The new approved project in Sihanoukville will be worth $656 million in 2023, a 44% of the total Investment

Sihanoukville has seen significant growth in new construction investment, driven by increased foreign direct investment and demand for new industrial plants.

According to the World Bank report, which cites data from the Ministry of Land Management, Urban Planning, and Construction, from January to August 2023, newly approved construction projects in Cambodia had a total capital of 1.5 billion, an 186% increase compared to the same period in 2022.

The investment in new construction projects in Sihanoukville reached $656 million, equivalent to 44% of total investment, an increase of 152% compared to the same period in 2022.

In the first eight months of 2023, the area of new construction projects reached 11.5 million square meters, an increase of 184% from 2022.

The World Bank points out that although most of these new construction projects are in the residential sector (about 50%), new industrial plant projects have increased significantly from 700,000 square meters (7.9% of the total land area) in the first eight months of 2018 to 2.8 million square meters (equivalent to 25% of the total land area) in the first eight months of 2023.

In contrast, tourism and commercial construction projects are declining in the first eight months of 2023, reaching only 200,000 square meters (2.1% of the total land area) and 1 million square meters (equivalent to 15.3% of the total land area), respectively. In the first eight months of 2018, there were 2.5 million square meters (equivalent to 27.5% of the total land area) and 2.2 million square meters (equivalent to 24.6% of the total land area), respectively.

These indicate an influx of foreign direct investment towards a more productive manufacturing industry. However, the hotel sector in Phnom Penh, Siem Reap, Sihanoukville, and border cities such as Poipet and Bavet is oversupplied.

It should be reminded that real estate investment in Sihanoukville was the first boom in 2018, with many foreign investors (mostly from China) investing in residential and commercial buildings and hotels. But with the government's decision to ban online gambling in 2019 and the outbreak of the COVID-19 epidemic, many construction projects have been forced to suspend or get stuck.

As of September 2023, a total of 965 new projects have been approved for construction in Sihanoukville and other areas in the province, with a total of 1,069 buildings and a total investment of $4.056 billion.

Currently, there are 364 buildings that have been suspended and stuck, 53 buildings under construction, 177 completed but not in operation, and only 434 buildings are still in use.

To help landowners, property owners, and investors who want to reinvest in these buildings, in March 2023, the government announced "package measures" of incentives, including tax and non-tax benefits.

Among them, any company that wants to invest in these buildings will receive a tax incentive with the following: a tax exemption on registration for real estate transfers between 2023 and 2025; a withholding tax exemption for real estate leases for 3 to 5 years; a 9-year income tax exemption; and a 9-year minimum tax exemption.