Is investing in Cambodia in 2021 a good choice?

In the context of the Covid-19 epidemic since 2019, many countries around the world, including Cambodia, have experienced severe regional economic crises, with some companies and factories, enterprises and businesses has suspend its business activities temporarily. By 2020, the World Bank has forecast that Cambodia's economy is likely to grow at the slowest pace since 1994, falling between -1% in the prime scenario and -2.9% in the lowest scenario. Poverty may increase by 3 to 11 percent, especially among households involved in tourism, wholesale and retail trade, garments, construction, trade, or the manufacturing industry, in case they lose 50% of their income for six consecutive months. In 2020, the Asian Development Bank released a report showing that economic growth had slowed to -3.1 percent. If we look at the activities of the real estate sector, there is a stagnation, which is a worrying factor. However, in 2021, we have observed that those activities have turned to a slight improvement.

Can the economic situation in 2021 be better than in 2020?

* Support activities by the Royal Government

Since the outbreak of the Covid-19 outbreak in Cambodia in early 2020, government authorities have been working to put in place emergency measures to curb the spread of the disease and provide financial assistance to affected families, workers, and enterprises affected by the crisis. To facilitate economic recovery, the Royal Government has to ensure macroeconomic and financial stability, accelerated trade and investment reforms, and accelerated the use of digital technology in development.

In this effort, the Cambodian government has also expedited the speedy vaccination of Covid-19 to locals and foreigners living in Cambodia. As for the investment sector, the state has taken care of it and encouraged it with some facilitation. In fact, last week, the National Assembly of Cambodia approved some draft of new investment law, which made investors who want to invest in Cambodia more convenient. On the other hand, the Cambodian government is also focusing on adjustment to business visitors’ compulsory quarantine which is a way to revive the economy.

* Real Estate Expert Forecasts

Due to the support and care of the Royal Government, some sectors such as factories and enterprises have reopened their businesses, while the real estate sector has also been active gradually. But after being hit hard by the global economic crisis caused by infectious diseases in 2020, for 2021, both state institutions and real estate experts claim that even more than in the middle of 2021, the investment situation in Cambodia has not improved much, as the virus continues to spread in Cambodia, including many other countries. However, economists and real estate experts remain optimistic that more vaccinations could be a key factor in the country's economic recovery, as well as attracting more investment to Cambodia in the near future.

Chrek Soknim, President of the Cambodian Valuers and Estate Agents Association (CVEA), expressed his view that on this occasion, for those who have enough money, they should buy land or houses for sale or rent for profit after the price starts to rise next year or following year. Especially for those who have the money to buy a condo project that is affordable and in a good location, because the condo offers the opportunity to pay in installments for a long time, and after the end of the project can be resold at a high profit or can be rented at high price. But before buying, buyer should be sure to buy from a reputable project developer, avoid buying a project that does not run smoothly, which can cause losses. He also said at another meeting that currently, although there has been some decline in real estate sales, prices have not been significantly affected. Low and medium price land and housing prices have not changed much as the market focuses on the local population who are in high demand.

Phillip Tan, international real estate expert , marketing manager for PropNex Australia, also expressed his views on Cambodia, saying that he still sees Cambodia as a location of real estate investment opportunities for national and real estate investors, especially in Phnom Penh. He continued that compared to Singapore, Cambodia has many golden opportunities to invest in real estate to reap the benefits of the future as Cambodia will continue to grow with strong economic growth in the future. Investors can invest in Cambodia in many areas of real estate, such as investing in condominiums for a second home after their home country. He also stated that Cambodia will move towards a great development in the future as the country is on the right track with the right government for the country's development projects with economic growth over the last two decades.

* Major infrastructure projects to be completed in 2021

In the mid of 2021, the state presented two projects that have been completed, including:

1. National Road No. 3

The construction of National Road No. 3 (Chom Chao-Baek Kous-Kampot) has a total length of 134.79 km. It took 48 months to build which was built by China Bridge and Road Corporation (CRBC) and  technical inspection by Guangzhou Wanan Construction Supervision Co., Ltd. 100% completed.

2. Morodok Techo Stadium

The construction of the main stadium of Moradok Techo National Stadium (Main Stadium) has been completed in August 2021. At the same time, HE Vath Chamroeun,  Secretary-General at the National Olympic Committee of Cambodia and Secretary-General of the Cambodian SEA Games Organizing Committee (CAMSOC), stated that "So far, this construction has appeared as a complete achievement. All the properties mean that in the past we were left with some chairs, track and field, and football fields, but now it is completely done. The pool around the stadium, which represents Kasik Angkor, also filled the pool with water, and the pool lighting system, as well as the sound system inside, are also equipped. Therefore, all the construction, equipment and other work for this big stadium have been completed. Apart from this, there is only a small decoration left in the outer courtyard.

We can also understand that the more development projects there are, the greater the value of the investment.

* Real Estate result report in 2021

For Cambodia, in the first half of 2021, the number of construction projects, investment cost and area decreased by 11.4%, -34.3% and 29.9%, respectively, compared to the same period last year. This is according to the report of the National Bank of Cambodia released on July 22. According to a CBRE report released in July, only 5 out of 17 projects in the condo market have been completed as planned for 2021. In addition, the number of condominiums that will be completed in 2021 is projected to drop from 10,825 units to only 7,909 units due to some projects being suspended. The retail or supermarket market is still the worst hit, with supermarket tenure rates falling by an average of 4.6%. Similarly, the number of companies renting the office market also decreased by 3.8%. Also last week, according to a report by the National Bank of Cambodia (NBC), the banking sector's lending to real estate and construction as of the first half of 2021 was worth about $ 10.5 billion which is equal to 31% of the total loan size in Cambodia.