Thursday, July 28, 2005

Good economic performance boosts Cambodia's building boom

Cambodia's construction industry is rapidly expanding in recent years, thanks for the political stability and better economic performance.

The number of new apartment built in Phnom Penh is increasing by 8,000 to 10,000 each year, and new houses are gradually selling out after construction is complete, according to a Municipal land management official recently.

And in tourist city of Siem Reap, home of world famous Angkor Wat temples, more restaurants, hotels and guest houses have been built to meet the demand of the increase of tourist arrivals.

Five years ago the total number of building permits approved was 671. By last year that number had jumped 46 percent to 981, local newspaper Phnom Penh Post reported.

At the same time, over the same period, the total number of homes being built has skyrocketed - 8,879 new home constructions approved in 2004 compared with 1,182 houses built in 2000, a jump of more than 650 percent.

In Phnom Penh's emerging building boom, one of the biggest private projects is a 6,000 square-meter villa under construction on Norodom Boulevard, south of the Phnom Penh International School. With a total land area of 10,000 square meters, the new home will include a 30-meter outdoor swimming pool built on a first-floor terrace.

The booming of Cambodia's construction is driven by three major factors, according to industry analysts: the political stability; the robust economic performance in recent years; and continuing assistance from the international community.

Cambodia is one of the most open economies in the developing world. Since early 1999, the government has intensified its economic reform program.

Some business experts say the boom suggests the economy is doing better than organizations like the World Bank have estimated.

The country has achieved high economic growth of 6 percent to 7 percent annually these years, with single-digit inflation and stable exchange rate and steadily increased international reserves.

Development assistance to Cambodia from the donor community, including multilateral and bilateral donors and international organizations, has averaged about 500 million US dollars every year since 1993.

Moreover, the country is under-going a gradual shift from the agricultural economy of the 1980s towards one emphasizing textiles, tourism and services.

Thanks for political stability, the improved macroeconomic situation and the openness of the economy, Cambodia attracted increased amounts of foreign direct investment.

And another factor, according to the government, is that each year 40,000 people are moving from the provinces into the capital, driving a flourishing market in suburban housing development.

As property prices in the center of the city surge, more families are opting for more affordable housing in satellite suburbs on the outskirts of town.

At least 10 housing developments are under construction around the city at present. Examples include Happiness City, Very Lucky City and New World Two.

"Mostly high-ranking officials working with the government will live here," Happiness City's marketing official Sokun Monika was quoted by The Cambodia Daily as saying. He said that villas sell for up to 170,000 US dollars.

Well before its scheduled 2007 opening, it has sold almost all its 300 villas and apartments, Sokun Monika added.

However, Chhuon Sothi, chief of the Municipality's Land Management, Urban Planning and Construction Department, said recently that the construction of apartments is enjoying a windfall on the market for the time being, but in the next three or four years, the market could peak.

And the lack of standards for local architecture, engineering and construction firms is inhibiting Cambodian companies from competing with their foreign counterparts.

The country's entrance into the World Trade Organization urges local companies to become more competitive, ultimately developing the domestic construction industry.

Cambodia has 35 architecture companies, 58 engineering companies and 212 construction firms.

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