Real estate boom in Phnom Penh harbinger of good tidings to Cambodia
Wednesday, 30 September 2009
Ray Clancy Emerging - Emerging Property Markets
(Post by CAAI News Media)
Cambodia is experiencing a real estate boom and the government is under pressure to boost the sector by making it easier for foreign real estate investors to buy, it is claimed.
After spending the last three decades struggling to recover from the legacy of the Khmer Rouge's rule, the country is emerging into the 21st century. A decade ago the capital Phnom Penh didn't even have one traffic light, now high-rise condos and offices are springing up as investors rake in the profits.
Many people still have an outdated perception of Cambodia, but private-equity investors are moving into the country. At least four new private equity funds, backed by brand-name investors, are aiming to bring $475 million of foreign investment into Cambodia.
And Cambodia´s private sector is urging the government to make foreign ownership easier as an open-minded real estate market would promote economic growth.
The Cambodian investment law was amended in 2005 to allow foreign ownership of permanent fixtures, but as yet has not been enforced. The old law will only allow property investment in the name of a Cambodian national but it is hoped that pressure from the private sector will result in a change.
'Key improvements to the property investment law would open up a whole new economic world to the country of Cambodia. These measures would not only further develop Cambodia´s property investment market, but the new interest from those investors who want to take advantage early, will not only create a boom putting Cambodia on the map, but will also make the country more competitive with its neighbors,' said Chris Green, Head of Research at property investment firm Obelisk International.
There are several reasons for urgent action, according to American lawyer and chairman of the International Business Club, Bretton Sciaron. 'This is already a sector of the economy that is dynamic, but foreign ownership of apartments, condominiums will help spur further economic growth. Such a regulatory development will provide a dramatic indication that Cambodia has an investor-friendly environment,' he explained.
Vast new building projects have increased over the past few years, including a great number of satellite cities worth billions of dollars that when completed will fundamentally alter the appearance of the capital. After years of disorder within Cambodia, the country is now turning things around as a growing economy posting a steady 11% growth over the last three years, fuelled by a strong tourism industry and clothing manufacturers.
China, South Korea and Malaysia have also been pouring money into the country and in 2006 foreign direct investment totalled $2.6 billion, up from just £240 million in 2004. And according to Cambodia Investment, more than $6 billion may be invested in the country in the next three years.