Real es­tate growth to slow in next five years, IMF pre­dicts

The Phnom Penh Post - - BUSINESS - Hin Pi­sei

THE In­ter­na­tional Mon­e­tary Fund (IMF) has pre­dicted that growth in the King­dom’s real es­tate sec­tor will slow in the next five years.

And while in­sid­ers say the sec­tor is sat­u­rated, govern­ment of­fi­cials seem to dis­agree with the IMF’s fore­cast.

The IMF’s Cam­bo­dian Eco­nomic Growth Re­port re­leased on Tues­day pre­dicted that the coun­try ‘s eco­nomic growth will con­tinue to re­main ro­bust for an­other few years, be­fore fall­ing to about six per cent in the medium term due to sub­dued pro­duc­tiv­ity growth, credit ma­tu­rity and real es­tate cy­cles.

“Cur­rently, the real es­tate and con­struc­tion sec­tors are strong driv­ers of eco­nomic growth, but five years [from now], other sec­tors will [drive] growth [more] than [real es­tate and con­struc­tion],” IMF rep­re­sen­ta­tive Jarkko Tu­runen said.

CPL Cam­bo­dia Prop­er­ties Ltd chair­man and CEO Cheng Kheng who runs the old­est real es­tate firm in Cam­bo­dia said the sec­tor will re­main strong for the next five years.

“The real es­tate and con­struc­tion sec­tors in Cam­bo­dia cur­rently have strong mo­men­tum in just three to four prov­inces for the next five to six years,

“I think that they will con­tinue to pick up in other prov­inces with po­ten­tial. The real es­tate sec­tor in Cam­bo­dia will con­tinue to grow for a long time,” Kheng said.

Cam­bo­dia Con­struc­tors As­so­ci­a­tion sec­re­tary Chiv Sivpheng said large con­struc- tion projects take three to five years to com­plete, so the IMF’s fore­cast could come true amid the com­ple­tion of some of them.

“Upon com­ple­tion of [a project], in­vestors do not make new in­vest­ments im- me­di­ately, wait­ing un­til the project is sold out so that even if the in­vest­ment falls short for a time, it will re­cover af­ter­wards,” he said.

But Sivpheng said the con­struc­tion sec­tor is now on the rise with­out signs of slow­ing.

Emerg­ing Mar­kets Con­sult- ing se­nior ad­vi­sor Nget Chou said the mar­ket will be sat­u­rated in five years due to the rapid surge in large con­struc­tion projects.

How­ever, he said Cam­bo­dia’s real es­tate sec­tor will con­tinue on the up­swing thanks to the in­flux of Chi­nese in­vestors.

“The real es­tate sec­tor in Cam­bo­dia for the next five years may de­cline some­what, but if the Chi­nese con­tinue to come and in­vest, it will be as good as al­ways,” he said.

Re­ports from the Min­istry of Land Man­age­ment, Ur­ban Plan­ning and Con­struc­tion showed in­vest­ment cap­i­tal in the con­struc­tion sec­tor for the first half of this year was some $2.15 bil­lion only, whereas it was over $6.4 bil­lion over the same pe­riod last year and $5.26 bil­lion in 2016.

Min­istry spokesman Seng Loth said he did not know what the IMF’s fore­cast was based on, but judg­ing by the mo­men­tum of the con­struc­tion sec­tor, he still be­lieved it will con­tinue to grow even stronger.

“We can­not say that growth in real es­tate and con­struc­tion in Cam­bo­dia will reach ma­tu­rity in the next five to six years be­cause de­vel­op­ing coun­tries ob­vi­ously need con­stant con­struc­tion,” he said.

The real es­tate sec­tor may de­cline but if the Chi­nese con­tinue to come and in­vest, it will be as good as al­ways

AFP

The In­ter­na­tional Mon­e­tary Fund has pre­dicted that growth in the King­dom’s real es­tate sec­tor will slow in the next five years.

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