Expert: Loose Real Estate Loans pose a huge risk to buyers

Mrs.Ann Sothida, real estate expert and CEO of CBRE Cambodia, recently voiced concerns that real estate buyers in Cambodia are at high risk of being overwhelmed by loose property lending, especially from project owners.

The concern comes after several international organizations urged Cambodia to tighten lending measures on the property sector to avoid risk.

The latest report from International Monetary Fund(IMF) shows that lending to property developers in Cambodia remains under scrutiny and not well managed yet, that's a worrying factor.

Likewise, the Asian Development Bank (ADB) recently warned that Cambodia should reduce the financial risk arising from lending to real estate.

Around this problem, Mrs.Ann Sothida explained that she was less concerned about bank loans because most banks have strict policies and controlling before lending, and the management of the financial system is the obligation of the National Bank. But she is very worried about the loan provided by the project owner.

Real estate projects in Cambodia, including residential projects, land lots have been growing steadily.In addition, each real estate project has its own mortgage loan service which is an attractive option for buyers,looking to buy their first home or land or new home.

While the real estate market in Cambodia is highly competitive, approvals of real estate loans that require monthly installments of customers seem loosing in order to entice buyers to buy real estate quickly.

Mrs.Ann explains: “The problem now is that the project owner is less restrictive to the buyer.We can say that they haven't study carefully on the buyer's living standard, could get result in a monthly payment or not. "

“What they focus on is selling a lot of their projects and selling out on time. This is a major issue, as in the case of the buyer being unable to pay the full amount or the monthly payment to the project owner, the project owner will take away the contract. So the loser is the buyer. ” She continued.

She also called on buyers to carefully consider their financial situation before deciding to redeem a property to avoid risk of unplanned risks.

It should be noted that , according to the "Asian Development Outlook 2019(ADO), credit to the private sector increased 26.4 percent year-on-year through June 2019, while real estate lending increased 37 , 2%, housing loans increased by 39.4% and construction loans by 32.1%.(This news came from Construction-Property.com)