Cambodian Banks Had a $10.5 Billion Real Estate And Construction Credit Exposure At The End Of June

Compass Cambodia report, July 29 - According to the central bank, the Cambodian banking industry's combined real estate and construction loan exposure was $10.5 billion in end-June, accounting for 31% of the sector's $33.9 billion overall loan book.

Mortgages, construction, and real estate accounted for $4.44 billion (13.1%), $3.22 billion (9.5%), and $2.84 billion (8.4%), respectively, according to the National Bank of Cambodia (NBC) in its first-half report released last week.

According to the NBC, despite the fact that the Covid-19 outbreak is threatening national economic development, a number of government actions have contributed to a positive perspective.

The banking industry's significant real estate and construction exposure indicates that the market is still hot despite the Covid-19 issue, with banks conducting detailed investigations of applicants' financial flows.

Simultaneously, the primary request from real estate players to the banking industry is for interest rates on loans to be reduced, citing the Kingdom's notoriously high rates in comparison to other countries. Low interest rates will allow people to invest and build their capacity, as well as improve their families' living standards, given that real estate loans in the Kingdom normally have annual interest rates in the six to twelve percent range.

According to the real estate veteran, development momentum in the construction and real estate sectors would pick up in the second half, with the government's immunization campaign serving as the key driver of Cambodia's economic recovery.

The banking sector's important role in real estate and development, with a gradually rising trend of Cambodians using bank loans to purchase homes.

He said that some property buyers pay instalments directly to the developer, while others choose to take out bank loans, and that a large part of bank creditors are young, freshly married, and wanting to start a new life.

According to the NBC, construction on public and private construction projects remained busy in the first half of this year, as seen by a 16 percent increase in construction material and equipment imports year over year, following an 18.6% contraction from January to June 2019.

However, new project development slowed in January-June this year, with declines of 11.4 percent, 34.3 percent, and 29.9 percent in terms of number, combined value, and construction area, respectively, according to the report, which noted a particularly poor performance in the tourism and trade sectors.

Source: Compass Cambodia comprehensive arrangement

Editor: Malinda         Chief Editor: Sunnie         General in Chief/Executive Producer: Nicole

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