Strong current for development

Seen from behind cement blocks at a building site on Chroy Changvar peninsula, major construction projects rise above Phnom Penh’s skyline. Development in Chroy Changvar has remained relatively inactive, but development along the west side of the Tonle Bassac is burgeoning. Photo by: Neang Sokchea

via CAAI

Thursday, 04 November 2010 15:00 Steve Finch

FROM the top of Yellow Tower, a new seven-storey office space on the Chroy Changvar Peninsula, the views extend 360 degrees into the surrounding provinces on a clear day. To the east the view of the Tonle Bassac is uninterrupted with only a few buildings in the surrounding area rising above two floors. While significant development has transformed the waterfront property across the river in recent years, changes to the capital’s Russey Keo district have been rather modest, but that is changing.

Of the half dozen satellite districts the government has earmarked for completion by 2020, in many ways this slither of land between the Mekong and Tonle Sap rivers is the most advanced.

While Camko City on the northern edge of Phnom Penh is years from completion – none of the commercial space is even under construction as yet, according to real-estate firm CB Richard Ellis – and Grand Phnom Penh is looking at a 2014 launch at the earliest, new properties in Chroy Changvar are coming online at an accelerating pace.

VTrust Apartment III was completed at the end of last year, Yellow Tower is scheduled to open in February and meanwhile construction workers at Mekong Tower could be seen finishing the building’s parking area this week. In just over a year another apartment building, the US$30 million Bellevue Apartments, is also due for completion.

“Chruoy Changvar is developing into one of the most exciting districts of … Phnom Penh,” said CBRE Country Manager Daniel Parkes, who is acting as agent for Yellow Tower and other buildings in the capital.

Although still undeveloped in comparison with the opposite bank of the Tonle Sap, the government has targeted this riverside district for major infrastructure development that would make it increasingly attractive for investors, property developers including Bellevue’s Arakawa told the Post this week.

“We do not have any problem with the infrastructure at all,” said a senior executive at the Japanese developer, declining to be named. “All the basic infrastructures are in place.”

Work continues on a project to widen National Highway 6 that extends into Kandal province from the Japanese Friendship Bridge, but the main improvement in access will be the new bridge across the Tonle Sap River, announced in September.

Ministry of Land Management spokesman Nomm Pheany said on Tuesday that private infrastructure development built around new projects will in turn transform the district.

“The infrastructure in Sangkat Chroy Changva will be better [than the city centre] because … developers are taking … new technology and materials that are modern to develop that area,” she said by email.

Prices on the peninsula are still low by Phnom Penh standards. Bonna Realty is advertising plots of land in the district starting at about $400 per square metre, or roughly five times less than those in sought-after Boeung Keng Kang I. Similarly, Bonna was selling a gated four-bedroom two-storey villa in Chroy Changva for $350,000 this week. Meanwhile, comparable properties in BBK I rarely priced below $500,000 with sellers often asking for $1 million or more.

“The price is lower [in Chroy Changva],” said Chrek Soklim, deputy director of VT Construction, which is managing VTrust Apartment III on the peninsula. “The market on the [East] riverside is lower than others [in Phnom Penh].”

Nevertheless, developers are increasingly building higher-end property on the less developed bank of the Tonle Sap. VTrust is renting out its top-end two-bedroom apartments with river views from $400 up to $2,500 per month each and only has two of its 11 units left on the market, said Chrek Soklim.

Arakawa will offer 143 executive apartments for rent when it opens Bellevue in early 2012, said the company executive. And in the office market, Yellow Tower is marketing itself as a unique, spacious office building with verandahs, plentiful greenery and amenities including high-speed internet, according to the company brochure, at prices from between $7 and $10 per square-metre.

But developers say the main draw across the river is not the improving infrastructure and competitive price of property: it’s the lack of development that remains the district’s key selling point.

“This is the most serene part of Phnom Penh,” said Yellow Tower’s Norwegian investor Kim Gjemmestad.

Where central Phnom Penh has become increasingly congested, noisy and high-rise at the expense of green space, Chrek Soklim said Chroy Changva district offers an alternative that can attract a different sector of the market, a niche he described as “people working from home and creative people”.

“That’s our target,” he added.

Gjemmestad said he plans to occupy much of Yellow Tower’s 2,700 metres of office space with his own IT team and will then rent out the remainder to “like-minded” companies, preferably in the computer industry.

Yellow Tower looks out over the river and another major new development, the latest Sokha resort that spans much of the western edge of the peninsula, also a hive of construction activity, at least at its southern end. Still, like the rest of Phnom Penh, Chroy Changva has seen developments suffer delays borne of the economic crisis and subsequent property slump. Ches Group had planned to complete construction of its 16-storey Mekong Tower on the opposite side of the peninsula by April, but work is ongoing.

The new Norton University campus has stop-started throughout the recent property slump, according to other builders in the district, and the long-awaited Malaysian Sunway development to the west of Highway 6 remains an unknown despite a 70-year land-lease agreement that dates back more than four and a half years.

Like other areas of the city, and the Highway 6 expansion project, the Sunway development has been marred in land disputes and threats of eviction against locals who continue to lay claim to the area. When or if the $2 billion project designed to cover 375 hectares – nearly double the size of Camko City – will ever be finished remains a mystery. Developers Sunway City Bhd were not available for comment this week.

Similarly, South Korean developers BK Asia Pacific have halted work indefinitely on the futuristic-looking Mekong Pharos development beside the new Sokha development on the tip of the peninsula. Although the residential development was due for completion in August, according to the company’s website, the BK Asia Pacific’s sales office is still the only building standing on the site and no other construction work has taken place.

These are setbacks in the area that active developers say will not affect the longer-term prospects of the market on the peninsula, and in some ways could simply raise demand for property in the area as supply remains below levels anticipated before the downturn.

The Arakawa executive told the Post Chroy Changva district remains on course to offer a unique, high-end environment unrivalled elsewhere in the city: “We think that Chroy Changvar is the best location for living in Phnom Penh.”