Cambodia is a developing country that attracts many visitors for its mother nature and historical sites/temples, also investors for Cambodia’s real estate are on the high. Thanks to that, Cambodia’s economy is on the rise and bringing in many foreign direct investments as well. Cambodia’s real estate has to take huge credit for all this FDI because this sector is the booming sector in Cambodia as of the past years till the present.
According to the World Bank, the largest engine of growth in Cambodia leading up to 2019 is the real estate and construction segment, which contributed to one-third of Cambodia’s GDP growth (Sangeetha Amarthalingam, 2021). The real estate credit growth in Cambodia as of December 2019 was at 37.9{2e40e2a64c474fde44a8242420ec4ab605f5053a63ed63fe5f4462e9bcb9f96e} and it consisted of any construction and owner-occupied housing, real estate activities, making Cambodia’s real estate demands the highest compared to the other segments (Sangeetha Amarthalingam, 2021). Then the pandemic (COVID-19) hit in 2020 and the sector came down a bit, but as of now, the year 2021, Cambodia’s real estate recovered by 60{2e40e2a64c474fde44a8242420ec4ab605f5053a63ed63fe5f4462e9bcb9f96e} already and is still lower than 2019 but will raise once again (Cambodia Construction Association, 2021).
Backed up by all the statistics, fast-paced growth real estate truly is Cambodia’s real estate. However, these are just figures with no explanations. Therefore, the real question is “What are the contributing factors to this fast-paced growth real estate in Cambodia?’’.
According to the Cambodia Economic Construction Development Corporation (CECDC), the construction projects risen to nearly $3.1 billion in Q2 of 2019 (Beyond Reality, 2021). We keep getting hit with numbers and statistics and we need to know how it got summarize into those figures. Thus, here are the reasons why Cambodia real estate sector has become one of the fast-paced growing sectors of all time:
- Growing Population
According to the World Bank Data, Cambodia’s population grew a 1.41{2e40e2a64c474fde44a8242420ec4ab605f5053a63ed63fe5f4462e9bcb9f96e} from 2019 to 2020. And as this article is being written the population in Cambodia is estimated to be 16, 956,036 based on the Worldometer elaboration of the latest UN data (Worldometer, 2021). About 24.2{2e40e2a64c474fde44a8242420ec4ab605f5053a63ed63fe5f4462e9bcb9f96e} of this population lives in urban areas, which rounds up to about 4.05 million people. Now, with the increase in demographics, the more the demand increases as well. When there are a lot of people living in urbanized cities or moving to live there, what do you think the demand would be? Yes, a place to live in, housing options, etc. Hence, more condominiums and apartment complexes are raising up, so the supply could be enough for the demand. Due to these stats and facts, Phnom Penh real estate game is sky-rocketing.
- Economic/GDP growth
The importance of GDP (Gross Domestic Product) growth doesn’t need wordings to describe, for a country is judged to be doing well economically or not by their GDP rate. Not proud to say this, but thanks to the pandemic (Covid-19), the world’s economy has been in recession recently. There isn’t a much-needed explanation for that since social distancing needs to be abided by in order to stop the spreading and flatten the curve. Many shops, restaurants, pubs, bars, local businesses went out of business because of the lockdown. This affected the entire world and recently still is. Cambodia’s GDP growth of 2020 went down by 3.1{2e40e2a64c474fde44a8242420ec4ab605f5053a63ed63fe5f4462e9bcb9f96e}, which isn’t much in comparison to other countries. Cambodia did quite well in prevented the outbreak from happening but that didn’t last long for in February 2021, unfortunately, there was an outbreak from inside the community. That was when it affected Cambodia most, with lockdowns and the closing of restaurants, clubs, pubs, offices, and schools that follow.
Hugely because the pandemic, caused the country’s GDP to fall, as GDP falls the economy goes down as well. As you can see, all of this is linked. Guess what’s next, when the economy isn’t doing well, people don’t earn enough money like they used to, and thus, where would the investment in real estate come from. Thus, this economic recession happening is a great example to show that if an economy is under much investment won’t happen as well. On the opposite side, investment in real estate helps the economy flourishes instead. However, this is an important point to take note of, for those who have money saved for investment, when an economy is periodically going down, such as this pandemic, you should invest in real estate while it’s cheaper. Afterward, when the economy climbs back up, your investment payback will blow your mind and you’ll earn a lot. Hence, Cambodia’s real estate sector still is attractive to many even during this recession.
- Strategic location
It is important where condominiums and apartments should be brought up. You can’t build it in the countryside and expect people to flock over to buy it. The best locations for real estate to peak at its fullest is hands down cities and urban areas. People tend to want to live in these areas, where they have better job opportunities with more pay, live closer to work, school, and other special facilities. This is why, Cambodian real estate is normally found in Phnom Penh, Siem Reap, and Sihanoukville. Positioning your building at the most wanted places is crucial and Cambodia has that figured out.
- Foreign direct investment (FDI) & international groups
When a country is called a “developing country” it will definitely attract foreign direct investments. Mainly because countries labeled this is like a gold mine to foreign investors. Plus, it is a win-win situation anyway. With their investment, they have their financial gains, whereas the country experience more development and would slowly become a developed country.
Cambodia last year, in 2020, received a total FDI of $3.5 billion in the real estate sector only and hasn’t included any other sectors yet. From this large figure, you could put two and two together to figure out why international groups and FDI are so interested in Cambodia’s real estate. That particular sector is already on the rise and now paired with more investments in it, thus making it boom even more.
After much analysis of Cambodia’s real estate sector, we have now told you everything you needed to know. The stats, figures, and numbers tell you how much of a fast-paced growth Cambodia real estate segment is. Furthermore, reasons, why Cambodia’s real estate market is booming, have also been discussed, such as the growing population, economic/GDP growth, strategic location, and FDI & international groups. One other thing to keep in mind, potential foreign real estate investment is expected from China in 2022 and 2023. Moreover, the Chairman of the BOD of CVEA, the CEO of Realtor 168 Co., Ltd, the President of Cambodian Valuers and Estate Agents Association, and the CEO & Chairman of CPL Real Estate Company, all stated that at the beginning of 2022, Cambodia real estate will begin to catch its momentum once again, since now in 2021 the pandemic is still on-going (Cambodia Constructors Association, 2021). Thus, Cambodia’s real estate will soon be booming quickly, once again.