For those of you who have been wondering whether it has burst yet following the world-wide financial crisis there is some good news and some bad news.
The good news is that it hasn’t burst – it has been deflating as I had predicted previously; so nothing new to report here.
The bad news, especially for those who still bought into the market in May and June, is that nothing is moving. Prices in Phnom Penh are down by up to 25% depending on the area – more in Phnom Penh Thmey and less in Toul Kork – no surprise there either.
West of Kompong Speu prices are starting to go down as much as 50% according to my information.
Korean mega-projects like Camko City and other big ones are still going ahead seemingly unfazed. Their financing was secured long before the crisis hit South Korea as well. But I know for a fact from one of the newer Korean banks in town that projects that were planned at the beginning of the year and to be begun about right now are on hold for the time being as they are still trying to sort out what will become of their financing. Boon Yong is one of the newer ones. They have a 10$-million project in the pipeline but are all scratching their heads now.
Traditionally construction is started at the end of September and beginning of October to take full advantage of the dry season. Just drive around Phnom Penh and you will see a lot of idle construction sites.
Another sector that is suffering, which has been widely reported in the newspapers, is the rubber industry. There has been a sort of a surge into agricultural land suitable for rubber plantations that even went into Koh Kong province, which normally is not known for rubber, up to the election. As we all know by now rubber prices fell up to 35% and latex prices up to 50%. I can tell you, though, that this trend is unabated as those plantations won’t be ready to produce until the trees are mature enough after 6 years. So this is still considered a good investment by most Khmer buyers who want to invest in something tangible. Predictions are that rubber prices will recover after the wintering season when the surplus stock has been depleted and the market has adjusted to a lower output.
Other agricultural land, though not completely unaffected, is also still actively sold at more or less normal prices.
Let’s wait and see what will happen to the mega-projects in tourism. Word is that people start saving on big ticket items, and international travel is one of them. My expectation is that Sihanoukville will look the same for some time to come. People who bought land in Sihanoukville can only hope for a rebound of the market in 2009 and 2010, if they have the breath to hold out that long.
Well, I bought land outside Sihanoukville for my own house. So I guess I will take advantage of lower construction cost now – iron and cement is cheaper, order books aren’t as full; so this looks like a good time to start.