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Real Estate Sector Sees Slow Recovery From Economic Crisis

Construction workers work on a new building in Phnom Penh. Cambodia is embracing a thriving real estate market, where land and housing prices in the capital city skyrocket with no sign of letting up, file photo.

Prior to the crisis, a real estate bubble skyrocketed the prices of property and homes across the country.

PHNOM PENH - Real estate values have begun a slow recovery, following a steep drop in the wake of the 2008 economic crisis.

Prior to the crisis, a real estate bubble skyrocketed the prices of property and homes across the country, leading to flurry of development activity. Real estate brokers and economists say they expect the prices to continue to rise, with more projects slated to begin.

The Cambodian government approved 1,083 construction projects within the first eight months of this year. That includes factories, commercial buildings, residential housing and casinos, for a total projected investment of nearly $1.4 billion.

“We can see a positive rise in 2012,” said Keuk Narin, vice president of Asia Real Estate Cambodia. This year, commercial land prices have risen 13 percent, he said. Residential land value has risen by 14 percent. “But it’s not growing in the way it was in 2006, 2007 and early 2008,” he said.

The increase is small in comparison the the plummeting values of 2009, where commercial land lost half its value after three years of growth and residential land prices fell by 74 percent. Prices continued to fall in 2010, Keuk Narin said.

At the height of the boom, commercial land was selling for $5,000 a square meter. Residential land sold at $3,500 per square meter. Today, prices per square meter, respectively, are about $3,200 and $1,700, said Noun Rithy, managing director for the Bonna Realty Group.

“We can compare real estate to sick people,” he said. “The sick now have some relief.”

These days, people’s attitude toward land has also changed, said Sear Chailin, CEO of Phnom Penh Appraisal & Real Estate. Where before, people were buying land with an eye to sell at a mark-up, he said, today “they have a clear plan for what they are going to do.”