Phnom Penh comes of age, forty years on

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Just over 40 years ago, Phnom Penh’s Boeung Keng Kang I (BKK1) commune was covered in undergrowth, with ruined villas and bungalows, forcefully abandoned by a people.

They were marched off to the provinces by Khmer Rouge soldiers as part of the regime’s social engineering policy. Those who escaped in time probably left unscathed but many didn’t.

BKK1 commune chief Prak Maly still has visions of blood-stained clothes found in an empty house which tell a grim story.

“As a community member then, I was tasked with collecting details from people. On one of my visits, I walked into a house, thinking that people lived there.

“Instead, I saw some clothes covered in blood lying on the living room floor. I can almost imagine what might have happened to the person wearing it,” she says.

The commune, which is part of the newly-created Boeung Keng Kang (BKK) district, has been Maly’s home since she first moved in with her only surviving sibling in 1979, after the Khmer Rouge’s fall.

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BKK1 commune chief Prak Maly stands before her office, which was once a vice den. The 1940s building has stood the test of time in an ever-changing BKK1. Sangeetha Amarthalingam

She lost her parents and seven siblings during the war. The 68-year-old remains the first commune chief, a post she has held since the 1991 Paris Peace Agreements.

“After finishing a three-month political course, my friend suggested that I move to BKK1. When I came, this place was a jungle.

“About 100 to 200 families lived here. Many buildings were in ruins, riddled with bullet holes after being bombarded during the war.

“It was scary to walk on the streets which were darkened by trees even during the day. My imagination always got the better of me,” she recalls.

The Kampong Cham native first lived in a villa on Street 310, one of BKK1’s main roads. In 1997, she sold the lot with the house and moved to a secondary road in the same commune.

The sale provides a good idea of what the prices of land were like in BKK1 back then.

“We did not have much money, so my husband and I decided to sell our place, which measured 550sqm. We agreed to a price of between $20,000 and $40,000, which is equivalent to $3.5 million to $4 million in today’s value.

“It was big money then as it is now. We were able to get another place and save a tidy sum too,” Maly says, grinning.

A rough calculation shows that she sold the land at about $37 to $73 per square metre. For perspective, the average monthly minimum wage was around $30 then, while civil servants earned between $150 and $200 per month.

The buyer tore down her house and built an office unit which still stands today. This essentially portrayed the beginnings of modern development in BKK1 and its neighbouring communes – Boeung Keng Kang II (BKK2) and Boeung Keng Kang III.

These, together with Olympic, Tumnop Teuk, Tuol Svay Prey I and Tuol Svay Prey II communes make up BKK district, which was established after Prime Minister Hun Sen signed a sub-decree on January 8, last year, which separated it from Chamkarmon district.

Over the past two years, development in the capital has begun to shift from BKK district to Prampi Makara, Tuol Kork and Daun Penh districts.

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For a long time, these sites were mostly dominated by small-scale private developers who turned villas and bungalow units into low-rise office buildings or apartments.

The trend used to be that enterprising locals who owned small plots (around 500-600sqm) of villa land in the city would build apartments comprising 40-50 units, as they lacked the skills and knowledge to carry out large-scale projects.

“These developments provided the sole proprietor with long-term revenue through rentals,” says Cambodian Valuers and Estate Agents Association president Chrek Soknim.

BKK1 was among the first to adapt to changes, starting right after the peace agreement, with the arrival of UN bodies and other foreign NGOs.

It complemented the area’s affluent image, seeing that it was already populated by high ranking government officials.

These underlying factors and its proximity to commercial business districts probably drove land prices up in BKK1, and it continues to do so two decades on.

However, development in the commune has not slowed down.

“Looking around, I think there is only 20 to 30 per cent of old BKK1 left,” says Maly, whose 1960s office, a former vice-den-turned-commune-and-police station, is among them.

The scenario is prevalent in key city areas in Phnom Penh where traditional communal zones featuring a motley of terrace townhouses, standalone houses, villas and makeshift huts are being devoured by office, residential and commercial spaces.

Demand for the latter is born out of stable economic growth, increased foreign investment, higher incomes and a burgeoning bourgeois society.

It is inevitable, says WorldBridge Group chairman Sear Rithy. “When the middle class grows, their appetite changes.

“More than 10 years ago, we had no cafes but now we have international coffee shops everywhere. I know that nearly 15 new restaurants open daily in the city,” he says.

Cambodia’s conducive business environment, young economy and population form a charming profile for investors, who are drawn by the massive opportunity to grow their market size through long-term investments.

“I feel that Chinese investors are daring. I call their people dragons. Wherever they go in the world, they move like waves. They are good for the country ... like a starter to bolster Cambodia’s economy.

“Once the economy is stable, the business to go into is property development,” says Rithy, a property developer himself.

But what does all of this mean to regular Phnom Penh residents who are witnessing the rapid alteration of communal living as modernity beckons?

Provisional figures released by the National Census Committee in August put Phnom Penh’s population at 2.1 million as of March 3, while a July 2018 Ministry of Public Works and Transport data shows that there were 2.2 million vehicles registered in the capital then.

With more than one vehicle for every person, it suffices to say that the city is groaning under large-scale property development and increasing traffic congestion as road infrastructure and amenities have yet to catch up.

As more lakes are filled and construction rises, the situation can result in dire consequences.

A 2017 World Bank report on urban development stressed that to realise the long-term vision of the Phnom Penh Land Use for 2035 master plan, the government should issue enabling regulations and codes, invigorate existing urban planning processes, and strengthen technical capacity.

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Although it acknowledges that rapid urbanisation in Phnom Penh over the past decade has created jobs and reduced poverty, there have been mounting challenges in the provision of basic services, including drainage, wastewater treatment, public transport and solid waste management.

The World Bank recommends that an integrated and comprehensive master planning process with a detailed land-use plan is essential to ensure that spatial planning, land use, infrastructure development and service delivery keep up with the population growth.

On a policy level, the bank says it should be done in tandem with existing sectoral and thematic master plans such as the Phnom Penh Urban Transport Master Plan 2035, Phnom Penh Master Plan for Drainage and Sewerage 2035, and Phnom Penh Green City Strategic Plan 2016-2025.

“It is essential to ensure that incentives for densification are created to avoid an inefficient pattern of urban growth,” said the global lender.

Generally speaking, the move to ensure sustainable development is good for a young city that is facing a growth spurt but the effects of gentrification are starting to show in local businesses, particularly those smack in the city centre.

Sole proprietors such as mechanics, grocery shops, tailors, hardware traders, clothes, electrical shops, and furniture dealers that serve the locale are aware that with the gradual draining of their clientele, it is only a matter of time before they pack up shop due to slowing business.

Property firm CBRE Cambodia associate director James Hodge says when a city becomes more metropolitan, it is up to its businesses to survive and adapt to the environment and the changing way that consumers require their services.

He cites an example of a cobbler in central London, UK, who, in an effort to survive, might be able to provide an authentic experience which would cost a significantly greater amount of money.

“Therefore, it is about the authenticity and quality that they [the traders] are able to deliver. You can be more confident in that kind of supplier than you could with a mass-market brand. So people would go there for the experience.

“The same could happen here over time. Brands can grow their identity or modernise to become attuned to customers’ changing taste,” Hodge says.

Flanked by a fancy Japanese restaurant and dry cleaner, one can easily walk past a tuck shop, dwarfed by a condominium towering behind it. Back then, it had no immediate neighbours. Today, global coffee chain Starbucks and a posh nightclub are just a stone’s throw away.

“When my husband and I moved here in 1986, this land was just an open muddy space. The residential buildings in front of us were empty, abandoned during the Khmer Rouge,” says the 55-year-old shop operator, who declined being named.

As a civil servant – a technical officer with the Ministry of Commerce, she says her family could not afford a house, deciding instead to build a small place which saw little extensions over time.

“After I left the public service in 1993, I sold foodstuff from a pushcart near Olympic City before starting this shop in 2010. Initially, I thought I would set up a mart-like shop but changed my mind because it needed more capital,” the mother of two says.

She converted her porch into the tuck shop which now caters to construction workers, office staff and the odd passer-by in the BKK1 neighbourhood.

“I don’t earn as much as the retail chains in this area but I am pleased to be of service to my customers, who are mostly locals,” she says, while tending to a motorcyclist who came to buy ice cubes, and mobile credit.

But the pressure to sell and relocate is imminent. Soknim says many city folks have been selling their property for “good money” to developers or entrepreneurs in the hospitality industry and resorting to gated-community abodes in the capital’s nine outer districts, which cost less than condominium units.

“Older properties that remain in the city are mostly shop lots where families run their business on the ground floor and live upstairs. However, their numbers will reduce as time goes on,” he adds.

Currently, the average price of land on BKK1’s main roads is about $5,500 per sqm, making it the costliest in the city, while land on smaller streets in BKK1 and BKK2 can cost around $4,000 per sqm.

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A grocery shop on Street 288, BKK1 bides its time before it gets swept under the wave of development. Sangeetha Amarthalingam

Northwest of the city centre, plots in Tuol Kork district cost between $1,800 and $2,500, which is the latest desirable development address for developers.

CBRE Cambodia data shows that nine condominium projects featuring 6,470 units were launched in Chamkarmon and BKK districts last year, the most compared to the other districts.

On the whole, 27 projects comprising more than 16,500 units were launched in Tuol Kork, Prampi Makara, Meanchey, Chroy Changvar and Sen Sok districts.

Condominium supply rose 27 per cent year-on-year last year with 18,000 affordable (23 per cent), mid-range (53 per cent) and affordable (24 per cent) units compared to 14,170 units in 2018.

By the end of this year, CBRE Cambodia forecasts that 28,000 units will enter the market – mid-range units priced around $2,500 per sqm accounting for 46 per cent, affordable units ($900-$1,950 per sqm) 30 per cent and high-end homes ($3,600psm to $4,000psm) 24 per cent.

“Condominium prices have been stable over the last year. We have seen some slight reductions in the mid-range sector while affordable pricing has crept up a little.

“The demand is very good for affordable and mid-range segments, driven by Cambodian millenials,” says Hodge.

However, developers are expected to face challenges in condominium development as the market becomes more competitive. Rental rates for condominiums could experience some downward pressure with increasing supply.

Former government clerical staff Sothea (not her real name) points to a space diagonally opposite her house which is being developed into a condominium by a local tycoon.

“There used to be a villa there,” she says, sipping iced tea at her sister-in-law’s stall in front of her house.

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This part wooden house located amid modern buildings offers en suite rooms to city dwellers who pay between $150 and $200 rent monthly. Sangeetha amarthalingam

Off Sihanouk Boulevard (Street 274), Street 57 exudes a quiet but wealthy feel. Over the 30 years Sothea has been there, it has transformed from empty plots of land to commercial lots which now host chic cafes, hotels and plush residences.

Squashed in the middle of that opulence is her part-wood-part-brick three-bedroom house, which has a moderate size driveway and courtyard.

Phnom Penh-born Sothea, whose parents worked for the royal family – her father a soldier and her mother a cook, settled there in 1989 due to its proximity to the palace.

“I have lived here for more than 30 years with my parents. My children were born here. This house holds a lot of memories for us. While everything else changed around us, we stayed put but I don’t know for how much longer,” says the 67-year-old.

Her son has been pleading with her to live closer to him and his family in the outskirts of town, which she is inclined to do, although with a heavy heart.

“I am going to miss this place when I leave, but I have to go soon. The tide is changing,” she says through tears.