Cambodia Economic growth and a burst of urban construction

Cambodia's leaders are proud to announce the country's newest and highest building as a symbol of the country's galloping economy - as Cambodia has averaged 11 percent growth over the past three years. In June 2008 the new high rise broke ground for what will be the country's highest skycraper, a 52-storey tower slated to become the "landmark" of the low-rise capital Phnom Penh. The one-billion-dollar International Finance Complex (IFC) is being backed by South Korea's GS E&C company and is expected to be completed in 2012, reported the Phnom Penh Post.

Picture: The new building under construction

Ground Area: 68,461
Project Overview:
-Business Zone: 52 Storey Office Tower, Serviced Residence (275 units), Commercial Complex etc.
-School Zone: International School
-Residential Zone: High-rise Apartment (6 buildings, 1,064 units)
Period 45 months
Investment U$1 billion Approximately (Construction Cost : U$0.7 billion Included)
Process
-2007. 12: Land Purchase
-2008. 06. 18: IFC Construction
Project Site
-The site located between West-Sothearos Street and
East-Riverside Road
-The National Assembly Building, Royal Palace and government bodies are located near the project site
Resource: IFC Presentation, June 2008

Economic Growth

Cambodia's economic growth has been boosted in recent years by a burst of urban construction funded by foreign investment, especially from China and South Korea who are the leading countries in terms of investment.

In an interview in early April this year, Kang Chandararot, head of the economics unit at the Cambodia Institute of Development Study (CIDS), a local research institute noted that the construction sector had contributed a lot to people’s welfare – both for industry specialists and for unskilled workers. CIDS estimates that construction now contributes about 7-8 percent a year to the country’s GDP.

The new construction, experts believe, would ultimately bring more tourists and investors. In addition, construction is advantageous because it offers jobs for workers. Now Cambodian unskilled workers are earning a full day’s wage on construction sites.

The minister of Land Management, Urban Planning and Construction, on March 25, 2008, also announced plans to introduce licensing for land brokers in an attempt to harness more of the economic benefits of the boom. According to the official record, land transference and business taxes brought in approximately $21 million in revenue in 2007.

Other large projects in Phnom Penh are: New Central City Plaza, which is an integrated development comprising housing, entertainment and shopping facilities on Russian Federation Blvd. This project is being developed by the Indonesian Lipo Politan Corporation. Another major project is the Grand Phnom Penh International City, a joint venture development between Indonesian firm Cinputra and RCAF; just to name a few.

However, inflation in Cambodia seems to be the challenge. Its inflation topped 10.8 percent in December 2007 and some analysts fear that rising oil prices could put a damper to Cambodia’s construction industry. The cost of investing in construction has grown rapidly. This price r ise has also reduced the capability of investors to finance and finish construction projects. Moreover, even if projects are completed as planned, rising housing costs have the potential to drive buyers out of the market.