help the sector.

"The government is trying to deal with the problem - it is under way," said Ngy Tayi, the undersecretary of state at the Ministry of Economy and Finance, and chairman of the Inter-Ministerial Task Force.