One of the many boreys that are under construction in Phnom Penh. Hean Rangsey
The government on March 22 issued a plea to developers of borey gated-communities and condominiums in Cambodia to ease some of the financial pressure facing customers to pay monthly instalments until the end of March 2022, in light of the Covid-19 pandemic.
It encouraged developers to waive penalties for late payments and to stop issuing them, the Ministry of Economy and Finance and the National Bank of Cambodia (NBC) said in a joint statement.
Huy Vanna, secretary-general of advisory firm Housing Development Association of Cambodia (HDAC), noted that the statement was not compulsory, but merely an appeal to the real estate community to assist clients with financial troubles.
Vanna met with senior officials of the ministry and NBC via video link on March 23.
“Participation will be on the voluntary basis of each company,” he said, adding that the optional nature of the statement did not warrant HDAC to issue a letter to its members.
Kim Heang, regional operating principal of Keller Williams (KW) Cambodia and owner of the Borey KS Residence along National Road 1, said while the appeal was a welcome gesture for cash-strapped homebuyers, it would be cumbersome for developers to comply.
He noted that project owners often take out instalment loans from banks to purchase construction materials, and modifications of customer payment plans could jeopardise their ability to pay back their debts or workers’ wages.
“The development of borey gated-communities and condos exclusively use working capital, in part from the owner’s own finances and customers’ payments. Predicaments involving working assets could lead to a slowdown or even a stoppage in construction.
“It is merely a call from the government, so each owner of borey or condominium development projects can size up how much they can chip in of their own accord during these tough times,” Heang said.
Nuon Rithy, CEO of Khmer Foundation Appraisals Co Ltd and owner of Borey Kien Svay Park, said the Covid-19 crisis turned economic emergency has had an impact on everyone’s financial situation, only made worse by the February 20 community outbreak.
The full involvement of all stakeholders, homebuyers, developers, construction companies, commercial banks and NBC would be required for the government’s appeal to be successful, he said.
He suggested that the central bank would have to intervene to change rules concerning loan repayments from developers to commercial banks. “As a rule, cash flows are fluid in nature. If any phase is obstructed, that could very well cripple the entire project.”
It is estimated that the Cambodian population will top 18 million by 2030 and the Kingdom will require an additional 1.1 million homes, according to the National Housing Policy adopted in 2014.
