Phnom Penh getting more expensive

Thu, 20 June 2013
16 Tourists take cyclos in Phnom Penh

Phnom Penh has risen up the rankings of the most expensive cities for foreigners to live in – but from 217th to 213th, according to the latest cost of living research by ECA International.

Meanwhile Tokyo has been knocked off the world’s number one spot by Norway’s capital Oslo, and now lies in sixth place. Oslo is followed by the Angolan capital of Luanda, where the goods and services commonly bought by expatriates are difficult to access, and command a hefty premium. Stavanger in Norway, Juba in South Sudan and Moscow in Russia are also now more expensive than Tokyo.

The ECA International survey is conducted twice a year, comparing a basket of consumer goods and services commonly purchased by employees in more than 400 locations worldwide.

Within Asia, Japanese cities still dominate the top of the cost of living ranking - four of the region’s top five most expensive locations are found there. Seoul joins them, having jumped from seventh to third most expensive Asian location, and from 29th to 14th globally. Not only have the prices of goods and services there increased at a faster rate than the previous year, but the local currency has also strengthened against other major currencies, pushing up costs there for many international assignees.

Beijing (24th globally), Shanghai (26th), Singapore (36th) and Hong Kong (38th) complete the list of the top 10 most expensive locations in Asia. On average, prices of items in ECA’s cost of living basket for Chinese locations have increased little or even seen small decreases this year. As a result, Chinese locations have fallen slightly down the ranking but the on-going strength of the yuan against major currencies has prevented them from dropping too far.

Hong Kong, ranked 38th in the global list and 10th most expensive location in Asia has only seen a slight fall in cost of living. Prices of goods and services in ECA’s cost of living basket have gone up approximately 4 per cent over the year on average there. This is a slightly slower rate of increase than the year before when prices rose 6 per cent on average. With the Hong Kong dollar pegged to a stable US dollar, the cost of living for assignees in the SAR has remained steady.

Indian locations continue to be among the region’s cheapest in terms of cost of living for international assignees. New Delhi, ranked in 200th position globally, is followed by Mumbai at 215.

Karachi, ranked 256th globally, is the least expensive Asian location for expatriates.Read Original text


Housing development on Cambodian islands not the right time yet

Thu, 20 June 2013
Sang saa island

Although currently there are a lot of development projects for resorts and guesthouses on various islands off Cambodia’s coast, experts say it is not the right time for such developments.

Po Eavkong, managing director of Asia Real Estate Cambodia, said the development activities on islands in Cambodia’s sea seem to be quiet,  although there has been a lot of activity recently.

So far only Song Saa island and Dek Koul island have been successfully developed, while other islands have only incipient projects, such as the massive Koh Puos development project, where recent information says the company developing that area is changing their manager and the design of the development.

Po Eavkong said “the development on those islands could have potential for the future but if you look at the domestic demand this time, it is not necessary and it is not the right time to develop housing on the islands yet. At present, there are a number of domestic flights to Sihanoukville, but those flights are not broadly available yet, and this is why the area has been unable to attract large developers yet.”

Po Eavkong added that development on islands requires a lot of money but if the demand is not adequate, the investors will not take risks. The development is also related to conditions such as security, safety, and infrastructure, power and water system for the living needs of the people.

Noun Rithy, the general manager at the Bunna Reality Group stressed that if those islands are resorts that have houses and commercial activities running well, a lot of people will go to live there, but if there is only housing or resorts, and have no commercial activities, people will not go to live there.

He said that “when there is a development with a clear strategic plan, there will be a lot of demand as well and if [you] want to attract a lot of people to live there, that place must have active commercial activities.”

Kuy Vat, president and CEO of VTrust Group said the development on islands will have great potential in the future but it requires the development to have good infrastructure and be well prepared before it can get a lot of support. “If there are development projects going gradually, it is good because they can start developing relaxing houses and villas gradually, while developing condominiums is not good this time,” he added.

He said “if there are only development projects for sale first and there are no actual development, those development activities will not be able to progress”.

Ho Vandy, co-chair of TWG, said that more than 30 islands have been granted concession by the government to private companies for development, but there are only a few islands that have been developed, such as Song Saa island, Koh Russey, Dek Koul island, Koh Tonsay and Koh Puos, but construction activities on these islands are not significant yet.

He said “it is not time for the development of construction such as condominiums, or villas. It requires a proper time because the people who have a lot of money don’t want to bury their money there. However, I would like to ask investors to comply with the law and do not take the beach to be their own private possession, and even though we want development, we also want the protection of the public interest”, he added.Read Original text


Crackdown on unlicensed companies

Thu, 13 June 2013
2 Cambodia property

The Cambodian Valuers and Estate Agents Association is now ready to take action over any company that has no valid license, because they are causing difficulty in the sector.

The leaders of the association will be discussing the issues to take measures against invalid agencies or businesses without clear licenses; up to now in Cambodia there has been no action related to these issues yet, Cheng Kheng, director of the CPL Real Estate Company and president of the Cambodian Valuers and Estate Agents Association said.

“We are currently discussing with the members of the Association and ministries concerned to issue Prakas, sub-decrees or laws for controlling the agencies and companies that have no rules and order,” he said.

“A country cannot be without laws and all people must also respect the law because when something happens it is often resolved by the law. Currently, the companies with valid licenses are mocked by the rogue businesses, and the number of the dishonest businesses is more than the fair businesses,” he said.

“We do legitimate business, always with ethical standards as well as paying tax to the government but the rogue companies do not do so, specifically from purchasing, selling and renting commission, he said, adding that, “we cannot allow them to make troubles.”

So far, the association has 24 company members.

Sorn Seap, general manager of KEY Real Estate Ltd admits the problems and he said he will urge action from the ministries concerned over invalid companies, comparing those companies to “mosquitoes that come to bite us even they know that biting us makes us die.”

“Those companies have caused many barriers to growth in the real estate sector because they do not respect the laws, professional ethics and do everything arbitrarily. All unlicensed companies should ask for the licenses to give confidence to Cambodian people as well as foreign investors,” he said.

Po Eavkong, the managing director of Asia Real Estate Cambodia agrees, saying that urging them to respect the laws is a very good thing, “because there are many benefits such as providing benefits to the companies with professional standards, and valid licenses to compete with transparency. The government can get revenues bcause the legal companies always declare their income and always pay tax to the government,” he said.

“If the government takes a specific measure for unlicensed companies, it is good. Doing so is making them turn to correct professionalism and reduce the impact of the loss of consumer confidence. Their activities affect the clear and professional companies because some companies defraud the trust of customers, therefore, investors lose confidence in the legal business and for this matter I have also met,” he said.

Ministries have already drafted the law on the management and trading of properties after meeting with the private sectors, Mey Vann, director of Department of Industry and Finance of the Ministry of Economy and Finance said. “The draft will be sent to the cabinet after the next elections, and we expect the law will be declared able to be used at the end of 2013,” he said.

“Even though, we haven’t had the law, the ministry has introduced and asked the public to use the services of legal companies with a license from the Ministry of Economy and Finance, he said. The ministry has also told real estate agencies to report the address of the invalid companies to the ministry for pre-action because now we do not have the law but after the law, we will punish them according to the law,” he said.Read Original text


7_Diamond_island

Thu, 6 June 2013
7 Diamond island

Cambodia remains an attractive destination for industrial work, with a low inflation rate of 3 per cent and a low minimum wages of $80 per month, according to the CBRE Asia Pacific Logistics Rental Index.

The index showed a slight increase of 0.7 per cent quarter-on-quarter in the first quarter of 2013 compared to just under 1.0 per cent in the fourth quarter of 2012 as rental growth remained weak for a third consecutive quarter.

Annual growth also continued to decline, falling to 4.4 per cent year-on-year. Leasing activity slowed during the quarter as occupiers opted to stay in their existing premises.

In the first quarter of 2013, Cambodia’s textile exports reached $1.34 billion, compared to $1.14 billion in the same period last year, with export commodities including clothing, timber, rubber, rice, fish, tobacco and footwear. In 2012, exports totaled $6.14 billion.

Factory rents in most markets – particularly in China – continued to record steady gains in the first quarter of 2013, along with the improvement in regional exports. In Southeast Asia, factory rents are generally stable.

In Cambodia rents also remain stable as a continuation of trends seen in 2012, with prime locations in industrial zones commanding rents of $2.5 square metre. Rents in lower quality industrial zones, where units are of a lesser standard, offer rents of $2 per square metre.

CBRE says there remains a distinct lack of supply of industrial units as occupancy levels in existing industrial parks continue to rise. The development of new industrial units has been slow as a direct result of the economic downturn, and the associated impact this had on the construction sector.

However increasing labour costs in China and Japan continue to drive the demand for industrial property within Cambodia.

In particular, Japanese manufacturers are seeking opportunities to relocate operations to Cambodia. Demand for factory space mainly came from tenants in heavy industry. Manufacturers in the chemical and automotive sectors were particularly active in setting up plants in new markets, followed by companies in    the consumer electronics and industrial machinery equipment sectors.

The opportunities to relocate to Cambodia in search of better production prospects are supported by the improving infrastructure, in particular at the deep seaport of Sihanoukville.

The supply of industrial units will be a key influential factor in the growth of Cambodia’s economy, ensuring that foreign direct investment can continue to drive the markets. A number of industrial zones have been proposed for development within sites acquired for the purpose of satellite cities.

CBRE says these industrial zones will provide industrial units to the North, South, and North West sides of Phnom Penh, and will cover approximately 7,000 hectares of land in total. They will be supported by new infrastructure allowing further development of both import and export opportunities.

These developments are still likely to focus more on land disposals than matching market demand and supplying rental units. This can largely be put down to the low returns achieved from current rental prices.

Economic growth in Asia Pacific is expected to gather pace over the course of 2013 and reach around 4.8 per cent for the year as whole. The Cambodian economy has continued its high growth rate as real GDP growth has expanded to 7.5 per cent in 2013. Cambodia is one of the world’s fastest growing countries, and opportunities for foreign investors to capitalize on low production and labour costs will drive the industrial markets forward.

The demand for industrial rental units in prime locations remains high in 2013, as Chinese and Japanese companies look to relocate due to high production costs in their retrospective countries. However the increased demand is unlikely to be met by future industrial parks as the market is largely dominated by owner-occupied locally owned garment factories currently. CBRE predicts this will change as different manufacturers enter the market.Read Original text


6_Camko_city

Thu, 6 June 2013
6 Camko city

The coming sprawls of Phnom Penh’s new satellite cities will bring about not only opportunities but also challenges for the population.

“Any urban area has to sprawl outside the main city areas so that it can keep up with the increasing demand of commercial land,” said Chrek Soknim, deputy director at Vtrust Property Co.

He said the prices of land in the busy central parts of Phnom Penh are increasing from year to year, and some of the residents have sold their land and moved to suburban areas where housing prices are much lower. They can use their savings from the selling for their businesses or other purposes.

The expansion of the urban area is an organic process, and this results in an easing of heavy traffic to the main city because of the relocation of some of the population into the other areas. This makes traffic in the central areas less severe.

Soknim said once a satellite city is built, it will also establish infrastructures and important facilities that ease the lives of the people there. “People will move from the central areas into that place and open up businesses that complement one another there,” he said.

Some of the middle and lower class population could move to the new areas because they think the places are good to live, while they also spend less.

They could have more opportunities to generate good incomes, compared to the central locations of the urban area proper, said Soknim.

The expansion of the central city to the outskirts of Phnom Penh can also be a good solution to the rising population. The latest data obtained from Phnom Penh City Hall shows the current population is about 1.6 million, growing from 1.4 million in 2008, while other sources indicate more than 2.2 million people in the city in 2012.

Soknim said the central areas of Phnom Penh can’t accommodate all the inhabitants. “Relocating to the satellite cities is the way out to ease the state of an overcrowded population,” he said.

However, the establishment of satellite cities could take tens of years.

Some satellite city projects, such as Diamond Island and Camko City have come to a sort of shape, and they could be very successful. They have not been fully occupied by the residents, but they are attracting some people to move in.

However, experts say it is difficult to get access to amenities and facilities. People like to have amenities and facilities in place because travelling in a long distance to have those services is annoying for them.

But Soknim said “the trend of the population’s preferences towards relocating to the satellite cities is looming in the horizon.”

Soknim of Vtrust maintains that it could take between seven and 10 years for a satellite city to be fully occupied.

“As we see with Toul Sangker,” said Soknim, “immediately after its completion in 2000, not many people lived there, but now it’s a decade later and the block is full of residents.”

Some other projects like Boeung Kak Lake and Chroy Changva City that are expected to be complete sometime in the future should experience the same growth.

Satellite cities are growing quickly. The government approved $2.1 billion of construction projects in 2012, while it was only $1.2 billion in 2011, data from the Ministry Of Land Management, Urban Planning and Construction shows.Read Original text


2_Bali_scenery

Thu, 6 June 2013
2 Bali scenery

Phnom Penh’s image will change when the Bali Scenery building near the Hang Bridge next to Koh Pich appears in 2016.

The first 19 storey condominium building is built to the first floor, while the second condominium, with 32 storeys, is currently seeing piling work, which is expected to complete in July. Oung Kimsay, the general manager of Bali Scenery said “we are working actively day and night to complete the project as scheduled in 2016.”

“The features of the Bali Scenery condominium is a good location with appropriate price, beautiful styles and of high quality,” he said.

Bali Scenery involves two buildings - the first with 144 units over 19 floors covering a total of 863 square metres, while the second condominium has 32 floors with 378 units, with a total of 1,110 square metres with parking underground.

Leoung Chi, the sales and marketing manager of the condominium project said now 60 to 70 per cent of the project has already been sold to multinational clients. The first condo building will be completed at the end of 2014, while the second will be completed in early 2016. One house unit is priced from $99,000 to $280,000, he said.

“We expect great success because our customers are confident in the quality and beauty of the first condo located along 2004 (Sor La street). This new project is in a good location with many interests from customers because of its location and environment for living,” he said.

However, Loeung Chui did not specify the cost of the first condo, but according to Oung Kim Say the construction will be around $30 million, regardless of the value of the land.

The location can be regarded as first class and the location can be compared with the Rose Condo buildings, but what is important is the quality of construction and the design of the building, according to Sung Bonna, the director of Bonna Realty Group).

The success of this project will depend on sales, management, design and the quality of the building, he said.

Condominium location is in a great position next to the river and commercial services, supermarkets, international schools, banks and many other services that facilitate living in comfort, Dith Channa, general manager of VMC Real Estate Cambodia said. This project is also to help promote and attract tourists to visit Cambodia, he said.

“I think this project will be successful but everything depends on the value and also the quality of construction,” he said.Read Original text