Real estate growth to slow in next five years, IMF predicts

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The International Monetary Fund has predicted that growth in the Kingdom’s real estate sector will slow in the next five years. Hin Pisei

The International Monetary Fund (IMF) has predicted that growth in the Kingdom’s real estate sector will slow in the next five years.

And while insiders say the sector is saturated, government officials seem to disagree with the IMF’s forecast.

The IMF’s Cambodian Economic Growth Report released on Tuesday predicted that the country ‘s economic growth will continue to remain robust for another few years, before falling to about six per cent in the medium term due to subdued productivity growth, credit maturity and real estate cycles.

“Currently, the real estate and construction sectors are strong drivers of economic growth, but five years [from now], other sectors will [drive] growth [more] than [real estate and construction],” IMF representative Jarkko Turunen said.

CPL Cambodia Properties Ltd chairman and CEO Cheng Kheng who runs the oldest real estate firm in Cambodia said the sector will remain strong for the next five years.

“The real estate and construction sectors in Cambodia currently have strong momentum in just three to four provinces for the next five to six years, I think that they will continue to pick up in other provinces with potential. The real estate sector in Cambodia will continue to grow for a long time,” Kheng said.

Cambodia Constructors Association secretary Chiv Sivpheng said large construction projects take three to five years to complete, so the IMF’s forecast could come true amid the completion of some of them.

“Upon completion of [a project], investors do not make new investments immediately, waiting until the project is sold out so that even if the investment falls short for a time, it will recover afterwards,” he said.

But Sivpheng said the construction sector is now on the rise without signs of slowing.

Emerging Markets Consulting senior advisor Nget Chou said the market will be saturated in five years due to the rapid surge in large construction projects.

However, he said Cambodia’s real estate sector will continue on the upswing thanks to the influx of Chinese investors.

“The real estate sector in Cambodia for the next five years may decline somewhat, but if the Chinese continue to come and invest, it will be as good as always,” he said.

Reports from the Ministry of Land Management, Urban Planning and Construction showed investment capital in the construction sector for the first half of this year was some $2.15 billion only, whereas it was over $6.4 billion over the same period last year and $5.26 billion in 2016.

Ministry spokesman Seng Loth said he did not know what the IMF’s forecast was based on, but judging by the momentum of the construction sector, he still believed it will continue to grow even stronger.

“We cannot say that growth in real estate and construction in Cambodia will reach maturity in the next five to six years because developing countries obviously need constant construction,” he said.