Building investment crumbles

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Capital investment in the Kingdom’s construction sector fell 9.6 per cent to $5.868 billion from $6.494 billion in the year-ago period. Hong Menea

Capital investment in the Kingdom’s construction sector in the first nine months of this year fell 9.6 per cent to $5.868 billion from $6.494 billion in the year-ago period, the Ministry of Land Management, Urban Planning and Construction reported.

It said it approved 3,739 construction projects (covering 12.91 million sqm) during the period, up 306 or 8.9 per cent from the 3,433 (on 13 million sqm) given the green light during the same time last year.

It noted that residential projects now comprise a larger market share.

Cambodia Constructors Association general manager and secretary Chiv Sivpheng told The Post on Wednesday that lockdown restrictions had led to a sharp drop in foreign investment in large construction projects in the Kingdom.

But local investment activity in borey, flat and villa projects has maintained its momentum, he said.

He pointed out that the recent announcement of the Koh Norea satellite city in the capital’s Chbar Ampov district – southeast across the Bassac River from Koh Pich in Chamkarmon district – has sparked renewed interest in large investment projects.

“The current downswing in capital investment is largely due to Covid-19 concerns; we’re sure to register a rebound before long,” Sivpheng said.

Khmer Foundation Appraisals Co Ltd CEO Nuon Rithy said Covid-19 measures had thrown a wrench into plans for larger international investment projects, limiting the number of applications and groundbreakings.

“Capital investment can be moved through the banking system, but project owners of each development are required to make personal visits to the sites.

“This is what led to the drop in capital investment for large projects during the period, especially from Cambodia-based international investors,” he said.

On the other hand, Rithy pointed out that a steady stream of new housing investment projects had begun to pop out, buttressed by money from local developers. “Local investors are on the rise now, and they are splashing money on residential constructions,” he said.

Overall real estate sales activity had not quite regained its pre-Covid-19 levels, he added.

Ministry secretary of state Lao Tip Seiha recently told local media that Covid-19 had led to many construction projects being postponed, especially large projects, which he said require permits from the ministry.

But small projects, whose final regulatory approval is in the hands of Phnom Penh and provincial departments of Land Management, Urban Planning and Construction, have enjoyed a more than 24 per cent surge in capital investment in the period from January-September, he said.

The ministry last year approved 4,446 construction projects (up 55.07 per cent from 2,867 in 2018), worth some $9.353 billion (up 78.88 per cent from $5.228 billion in 2018), on a total area of 18.54 million sqm (up 62 per cent from 11.42 million sqm in 2018), it said in a report.