Massive Chinese building spree in Phnom Penh worries expat community

Published:  12 Sep at 6 PM
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Chinese money is changing Cambodia’s capital Phnom Penh beyond recognition.

The city of Phnom Penh, formerly famous for its French colonial villas as well as its New Khmer Architecture modernist structures, is now becoming unrecognisable due to massive investment by Chinese developers. Over 200 investors arrived along with Chinese President Xi Jinping in October 2016, with the subject under discussion the Chinese Belt and Road Initiative. As a result, billions of dollars were committed for the construction of towering high rise condo blocks aimed at wealthy buyers. The average median income per household in the city is $11,000 a year, leaving no doubt as to the market at which the developments are aimed, and historic buildings are being razed to the ground and replaced with high-rise developments.

According to international realtor Ross Wheble, Phnom Penh’s luxury condo market is already oversubscribed, with rentals and sales slowing markedly due to the limited number of Cambodians able to afford upscale apartments. Domestic demand, he said, is essential if a market is to be sustainable. Within the city’s expat community, it’s mostly accepted that a huge influx of incomers from China as well as the Asian equivalent of buy-to-let investments will ensure success for the developers, but will also sound the death knell for the city they love. Others are fearful of a Chinese invasion.

What’s happening in Phnom Penh is just another example of the Chinese real estate binge now taking place across Asia in regions designated as part of the New Silk Road. However, not all Asian governments are inclined to allow the Chinese takeover, with some even cancelling previous agreements. A month ago, Malaysia’s Prime Minister warned about Chinese colonialism and banned foreign buyers from a new $100 billion Chinese development, adding that foreigners will be allowed to purchase property, but won’t get entry or long-stay visas.

As regards Cambodia’s stance on the Chinese invasion, the numbers of vacant new-build condo units in the city are expected to double to 20,000, with the government seemingly happy to allow the massive high-rise projects. Worse still, Cambodia’s government is planning a new Cambodian capital city to the north of Phnom Penh at an estimated cost of $80 billion. It’s to be called Samdech Techno Dragon City after leader Hun Sen’s zodiac sign and official title. According to Michael Kugelman, deputy director of the Washington Wilson Center’s Asia Programme, the massive projects are simply lining the pockets of high-placed regime officials without benefiting everyday Cambodians in any way. This, he said, is one of Cambodia’s sad realities.
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