From the PPP (obviously the author must be an anti-semite, a commie, and someone who hates rich people to even suggest that not all is well in Cambodia's overpriced wonderland)

Property-bubble worries prompt sit-down
Fri, 14 August 2015
Sor Chandara and Ananth Baliga
Amid rising fears of a potential bubble in Cambodia’s real estate sector, the government has called a meeting next week to address concerns of overheating in the sector, as high prices fuel anxiety of increased speculation in the market and a lack of demand-driven growth.

The Ministry of Economy and Finance has invited all relevant stakeholders, including the Ministry of Land Management, Urban Planning and Construction, the National Bank of Cambodia and private developers, to a meeting on August 18 to assess possible risks to Cambodia’s fast-growing construction and real estate sector.

“If prices are reasonable for the [purchasing] ability of the buyer, it is OK, but we are afraid that the high price is the result of speculation,” said Mey Vann, director of financial industry at the Ministry of Economy and Finance.

“If there is speculation, we need to find solutions to prevent this bubble price.”

According to Vann, another concern is the rising debt in the real estate sector.

He said that if developers are using their own capital to fund projects, there is less risk, but if they are accessing credit and then fail to complete these projects, it will result in “ghost buildings” and hit the buyer hardest.

“In 2008, we have just a few cases but it was not much, compared to other countries, to make us worried,” he added, comparing today’s market situation to the real estate slump post the global financial crisis.

Huy Nara, director general of the General Department of construction at the Land Management Ministry, was less cautious.

He said despite the increasing number of construction companies entering Cambodia, demand was keeping up pace with the supply.

“Even though there are some condos that are not yet sold but they will be OK,” Nara said. “Clients will come.”

While he was yet to receive an invite for the meeting, he said apart from discussing risks to the sector, the meeting will look at also improving the investor climate in the country to facilitate increased investments.

Earlier this year, both the World Bank and Asian Development Bank warned of the increase in credit to the construction and real estate sector, suggesting the strengthening of supervision and monitoring of such lending.

In lieu of these warnings, Grant Knuckey, CEO of ANZ Royal Bank, said the National Bank of Cambodia should increase vigilance of real estate lending; however, it was “much harder in practice than in theory”.

“Money ostensibly lent for productive activity can in reality be diverted for property investment – it can be hard to police,” he added.

A “classic bubble”, he said, was characterised by extreme over-supply, high leverage, which is the amount of debt used to finance a firm’s assets, and extreme prices.

Knuckey said that he didn’t see any of these criteria being met in current market circumstances.

“However left uncurbed, it is probable one [bubble] may develop given the trends are all moving in that direction,” Knuckey said.

However, Nguon Chhayleang, CEO of Regent Realty, a Century 21 franchise, said in the next six months he expected to see a “small bubble” forming in Cambodia’s property sector that could burst in a few years.

“It will be a combination of failing projects and lack of investors coming in,” said Chhayleang.

“If neighbouring countries open up their country, to attract investors, there will be a smaller number of investors and potentially the bubble will burst.”

Sung Bonna, director of the Bonna Realty Group, said the upcoming ASEAN Economic Community (AEC) integration could spark increased investor inflow to the sector and can balance the excessive supply currently in the market.

“If the AEC integration results in more activity and more demand, then construction projects will be completed,” he said.

“But if it is not much activity, then we will feel concerned.”

hanno wrote:I'd be sitting on the beach right now, drinking beers.

See, that's what I'm doing right now (even though not in Cambodia). Poor, poor Hanno

Maybe they mean the bubbles in your beer, hanno.

hanno wrote:I believe it when I see it. Here in Vietnam they have been saying for 15 years that the bubble will burst, A couple of rough patches for sure but if I had bought a few acres back when I first got here; I'd be sitting on the beach right now, drinking beers.

It is very tough to predict when a bubble will pop, but not as tough to predict that one will. Ron Paul started warning that the fed driven real estate bubble in the U.S. would pop in the 1980s. It popped in 2008. Everyone told him that he was crazy until the economy imploded in spectacular fashion.

It was easy to see the U.S. bubble pop coming though. Everything was loaned to the people at ridiculously low rates to people who had little money. I've seen a lot more money flowing around (cash wise) vs. the U.S., so I'd be a lot less worried. Maybe the Chinese are buying too many things up at the moment, but in terms of simple homes and basic land prices, no, I wouldn't worry.

When I see all these Boreis going up in and around Phnom Penh I can't help wondering who is going to buy all those houses for a minimum of $120K. The way it worked until now was that the people with some money bought it in the hope of re-selling it or renting it. Most of them did eventually; sometimes it even took a couple of years. But with this oversupply I don't believe this will happen again. What's that market integration got to do with it? First it was the foreigners that would buy the condos, now other ASEAN citizens? Once the law was changed to allow foreigners to buy condos they can come and buy any condo they want. Has it helped? I think not. The Chinese are buying up everything left and right, and they aren't even ASEAN. So what's the logic behind this? I don't think even the Chinese can buy up all that over-supply. In SHV it is the same. Who is going to buy all this? And who is going to fill all those new big hotels? There are too many hotel rooms here already anyway.

One thing is for sure, prices are way too high. One case in point how this works is one of my wife's nephews. He built a hotel in Kratie with a backer's money. He had some left over which he used to buy 2 ha across the street from the hotel. It is not even in a good location. He put up a sign saying he is going to build a borei. He bought the land - all rice paddies - for $5/m2 and had to spend another $10/m2 to fill up the low-lying paddies. He parceled it up into lots of 5 x 20m and now sells it for $80/m2. And don't think there aren't any buyers. He sold 20 lots in 2 weeks, all hoping to resell it for $100/m2. (Naturally, the first thing he did with some of the proceeds was to buy a $100K SUV.)

rubberbaron wrote:One thing is for sure, prices are way too high.

Yep, the prices, in PP especially, are ludicrous! There are still plenty of bargains to be found in towns such as SR, Battambang and Kampot, but that won't last much longer.

New article today from the PPP...

http://www.phnompenhpost.com/business/b ... downplayed

Last time I saw Real Estate agents being interviewed and predicting a minor bubble or no real bubble at all... was about 3 months before the market collapsed in Dubai. As for bargains to be had in Siem Reap? You have to be kidding, everyone seems to be valuing their shit at insane prices here... $160,000 for a wooden house on a tiny piece of land? If that's a bargain... I don't want it.