Coronavirus (COVID-19) has affected the world economy badly. Due to the virus, countries around the world have imposed shutdowns. As people are not willing to get out of their houses, local and small businesses have been affected the most.
Apart from businesses, many industries, including real estate have been affected badly. The real estate sector plays a crucial role in the economy of any country. This is the sector which has a great contribution to GDP and employment of the country.
Talking about Sihanoukville, Cambodia, the Sihanoukville property market stays optimistic, despite the tumble.
In the year, the Cambodian government has decided to ban online gambling. The reason for banning online gambling in Cambodia was to avoid money laundering and other crimes. Due to this decision by the government, thousands of people have lost their jobs.
Before this decision, the real estate market was booming in Cambodia, especially in Sihanoukville. The government of Cambodia on August 18 announced that the new licenses for online gambling will not be issues. And, the existing licenses will not be renewed once they get expired. The government addressed the increase in cases of money extortions around online gambling venues.
After that decision, a huge number of Chinese people have left Cambodia. According to reports, around 200,000 Chinese people residing in Cambodia have left after the online gambling ban by the Cambodian government.
After tens of thousands of Chinese people left Sihanoukville, the city has seen a big decline in the real estate market. The prices of properties in Cambodia starting falling. Apart from this, rental prices were also falling.
Though the ban on online gambling resulted in a decline in the real estate sector, Nuon Rithy (the chairman and CEO of the Khmer Appraisal Foundation) explained how this decision will be beneficial in long term. According to Nuon Rithy, the Chinese people who left Cambodia were workers or visiting gamblers, and not investors. This is what caused the decline in demand for accommodation, food, etc. services.
He claimed some areas of investment in the country such as real estate, construction, tourism, textiles, etc. are stronger.
Nuon said, “The decision to stop the issuance of a gambling license is a good strategy to filter good investors … which will bring benefit to Cambodia’s economy in the long run. I strongly believe that the decision will provide long-term benefits and Sihanoukville province will become the best destination for tourism and trade in the near future.”
The CEO of Khmer Real Estate Co. Ltd., Kim Heang said that the decline in real estate prices in Sihanoukville, Poipet, and Bavet (as they are main centers for online gambling) due to the online gambling ban is just a short-term effect. The market will recover and do well in the long run.
As we have seen, the government’s ban on online gambling resulted in the mass exodus of Chinese nationals. This was not enough that the Coronavirus outbreak made it even worse. Cambodian Valuers and Real Estate Agents Association president Chrek Soknim told that the decline in Chinese investors in Cambodia coupled with the Coronavirus outbreak.
Here’s what Soknim said, “It could be said that the huge drop in property prices is almost in sync with the overall decline in the economy. It is not the bubble the buyers and sellers want, like before.”
Soknim expects property prices in Sihanoukville will rise once again after the Coronavirus ends.
After Coronavirus ends, businesses will run smoothly, the unemployment rate will decline, people will go out & spend money, this way, the money will flow smoothly in the economy. And steadily, the real estate prices will also start to increase in the country.
Oem Senghou, who is the branch manager at Century 21 Zillion Holding also explained how the real estate sector is declined compared with the previous year’s prices. He said land in the province’s prime location is valued currently at around $3,500 per square meter. This is the drop from $5,000 the last year.
Oem Senghou said, “After Covid-19 is over, I expect the real estate market situation to recover, but growth will be gradual and will not see sharp increases like before.”
Senghou expects the real estate prices to recover as time passes. He compared the current property and rental prices with the prices the last year. He said, at present, the property prices are down 20% to 30% from the same period the last year. Talking about rental prices, they are fallen more than 50%.
In the month of November, the government announced that it will spend $294 million to build 34 new roads and also focus on other infrastructural activities in the province.
Kheang Phearum, who is the spokesman of Preah Sihanouk Provincial Hall, told that the pandemic outbreak has affected the real estate and economy of countries around the world. It is not just the province that has seen a decline in the real estate sector.
Phearum also said the economy and real estate sector will start recovering and doing well once the Coronavirus ends. He also said officials are working continuously to build and repair infrastructure in the province.
Here’s what he said, “There is a lot of construction at this time so this will boost growth in the province in the future. At that time, the real estate market will [rebound] accordingly.”
The early cases of Coronavirus were reported in the end of December 2019. As the new cases of COVID-19 started to rise, the real estate market in Sihanoukville and throughout Cambodia started to decline, according to a report from CBRE Cambodia.
The virus began in late December 2019 and in the month of April 2020, it infected more than 1.2 million people all over the world. As the number of Coronavirus infected patients was increasing, the prices of real estate were also getting affected in Cambodia.
The real estate sector is seeing a decline in Sihanoukville as the decline of online gambling ban coupled with COVID-19. However, the fallen prices will start to recover once the Coronavirus pandemic ends.
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