One year after an economic crisis swept across the globe, experts say Cambodia’s key construction sector—which had been booming—is showing no signs of recovery.
The crisis, which spread in August last year and eventually engulfed world markets and economies, shuttered several major construction projects in Cambodia, while delaying others.
A $400-million Korean project to build a mini-city on four hectares of land was dashed. Another project, to build a 53-story building, never got off the ground. Other projects, big and small followed, as the price of land tumbled as much as 50 percent.
“The land and housing markets have remained silent,” said Sung Bunna, head of a self-named real estate group. “Up to now, everything is still quiet. There are not yet potential investments that could make the real estate market warm.”
Only private housing construction remained active, he said.
Seng Sopheak, a real estate evaluator for CPL, said customers had fallen off 70 percent since the crisis began.
“People who buy land or houses now are only those who wish they could do some business, which is different from previous times, when a buyer didn’t care what he bought,” he said. “What was important was to buy and then to sell for a benefit.”
One project that was not halted by the downturn was Gold Tower 42, an investment by South Korean company Yun Woo.
However, Nov Ratana, marketing manager for the project, said the number of clientele for the high-rise had diminished over the past year, and now the company has had a hard time selling one unit per month.
The construction sector started a major upswing in 2007, one that lasted until the middle of 2008, creating jobs for more than 200,000 workers, said Sov Sovandeth, president of the Cambodian Federation of Building and Wood Workers. The slowdown has put 40,000 laborers out of work, he said.
Other ongoing projects include the $1-billion mini-city of Diamond Island, an investment of the Overseas Cambodian Investment Corporation, and the Grand Phnom Penh, a $600-million joint project between Cambodia and Ciputra of Indonesia.
And though the slowdown has been evident in real estate investment, construction investment has started to climb, up 30 percent in mid-2009 compared to the same period last year.
The Ministry of Land and Labor Construction reported more than 1,000 new projects totaling $1.1 billion have been approved by the government. However, the director of the ministry’s construction department, Im Chamrong, said only six high-rises among all the new projects were seeing work done, and there are no city construction projects.
There are signs in other countries, such as China, USA and Britain, of real estate recovery, but Lan Sinara, president of Land Property, said this had little influence on Cambodia’s own sector.