Wednesday, October 28, 2009

The Real Estate Market in October – Addendum

A couple of comments asked about the situation in Sihanoukville and also about constant flooding in Phnom Penh Thmey.

I left out Sihanoukville, although this is more or less my home market, because there really isn’t anything to report as the market is as good as dead. Beachfront property is offered at $300-$350/m2 (Otres Beach). Under normal circumstances this is way too low as you only have so much given beach in any country. In Western countries beachfront real estate is as valuable as inner city properties. Like inner city land beach front land is irreplaceable. Once it’s gone it’s gone. But in the absence of any major development, both residential and tourist, these prices can only serve as an indicator. The same maxim applies here just as in PP – if people need money they will sure be ready to negotiate. But I suspect that the people owning those properties all have money enough and don’t need to haggle. They can just bide their time. Back in 2007 I negotiated for one hectare and got an offer for $100/m2. I was planning a small modern resort at the time, but the financing fell through. This just goes to show how prices developed even without any development in sight. Similarly, Ream State Park was divided in the National Park and a zone available for tourist development. The government even announced an agreement with a Chinese company in 2008, if I remember correctly, but nothing has happened. The park is as pristine as it was before, if you disregard some slash and burn practice by local people.
In all other areas there is no visible activity – both residential and commercial. Just compare the number of listings on with other provinces.

The situation of SHV applies to basically all the other provinces too. It’s really hard to gauge it when there is no activity to speak of.

As far as agricultural prices go they are holding steady. Prime fertile land in Kompang Cham and Kompong Thom is still around $3000/ha. Rice paddies in outlying areas might go for about $2000/ha.

I said I consider PP Thmey the up and coming area. I stand by that statement despite of the fact that parts of the area suffer from severe flooding during the rainy season, and especially this year with typhoon Ketsana and a longer than usual season. It appears as if the dry season is now slowly being ushered in. I am showing a Google map of the area indicating the areas.

Click on the map to zoom in - the black vertical longer lines roughly outline PP Thmey, the shorter lines delineate the flood-prone areas north and west of them.

It also depends largely on whether the land was filled up with dirt to road level or whether it is still low lying former rice paddies as you can see from the following pictures. Click on picture to zoom in.

Low lying - semi-flooded - ready for development once filled up.

Completely flooded - low lying.

Contrast between lot filled up and adjacent lot still flooded.

Entire area completely filled up, consequently dry.

Two inhabited lots on the road (in the background) - what are those poor buggers supposed to do?

Parcelled land, ready for development

It won’t take long before those ‘wetlands’ will dry up and look normal again. If somebody will develop their piece of land they will start doing this right about now. Filled-up land is, of course, easier to sell and much more attractive to the buyer’s eye. I personally wouldn't mind buying a lot like these provided that it is or can easily be connected to the public water and sewer system. One m3 of dirt is about $3; usually one needs to fill up about 50 cm. With a lot of 4.5 x 20 m you are talking about $135 to $150. So if somebody wants to buy in the area and needs some advice email me. I am not an agent so I am not interested commissions. It’s a free service.


Anonymous said...

One would need great affection for this area to invest, build and live in a flooded environment.
You can raise your plot but you would be an island surrounded by wetlands.
I don't suppose anything is being done to in terms of infrastructure and drainage is there?
Not my cup of tea.

KJE said...

I just read this comment. In fact, the city government is putting in drainage pipes and a pump station so high waters can flow into the Mekong river. Up to now the flooding receded with the reversal of the water flow on or around Pchum Ben.

Anonymous said...

thanks. Keep the picts coming they add value to the blogsite and inform the visitors.
Keep up the good work.