Cambodia’s Real Estate Sector Reeling in the Wake of COVID-19

The global health crisis of Coronavirus Disease 2019 (COVID-19) has brought about multifaceted issues in Cambodia and around the world. This crisis has seen the global economy plummet and in the case of Cambodia, the majority of the impact concentrates on sectors such as tourism, garment manufacturing and real estate. COVID-19 has ravaged the once-prosperous property market and, increasingly, people are urgently trying to sell or rent out their buildings and land, but how did we get here? 

The sad reality is that the foundations upon which the Cambodian real estate sector was built have been looking shaky since late last year, long before the world was aware of the coronavirus. These troubles began after the Cambodian government announced the online gambling ban in August 2019, sending shockwaves through the Chinese investment hub and seaside city, Sihanoukville.

Needless to say, the exodus of Chinese opportunists was rapid and well-documented, but the impact on the real estate sector set in slowly like a rot. Property values began to decline, investors – mostly from China – were becoming harder to find and it suddenly looked as though supply would drastically outstrip demand. While the sector wobbled under the online gambling ban, COVID-19 brought a fresh wave of panic – not just for real estate agents in Cambodia, but around the world.

The pandemic has applied near-unbearable pressure on the tourism sector, as the world retreats into itself to slow the spread of the virus. Garment factories, despite being potential breeding grounds for infection, have been forced to remain open by order of Prime Minister Hun Sen, although the lack of demand threatens even this pillar of the Cambodian economy. Real estate however, is experiencing a twofold threat – Chinese investment has slowed up and the pandemic is rendering people’s purchasing power moot.

However, the real question remains, why are more and more owners putting up their houses, buildings and land for sale? 

On top of the issues mentioned above, there is a lack of capital in Cambodia right now – businesses are shut, employees out of work and debts are mounting up. The entire economy is withering under the wrath of COVID-19 and while certain observers have suggested now is the time to invest in property, it currently remains beyond the financial capacity of more than most Cambodians.

As unemployment rises and debts mount higher, fewer landlords are able to lower their rent – which is further forcing businesses to close, more people to become unemployed and so we enter a vicious spiral.

While the government assures us that the financial means are in place for Cambodia to weather the storm of COVID-19, this will offer little immediate respite to those in the real estate sector, nor to those businesses forced to close and to the families of those who lose their jobs and livelihoods. 

Time will tell how Cambodia’s economy will recover, but as the World Health Organization warned on April 20, this may just be the beginning and the worst of this pandemic may well be yet to come.

 


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