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 Bongthom.com 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.

The New Demonstration Law

I really don’t want to go into details – others will do that for me. What struck me, however, was the reporting taking place.

The VOA Khmer writes:

"The opposition parties voiced strong criticism of the section of the law that limits demonstrations to 200 people."

The Phnom Penh Post is a little more specific:

"Under the new law, gatherings of more than 200 people will require organizers to apply for a permit from the government at least 12 hours ahead of time."

If you read the whole VOA article there is not one mention of the actual context. They let it stand as though demonstrations over 200 will not be allowed. This is factually wrong reporting, tendentious, even malicious. Isn’t the press supposed to report the news? And they complain about the CPP-leaning press in Cambodia?

The Real Estate Market in October

On the surface nothing much has changed since my last report, possibly with the exception of townhouses (flat houses). Prices for those have dropped quite a bit. One can get an Eo flat for less than $25,000 in some areas. Naturally, the closer you get to the city the higher the prices. But the glut is obviously being felt all around now.

By and large, developments have basically stopped. Sung Bonna recently said in an interview that many developers are on the brink of bankruptcy. He said they claim to have built many units, but sometimes all you can see is three or four units in progress. On being asked for the names he politely declined claiming confidentiality. Of course, if he would name one of those guys in dire straits he’d possibly be playing with his life.

The exception are two big developments, Grand Phnom Penh, where work is steadily continuing, albeit at a slower pace as I noted before, and the Golden Tower, which really looks busy, besides being a major traffic hassle. The Canadia Tower is almost complete, though the grand opening has been postponed several times, now scheduled towards the end of the year. But it will open. Camko City is quiet as hell. When I drove through one glaring fault in its concept again became very apparent. The high-rises surround the townhouses in their middle. These are now complete, even boasting a few tenants. The landscaping looks nice, and it really would be a modern suburban development, if it were not for the skeleton high-rises casting their shadows over the townhouses. Come to think of it, it reminds me of a modern ghetto, in which people sort of live on top of each other. I am sure it all looked really nice on the drawing board, but wouldn’t it have been better to design it in such a way as to give the townhouse owners more ‘breathing’ space?

My reviews always focus on residential properties, for the simple reason that I am just not in the market for commercial land. However, Sung Bonna of Bonna Real Estate stated that commercial land dropped to an average about $2,700 from $2,800 per sqm last month. This neglected to mention the big issue of location. In order to explain his statement a little better I am showing a graph from his own latest brochure, which indeed gives a pretty good overview of what’s going on at the present time.


Looking for residential properties, as I am somehow always involved in due to family requirements, one can find out, though, that owners still haven’t learned much; learned much in the sense of the basic economic law – slack demand, decreasing prices. Everybody in real estate knows that buyers are far and few between. Sellers nonetheless maintain their oftentimes ridiculous price demands. I talked to a real estate professional about this, and he said that people keep their prices up because they know they will have to come down considerably if they really want to sell. So the often mentioned price drop of 40% or so won’t be advertised but will be achieved in face-to-face negotiations. I am still not convinced. I never encountered any great latitude on the sellers’ part. Unless it’s a fire sale, don’t hold your breath for getting real estate on the cheap – just yet. I do believe, but I am no clairvoyant, that the last air of the real estate bubble has not been squeezed out yet. Eventually, people who bought land left and right will sell it at less profit, e. g. if they bought for $32 to $50 per m2 and are now asking around $150 to $200 just because they think the area is worth that much and with no buyer in sight will see that the proverbial bird in the hand is worth more than two in the bush.

There are two modern developments, which will be completed in a month or two. They are almost identical; the floorplans are, though not the entire site. One is located in Stung Meanchey and the other one in Phnom Penh near the Wat Somroang Andeat. While the PP Thmey development is practically sold out (three units are still available), the one in Meanchey is having problems. The reason for this is that most of the units in PP Thmey were sold before the crisis, while the ones in Meanchey started selling after the crisis had hit. Row houses as pictured below are listed for between $125,000 and $155,000 for sizes varying from 6 x 12 m to 7 x 12 m. The original buyers are now putting some units in PP Thmey on the market for as low as $98,000 for the smaller unit. For people who don’t mind having no yard or garage, although there is room for one or two cars in front, and who like the uniform look of the whole site, these are actually pretty nice properties. I considered it at one time as a PP residence but decided against it because of the close proximity of the units. Your neighbors can directly look into your bedrooms. The balconies are adjoining and you can practically hold a barbecue with your neighbor, and you are both still in your own houses.



I came across one interesting development, which is now offering lots in non-standard sizes, e. g. 16 x 22 m at $100/m2. It is located along Thri Heng Road in Phnom Penh Thmey,which is in my opinion the up and coming area. The developer offers terms, e. g. $11,000 down with the balance over 5 years without interest. Alternatively, you can opt for monthly payments of $1,000 until the entire purchase price has been paid off. Compounded interest is around $4,500 on an amount of $35,000. This is not bad at all. According to the developer half of his lots have been sold; and each individual lot comes with its own ‘hard’ title. Of course, you can’t build on the lot until at least 50% of the price has been paid off, at which time the developer will transfer the title. In the U. S. this is called owner financing. Lo and behold, the developers are Khmer-Americans who have returned to Cambodia. If more people used these marketing strategies the real estate sector would become more competitive and could probably come back to life from its present dormant state. This kind of deal has its downside too, as most deals have. Until you have paid off your 50%, you don’t know what might happen to the developer and whether he might have used it as collateral for a loan. What if he defaults?

On the other end are owners with different marketing ‘strategies’ that offer a piece of land, size 11 x 20m, with a house on it for $55,000 ($250/m2) in an area about 15 km from the Monivong bridge and approximately 3 km from national road no. 1. The house is in a decrepit state and would need to be torn down. Here is a picture of the village.


These people must live in another world.

A word about Phnom Penh Thmey – it is the up and coming area in my view because it is located only about 15 to 20 minutes from downtown Phnom Penh during rush hour and you can do the distance in 10 minutes in normal traffic. Plenty of land is available, although you need to be careful about the sewage system, which is not in place everywhere. Sewers are put in by the local Sangkat, and they are not really eager to do this for a single property. So if you buy out there make sure you can get connected to an existing sewer line. Water is another big issue, but from what I have seen it is pretty much present everywhere, as is power. People looking to live in or near Phnom Penh should not forget to go and take a look there.

And a final word about the Dey Krahom development: nothing is being done on the site. The ‘boding’ complex is still an eyesore and should really be erased. The problem there is obviously that some people do have papers documenting their continued possession of the apartments since 1989. They are still asking outrageous prices. Of course, the land there is still worth about $4,000/m2, but who has the money these days to risk a major development with an uncertain economic outcome. This is the one aspect all the ‘human rights’ crowd failed to see when they asked for the Dey Krahom dwellers to be compensated at market prices. A good businessman will not look at something without at least medium-term planning. The land is just sitting there and has not been appreciating the last 2 years. That’s bad business in my book. Human rights are all fine and dandy, if you’ll excuse my flippancy here, but you cannot neglect the economic aspects. I don’t want to go into the legal or humanitarian aspects here. We all did that a while ago already.

The bottom line for real estate is that it is still dead and doesn’t look like it’s going to recover any time soon – probably not until the end of 2010.

Here is a picture of a realtor’s office in Phnom Penh Thmey. Believe it or not they are pros. It’s two ladies, mother and daughter, and they know their area and who is selling what like the back of their hands.

Land Evictions

The recent articles on land evictions in Bos village, Kaun Kriel, Oddar Meanchey, and in Chroy Changvar, Russeo Keo, Phnom Penh, make for disturbing reading. In some cases one can see the background, e. g. the heavily debated and widely argued Dey Krahom land dispute. In other cases the information is not readily available to an outsider. But since I am at present in Cambodia I tried to get behind the two stories by talking to a few knowledgeable people.

These sources said that the failures of the local governments lie at the heart of the whole eviction problem, that is, on the Sangkat, Khan, and provincial levels. For years and years the local governments have allowed people to settle practically wherever they want. This is probably a holdover from Communist times, during which the government was occupied more with party matters, doctrine, and the well-being of their functionaries than the welfare and lives of the population. As was often the case, people couldn’t expect too much help from their local leaders. They just didn’t care, or only if their own personal interests were affected. Like in all Communist countries a very active underground economy established itself and people took many matters in their own hands.

This carried over once Cambodia morphed from a Communist people’s republic into the State of Cambodia and then into the Kingdom of Cambodia. People were absolutely free to move and settle wherever they chose. During Communist times there still were some restrictions in place but not as harsh as in the Soviet Union or East Germany, for instance. The claims of many people to ownership of the land they lived on date back to that time. This is why one encounters claims such as in Bos village where some people state they have lived there for 30 years, which would put them there at around 1989, exactly the year the Cambodian governments recognizes as the start of ownership by possession (continued occupation). Under that tenet claims to ownership by people 40 and under without their parents living there with them, or without their parents who are now deceased ever having lived there, appear suspicious to begin with.

But regardless of age, the fact of the matter is that people live on land that doesn’t belong to them, unless the provisions of the land law or common law apply. No matter which law or regulation applies, however, one can’t really blame the people who are mostly ignorant of any legal underpinnings of their settling in certain places. It is a fact that local governments, and it would fall into their jurisdiction, allow people to this day to move from place to place unhindered, which of course is their right, buth they also let them settle on state land and use for their purposes. If it is in private hands the owner no doubt will quickly get them to move. Most empty lots both in Phnom Penh and in the countryside are guarded by someone sent there by the owners in order to prevent just that.

People routinely set up shop alongside roads to hawk fruit, vegetables, drinks, and snacks. Their ramshackle huts serve both as store and living quarters. Mostly they eke out enough to feed their family, and needless to say, they cry foul once the local government approaches them with their order to relocate. It’s, of course, exactly the same for people tilling a rice paddy or small mango grove in rural areas.

One good example is the road from Sihanoukville to Stung Hao, which I travel frequently since I own property there. This road is heavily traveled by trucks coming from the port using this road to get to highway no. 4. Many tanker trucks travel from the oil depots right after Hun Sen Beach to Sihanoukville and in the other direction to Phnom Penh.

Right after the port there used to be those roadside vendors and it was really a hassle to get through that stretch of road with all that truck traffic, not to mention the people on their motorbikes that usually go every which way, mostly a way least expected. Finally, the provincial government caught up with the situation and ordered those huts moved. It is not known whether they gave them a new location or they just told them to move. It appears as if the people were just told to move. So what they did was move their establishments about 3 km up the road right after the next village. Granted the road there is a little wider but you can just wait for the next order to move as traffic will certainly increase again once real construction of the new port in Stung Hao has begun, and I won’t even think about the time when it is finished.

Another example is Hun Sen Beach itself. Were it not for the unsightly pipeline jetty to the Sokimex and Total (is it?) depots this stretch of beach could become a major tourist attraction in the area. But every now and then one can see squatters who have set up shop and quarters there. Sometimes the authorities move in and get them to leave again. But hardly a week or two go by until the next family starts building some shack. This happens over and over again. Likewise at other locations one can safely assume that authorities just don’t bother until the time some developer comes along and offers to lease or buy the land. Authorities hear the word ‘development’ and get all excited without thinking much about what land they are talking about. They know this is state-owned property and they forget people might actually live there. Once the contract is signed they are really surprised to find out they now have to deal with people living on the land, and they begin to wonder how to go about it. First, and this is from a knowledgeable source, they normally send a policeman or lower official to the community and tell them they need to move soon as the site has been sold or leased. The officials don’t worry about rights violations or other, in their minds, ‘outlandish’ ideas.

In the vast majority of the cases the dwellers don’t have a title to the land. Most of them simply don’t know about it. For instance, I know a family in Kratie province that has owned land since Sihanouk’s time before Lon Nol. At that time they had proper titles and all. But all documents were lost during the Khmer Rouge period. They have been working this land since 1979 and nobody ever asked any questions and consequently nobody ever thought of getting proper documents. Only recently did the chief of the Sangkat tell them to file proper title to their land so their wouldn’t be any dispute later on. Similarly, these ‘squatter’ just didn’t bother with doucments. But now they are faced with relocation from land they thought was theirs. These people can be pretty obstinate and, therefore, they just don’t act on what the policeman told them. After a while, if the situation warrants it and if they expect stronger resistance, the authorities might offer an alternative location. Usually, people just don’t want to move from their accustomed place and simply refuse to leave. Now things get dicey. Khmer people in power don’t take disobedience well. In their eyes they have to act decisively, otherwise their whole authority would be undermined. Well, they usually first issue an ultimatum, maybe even a second one, but then they just move in with what is available them, which, naturally, is the local police force, and sometimes the local army commander helps out with a platoon or squad. Bulldozers and fires will certainly make those ‘hardheaded’ people move. This is, of course, heavy-handed by most standards, but according to my sources, if the authorities did not move in with force these people would just not move – the people who squat on the land ‘illegally’ to begin with. Illegally is correct, at least in most cases, but it only came to that because the authorities did not enforce their regulations in the first place. After all, the authorities are there to help and serve the people, but this concept has apparently not quite permeated all Khmer government circles. Instead of engaging in endless conferences, workshops, and meetings with unknown outcomes, perhaps they could sit down and think ahead of time in order to ward off those unsavory confrontations with their own people, the human rights organizations, and donor countries. It’s called advance planning.

There is one example, though, where the government did it right – and there may be others. The state owns quite a few rubber plantations in Kompong Cham and other provinces. All these plantations are in the process of being privatized. Some smaller parts of these state-owned plantations were leased to private smallholders. These small leaseholds were sometimes sold to other parties. Last year the government was negotiating to lease 5,000 hectares to a private company so it could finally get some benefit from their perennially mismanaged rubber plantations. In preparation it issued a directive that no current leasehold was to be traded and that the leaseholds were going to be terminated at the beginning of this year. It may not be a perfectly fitting example in the context of land evictions, but the leaseholders knew in advance they had to leave, and in order to avoid any undue complications and outcries from possibly deceived buyers of those leaseholds and self-appointed protectors of rights, the government let it be known well in advance what is was planning to do. In the end the whole situation was resolved in a civilized manner. It just goes to show that it can be done.

The Problem With the Sam Rainsy Party

The Human Rights Party and the Sam Rainsy parties’ merger is possibly off the table as they couldn’t reach agreement on a number of points, according to Kem Kokha. This together with my recent comment that Sam Rainsy (and Mu Sochua) lack broad appeal, made me wonder why the SRP doesn't want to take a slightly different tack. The lack of appeal was, of course, vehemently denied by partisan overseas Khmer by pointing to the respectable 21% they represent. My view is certainly an outsider’s view. I am not a member of the party, though I did talk to SRP people; but if I had the right to vote this is how I would think.

To the discerning observer the biggest problem is Sam Rainsy himself. To illuminate the point I am making let’s use an international example of a multi-party democracy that recently held parliamentary elections: Germany. For those of you who don’t read or watch international news here is a little background.

One of the so-called people’s parties, the Social Democratic Party, which normally gets between 33% and 40% plus or so of the vote slipped to a mere 23% . The loss of the Social Democrats is all the more noteworthy as they shared in the government of the last four years, could point to their record in governing the country, the foreign minister belonged to their party and they had several ministers in the government. So automatically this party had had ample exposure, although not as great as their coalition partner whose main candidate was the prime minister or chancellor as it’s called there. Nevertheless, the Social Democrats had been a partner in varying coalition governments the last ten years.

So why did the Social Democrats slip so much? And here is where I find some similarities between the SRP and the German Social Democrats; not so much in their results (both are still sizable) but in the profile of their party. One German political analyst tried to reduce the failure to one main point: this party conducted a campaign of saying “no” instead of saying “yes”. In other words, the Social Democrats highlighted the weaknesses of the Christian Democrats, thus giving them even more publicity, instead of focusing on their own strengths and alternatives to their political opponent. In addition the leading candidate was rather colorless, and, of course, during hard economic times people just don’t like to upset the cart by voting in too extreme politicians, e. g. the Leftist Party. The Social Democrats were not able to convince the large number of undecideds to vote for them. A certain disenchantment with politics also led to a larger than usual share of non-voters. As a consequence, the party chairman who is largely responsible for composing the party platform and the thrust of the campaign will resign from his position. The leading candidate will become the parliamentary leader of the party and most probably never again be the party candidate for chancellor, if history is a guideline. This practice, by the way, is commonplace in all Western democracies, possibly with the exception of Italy. Losers simply move back into the rank-and-file. 23% compared to erstwhile over 40% is just plain devastating for a people’s party.

In Cambodia you have an opposition party that revolves around a candidate who obviously isn’t able to reach a wider share of the population. As shown in Germany, those candidates usually step back and let somebody else shape the party’s profile. This is all but impossible with a party that bears the main candidate's name. Oftentimes, opposition leaders in third-world countries are able to formulate their message as being the liberator and the fighter for justice, equality, and freedom for all. Sam Rainsy certainly doesn’t fit that description in terms of liberating the country. He may have succeeded in creating the image of fighter for justice and equality. And if you ask the people, the vast majority think they have all the freedom they need.

It is striking that Sam Rainsy’s public persona is defined by his strident condemnations of the government. Although the party has a platform, incidentally very similar to the CPP’s, but the party leadership has not been able to promulgate clear alternatives and concise steps in how to bring about that much heralded change they stand for (to borrow a phrase from the Obama campaign). Instead they rely on incessantly hammering away at the same complaints of rampant corruption, impunity, violation of rights, etc. Regardless of whether these complaints are well-founded or not, and we know they are to a certain degree, the lack of a clear programmatic alternative and a well-defined identity have in my opinion proved more detrimental to the SRP; detrimental in the sense that the party could not achieve significantly better election results in 2008 compared to 2003. It would appear as though the constant barrage of criticism and condemnations of the Prime Minister and his government did not help the SRP at all. The party has a core constituency of about 20 or 21%. Outside this voter block people are seemingly just not convinced of the governability of the party.

The major problem, I believe, is the complete personification of the party. Sam Rainsy founded the party in 1996 as the Khmer National Party, only to find out that the CPP candidates in the 1998 election campaign usurped that name in describing themselves. After all, they were all Khmer nationals. This prompted Sam Rainsy to change the party name. The logic was that nobody could confuse that name with the CPP. Ranariddh incidentally followed the same logic when he founded the Norodom Ranariddh Party to make sure nobody mistook him as Funcinpec chairman that he used to be. Basically, in the aftermath of the 1998 elections the CPP and the SRP candidates were practically interchangeable. The wish for some sort power, be it local, regional, or national, not the issues seemed to be the motivation for most of them. (How else can one explain why a number of them switched to the CPP just before the last election?) What made the difference were the two party leaders. The people by and large don’t really care about Hun Sen’s past. So he was a Khmer Rouge cadre, but Funcinpec was in bed with the Khmer Rouge too, and this party won the 1993 elections - and both Sam Rainsy and Mu Sochua are former Funcinpec members. The SR party is clearly identified with Sam Rainsy. This could have been an advantage if the leader were more charismatic and knew how to mobilize the masses. That has not materialized.

The SRP wants to eliminate corruption, implement pay hikes for civil servants, including teachers, create a safe environment for foreign investments, etc. Remarkable was Sam Rainsy’s call for a $500 million stimulus package to get the economy out of the recession. He called for more public spending in general. How he would finance that remained a mystery, probably even to him. He referred to the somewhat nebulous figure of $500 million that could be saved by eliminating corruption. Nobody knows how that figure was established except that the former U.S. ambassador once came up with that estimate. Even if it were true you could not eliminate corruption so fast as to be able to reap the $500 million and put it into public works programs.

It boils down to the leading personalities of the two competing parties – just like in Germany or elsewhere. And here Hun Sen, despite the hate he evokes especially among the overseas Khmer, clearly has the advantage. He has the benefit of the most prominent public office there is in Cambodia. The country under his leadership has progressed, although overall progress, especially in the countryside, is slow. If you looked at the country in 1990 or even after the 1993 elections and you look at it now, you would know that there has been undeniable progress. Many people prospered during the real estate boom. Garment factories opened their door and created employment for about 300,000. Tourist arrivals boomed creating about the same number of jobs. Yes, they were all low-paying but jobs nonetheless, and about 60,000 or so were lost this year due to economic slump. Not much of the wealth in urban areas has trickled down to the rural poor. But new roads were built; rural people could see progress through that alone. Public safety was established. (If you don’t believe me you should have traveled from PP to SHV in the early 1990ies.) Hun Sen enjoys wide support among the rural population. He portrays himself as the simple person with the same roots as them. He is not an elitist like Sam Rainsy who is the son of a well-to-do family and moved to France when he was 16, studied there, had a career in finance and became wealthy in his own right. He is clearly not one of the people. Whether one likes it or not, Hun Sen, despite his controversial persona, holds the better cards.

Sam Rainsy exhausts himself in his public denouncements of the government. There is nothing concrete in terms of remedies coming from him. This is certainly not enough on which to base another election geared towards his persona, although there is time until the next one, which is more than 4 years away. Maybe a few strategy sessions and in my opinion nothing less than a complete make-over of the party, including a change in name, a sort of reinventing itself, is going to help move the party from being the permanent minority party, which may possibly hover at 20%. Maybe even a completely new leadership would be required.

A personified party is too singular. Saying ‘no’ cannot replace true content of a message – a message this party has not managed to formulate. And with the chances of a merger with the Human Rights Party dwindling it looks like the party is not able to incorporate different ideas on strategy and content.