An uncompleted housing development in Phnom Penh. Supplied
Several real estate professionals have asserted that direct intervention by the authorities will greatly benefit homebuyers facing payment difficulties and also help residential developers and various housing projects secure sufficient funds to complete or expand their projects.
On January 3, Minister of Land Management, Urban Planning and Construction Say Sam Al organised a discussion forum with representatives of the construction and real estate private sectors.
The meeting included the participation of Chea Serey, governor of the National Bank of Cambodia (NBC), as well as leadership from the Housing Development Association of Cambodia, Cambodian Valuers and Estate Agents Association, Cambodia Constructors Association, Cambodia Microfinance Association, Association of Banks in Cambodia and representatives from numerous companies and stakeholders.
The discussion focused on two main objectives: finding ways to facilitate and coordinate procedures to provide companies and homebuyers with better loan terms through financial institutions, and in-depth discussions with banks, financial institutions and other stakeholders to successfully implement policies aimed at enabling all Cambodian citizens to access affordable housing.
The attendees also discussed the possibility of transferring clients who are purchasing homes through installment payments with development companies to financial institutions, which generally offer loans with lower interest rates and better repayment terms, with loan periods extending to 25-30 years. This would also help developers who are facing capital blockages to regain their funds to continue their projects.
Sam Soknoeun, president of the Global Real Estate Association and CEO of Sam SN Realty, told The Post on January 6 that government intervention is crucial in revitalising Cambodia's real estate and construction market, which has been quiet since the outbreak of the Covid-19 pandemic in early 2020.
Before the pandemic, individuals with about 30 per cent of a property’s value could find a financial institutions which would provide them with financing.
However, since the onset of the pandemic, financial institutions have largely ceased offering loans, with some institutions nearly closing loans for land or housing purchases altogether.
Soknoeun noted the government’s intervention would serve as a driving force to improve the housing sector in Cambodia. The meeting, especially the participation of the NBC, was very positive, giving hope to both buyers and developers in the housing market.
“What is especially remarkable is that the NBC has shown initiative by requesting financial institutions in Cambodia to offer loans to property buyers in developments, as we have seen some projects being stalled because some developers, after completing construction, were unable to sell their properties,” he said.
“Meanwhile, the instalment payments from buyers to the developers have faced challenges, leading to cash flow problems that have meant some developers have not finished their projects as planned,” he added.
He further explained that if the payment method could be transferred from the developers to financial institutions, it would ease the burden on debtors, as the interest rates with developers are usually around 12 per cent per annum, whereas loans through financial institutions would have lower interest rates and longer repayment periods.
Soknoeun emphasised that when working with banks, buyers would receive better interest rates and have more flexible payment terms, which would relieve their financial burden.
According to him, the seventh mandate National Assembly has been working diligently to resolve many issues in the land and construction sectors.
Dith Channa, a board member of the Cambodia Valuers and Estate Agents Association (CVEA) and CEO of Lucky Realty Co., Ltd, also believed that government intervention will help encourage more Cambodians to purchase homes, as the interest rates with developers are higher compared to financial institutions.
He added that it will also help developers secure immediate funds from banks to continue or expand their projects.
“Through these discussions, I believe it will contribute to improving the real estate and construction sectors in Cambodia. As a real estate professional, we really want to see the NBC and all financial institutions reduce the conditions for providing loans, especially for quality and promising projects, by adding more capital to ensure that each project can be completed as promised with buyers and help improve the real estate market,” he said.
On December 27, the government announced the formation of an inter-ministerial committee for affordable housing development projects. The decision aims to facilitate measures such as tax reductions, providing loans at lower interest rates and the construction of road, water and electricity infrastructure, among other initiatives, each designed to enable citizens to own their own homes.
