A 60-storey skyscraper soaring above the low, monotonous spread of red-tiled roofs of Phnom Penh? Don’t be surprised. After several years of slow growth, Cambodia is stirring again, and when an economy turns, real estate is usually where an emerging nation stamps its first ambitious footprints. Cambodia is no exception.
Of course, it’s still an idea, but the idea has been approved by the government, along with at least 200 other proposals for buildings higher than 10 floors that, once built, will change Phnom Penh’s skyline forever. Nine buildings in the capital are already 20 storeys or more high. A 38-storey mixed-use development, Vattanac Tower, is due for completion in September 2012. A 52-storey project, called International Financial Complex, is still on after some pruning. Sixty storeys can’t be too far behind.
It’s an “uprising,” literally, now spreading to other parts of the country as well, especially Seam Ream to the north, the once-sleepy outpost that’s now the country’s second-largest city. Fuelling the boom is a new law, passed in May last year, which allows foreigners to own up to 70 per cent of any property above the ground-floor level that’s not within 30 km of a border.
Cambodia is still an LDC (least developed country), with its 15 million mainly agriculturist population surviving notionally on $1 a day. But the LDC status allows the country to have quota- and duty-free access to most world markets, which an increasingly pro-private-sector government now sees as an advantage. Export policies have been liberalised and tax reforms have been implemented to let investors exploit this benefit to the full. The government also wants to leverage Cambodia’s membership of the economically resurgent Greater Mekong sub-region, which offers investors the prospects of a wider regional market.
All this has spurred a fresh investor interest in Cambodia and triggered an explosion of demand for commercial and living spaces. New apartment blocks are proliferating all over the place. Rental for “Grade A” office space in Phnom Penh has shot up to around $30 per square metre. A one-bedroom apartment in Seam Reap, believed to be the fastest-growing city in Asia, now rents for $450 a month, while a two-bedroom one could easily fetch $650 or more.
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South Koreans are developing a whole new satellite city near Phnom Penh, called Camko City, aimed particularly at foreigners looking to settle down in Cambodia. Although the project has run into temporary snags, with its principal financial backer, Busan Savings Bank, being investigated for banking irregularities at home, Cambodians believe the project won’t be allowed to crumble as almost half a billion dollars has already been sunk in it and quite a few residential towers are up on its 119-hectare site, reclaimed from a lake.
Four other satellite cities are at various stages of development around Phnom Penh, including the 260-hectare Grand Phnom Penh International City, invested by Indonesia’s Ciputra Group, with architectural designs that are considered too avant-garde for Cambodia. A fifth one has just been announced by a local firm, Overseas Cambodia Investment Corporation, which is prepared to spend up to $3 billion to build a 387-hectare property. Satellite cities are part of the government’s plan to cope with Phnom Penh’s burgeoning population, now 1.5 million but growing at about 20 per cent a year.
The popular impression of Cambodia is still that of an Asian “Wild West,” where ganja, guns and sex can be had in plenty, corruption runs through all levels, roads are dusty and easily flooded, and all kinds of backpackers, outcasts, drifters, paedophiles and alcoholics feel at home. In parts, that may still be true, but the signs of change are many and convincing.
There’s a rush of new hotels, restaurants and Western-style shopping malls, and Phnom Penh’s first multiplex, licensed to show Hollywood movies, has just made its debut. Fund transfers through domestic banks are on the rise. Car sales are strong, helped by easy bank loans. The telecom network has already spread to three international gateways and more than 20,000 km of fibre-optic cables. The country’s first communication satellite could be launched in early 2013. Roads are being upgraded with help from the Asian Development Bank (ADB). Trains are running again on the country’s once-defunct railway under an Australian concessionaire.
The economy remains strong. Garment exports, Cambodia’s second major business after tourism, are on course for a 30 per cent rise this year over last year’s $2.99 billion earning. As for tourism, 42 large-scale projects worth $2.6 billion were approved in the first five months of this year, more than double from a year ago. Club Med is considering making an entry. ADB has just announced a three-year, $500-million programme for projects in agriculture, education, finance, water supply and transport. And Cambodia’s long-awaited securities exchange is ready to start trading by the end of this year.