A north facing view of the rapidly developing skyline of Phnom Penh last year. Heng Chivoan
Cambodia approved more than 3,000 construction projects with a total capital investment of over $5.2 billion in the first 11 months of 2023, representing an almost 100% increase in financing year-on-year, as reported by the Ministry of Economy and Finance.
From January to November 2023, the government, through the Ministry of Land Management, Urban Planning and Construction, approved 3,142 projects covering an area of 12.69 million square metres with an investment of $5.255 billion, according to the finance ministry’s 2023 Socio-Economic Trends Report.
Although the number of ventures decreased by 684 over the same period of 2022, the total development area and capital investment saw increases of 92.8% and 99.7%, respectively.
In November alone, 218 projects were approved, encompassing an area of 362,517sqm and an investment of $145.7 million.
“The construction sector’s status in November was slightly better than in the previous month [October], while at the beginning of 2023, there was a significant recovery,” the report stated.
Chiv Sivpheng, general manager of the Cambodia Constructors Association (CCA), noted that the decrease in the number of investment projects, coupled with the increase in capital investment and construction area, indicated that most undertakings approved by the authorities are large-scale with substantial financing.
“This confirms the confidence of major investors, especially foreign ones, in investing in Cambodia,” he said.
Sivpheng added that the sector was expected to gradually recover from the severe downturn experienced during the Covid-19 pandemic.
“Political stability and strong economic growth are key factors attracting more real estate and construction investors … As direct investment grows, so does the demand for office buildings and factories,” he added.
Va Vireak, a real estate expert, spoke at the annual meeting of the Cambodian Valuers and Estate Agents Association (CVEA) in December. He said global-regional economic growth and the government’s intervention would soon revitalise the sectors.
He also noted that 2023 was a challenging year for the country’s real estate and construction market, across all buying, selling, renting and construction activities.
Based on forecasts from major international financial institutions like the Asian Development Bank (ADB), the International Monetary Fund (IMF) and the World Bank, he predicted that the country’s economic growth in 2024 would surpass that of 2023, leading to an improvement in the sector.
“I think now is a good opportunity for those who want to buy real estate or invest in real estate and construction, provided they have the right cash flow. However, if they rely on high-interest loans, they should refrain from investing,” he advised.
According to the finance ministry, a total of 4,275 projects were approved for construction by the land management ministry in 2022, marking a slight decrease of 28 projects compared to 2021, with a total investment of $2.968 billion, down by 46.8%.
Of the projects, 3,768 were residential, accounting for 88.1% of total construction requests, an increase of 48 projects from the same period of 2021.
