Sihanoukville real estate is now a popular play among Chinese investors, but this hasn’t always been the case. The Belt and Road Initiative brought a surge of Chinese investment activity to Cambodia. Sihanoukville, a resort town in the southwest part of the country, welcomed a record number of tourists last year as well as significant Chinese investment.
Sihanoukville governor Yun Min explained to The Phnom Penh Post that due to the increase in visitor arrivals, Sihanoukville is enjoying rapid development and a rise in land and real estate value. The city’s governor estimated these have doubled in the past year with some places recording property price increases of 400 percent.
More infrastructure, more people
Of course, it is not simply tourism driving the Sihanoukville real estate market. The region has welcomed significant infrastructure and telecommunications investment. The Cambodian government has also expanded the region’s port and special economic zone (SEZ), making it the largest in the country. These improvements have led some businesses to call Sihanoukville, the BRI’s first port of call, home. Now more than 100 Chinese firms are based here.
Additionally, China Communications Construction Company’s subsidiary China Road and Bridge Corporation will build a Phnom Penh to Sihanoukville expressway. Work on the USD2 billion project started last year and will take four years to finish. Meanwhile, Sihanoukville’s airport is currently undergoing a renovation that will allow it to accommodate more passengers and larger planes. These are expected to bring even more people to the city and the surrounding areas.
According to the Cambodian Ministry of Tourism, there were more than 1.5 million tourist arrivals to the Preah Sihanouk province, where Sihanoukville is located, during the first nine months of 2017. This was an increase of 22.4 percent when compared with the same period in 2016. Among foreign visitors, more tourists came from China than any other country.
There is also a sizable Chinese expat community in Sihanoukville. Of the foreigners who requested a work permit in in the city last year, almost 70 percent were from China.
This helped create strong demand for rental properties with local agents telling the media that prices in 2018 have soared. A report in the Khmer Times found residential rents in the Sihanoukville city center to have risen by 5 to 10 times in 2018.
Risky business or golden opportunity?
With property prices increasing at a similar pace, some of have warned of a property bubble forming in Sihanoukville. Local hotel investor Lao Heng explained to local media that the current influx of real estate investment could create a property bubble unless investors focus on sustainable development.
Despite this concern, Kim Heang, Cambodia Valuers and Estate Agents Association president, told the Khmer Times that as long as foreign investment continues into Sihanoukville, rents and property prices should sustain their upward momentum.
With both a solid business and tourism outlook, it is easy to see why Sihanoukville real estate has become a Chinese investment hotspot. With further infrastructure investment set to get underway, there is no reason to believe the property market is heading for a dive. However, the staggering rent and property price growth seen over the past 12 months probably isn’t sustainable and will likely retreat in the coming 12-24 months.
