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Cambodia Finds New Target for Real Estate:

Chinese Investors
By Chris Horton

Jan. 9, 2018

PHNOM PENH, Cambodia — To sell real estate in Cambodia, agents are

brushing up on their Mandarin.

Across this traditionally low-rise Cambodian capital, a building boom is

becoming more noticeable as it pushes higher into the sky, and its largest
projects are often geared toward Chinese investors, who have only recently
taken interest in the nation’s real estate market.

Chinese investors are flocking to Phnom Penh, which had primarily been
an investment destination for Southeast Asians, Taiwanese, Japanese,
South Koreans and some Westerners. For many of the capital’s largest
projects, Chinese are now viewed as the target market.

“Historically, Chinese investment in Cambodia has mainly been in

infrastructure,” Ross Wheble, the country manager for Cambodia for the
real estate consultant Knight Frank, said in an email. “It is only within the
past 18 months that we have started to see the entry of Chinese developers
and individual investors.”

This year is going to be a big one in terms of high-end residential property

coming on line, Mr. Wheble said.

In 2017, 3,488 high-end residential units were added to the existing supply
in Phnom Penh, he said, adding, “We forecast an additional 15,688 units to
complete in 2018.”
Traffic streaming by the National Assembly, left, and NagaWorld, the
only licensed casino in Phnom Penh. In the background is the Bridge,
Cambodia’s tallest and largest residential development.
Thomas Cristofoletti for The New York Times

The Bridge development is nearly complete.

Thomas Cristofoletti for The New York Times
 Statues of Minions characters outside a showroom for the Prince Real
Estate Group. Thomas Cristofoletti for The New York Times

One of the largest companies vying for Chinese investors is the Prince Real
Estate Group.

In the city’s central district of Chamkar Mon, across the street from
Cambodia’s National Assembly and the Australian Embassy, statues of
Minions characters stand outside a showroom for Prince Real Estate. A
large sign, in Chinese and Khmer, advertises luxury condominiums ranging
from 23 to 175 square meters (or about 248 to 1,880 square feet) with an
expected 12 percent annual return on investment and monthly payment
plans from $386. Next to the embassy, a competitor’s almost-completed
project called the Bridge — Cambodia’s tallest and largest residential
development — looms large.

Prince Real Estate has multiple projects in Phnom Penh’s center. Its 37-
story Prince Central Plaza, with more than 1,000 condominium units, is
scheduled for completion in May. The 27-story twin towers of Prince
Modern Plaza are set to be finished one year later. It owns one completed
project, Diamond 1, on Diamond Island, a mile-long parcel of land adjacent
to the city’s only casino that is buzzing with real estate projects aimed at
Chinese investors and affluent Cambodians.

Outside the firm’s showroom, shuttle buses stand ready to transport

prospective buyers to Prince Central Plaza, while sales agents fluent in
Mandarin wait to show off model units, which sell for $2,600 a square meter
on lower levels and up to $4,000 a square meter for penthouse units. The
showroom shares space with the chamber of commerce for the Chinese
province of Fujian.
“In terms of purchasing, it’s basically all Chinese,” said Chen Jingjing, a
sales agent, who noted that most buyers tended to come from Fujian and
Zhejiang Provinces, along with the cities of Shanghai and Shenzhen.

“Most people are buying for investment, but some will live in their flat
because they have a company or do business here,” she said. Around 90
percent of the units at Prince Central Plaza had already sold, she said, with
around half of the Chinese buyers paying cash.

Cambodia offers rapid economic growth, a young population and good

returns on investment, but there are other reasons that the Phnom Penh
property market appeals to Chinese investors, including China’s mounting
debt.

Cambodian soldiers running in front of a reproduction of the Arc de

Triomphe, part of a Parisian-style development on Diamond Island.
Thomas Cristofoletti for The New York Times

“Chinese businessmen are acutely aware that the country has a chronic
debt problem, and it’s anyone’s guess in a place as opaque as China when
that bubble will explode,” said George McLeod, a political risk consultant
based in Bangkok. “Businessmen with wealth in excess of a few million
dollars are scrambling to squirrel cash outside of China’s borders and the
reach of its unpredictable authorities.”
Additionally, Cambodia is primarily a cash economy, with the United States
dollar accounting for the vast majority of money in circulation, which
creates opportunities for money laundering.

“Cambodia’s banks have lax internal controls and policies around anti-
money laundering and know-your-client compliance, making them wide
open to serve as vehicles to launder cash from criminals and corrupt
government officials,” Mr. McLeod said. “Given my experience doing
investigations in Cambodia, I am convinced that laundered money from the
P.R.C. is a substantial portion of property investment in Phnom Penh.”

Another major selling point for Chinese buyers — one that features
prominently in marketing materials for many real estate developments —
is that Cambodia is a key participant in One Belt, One Road, an
infrastructure initiative from President Xi Jinping of China that is
harnessing hundreds of billions of dollars in state and private investment to
bring Southeast Asia, Central Asia, Europe and other regions closer to
China.

Cambodia’s prime minister, Hun Sen, has become one of China’s most
reliable friends. Having used Vietnamese support and then Western aid to
consolidate and preserve his rule over the last three decades, Mr. Hun Sen
has moved on to become China’s strongest ally in Southeast Asia, an area
where Beijing has extensive development plans.

As a member of the Association of Southeast Asian Nations, Cambodia has

prevented the bloc from issuing statements critical of China’s island
building in the South China Sea. China has returned the favor by providing
Cambodia with a flood of investment and loans.
 The Central Market, one of the best-known buildings in Phnom Penh.
Thomas Cristofoletti for The New York Times

The NagaWorld casino in Hun Sen Park.

Thomas Cristofoletti for The New York Times

A Cambodian People’s Party sign at the entrance of Diamond Island in

Phnom Penh. Thomas Cristofoletti for The New York Times

In December, Chinese firms pledged to invest an additional $7 billion in

Cambodia, including in a highway that will connect Phnom Penh with
Sihanoukville. Cambodia’s main port, Sihanoukville is also a major
destination for Chinese property investment and China’s Belt and Road
ambitions.
The highway will reach from Sihanoukville on the Gulf of Thailand to
Phnom Penh’s international airport. Unsurprisingly, the Sen Sok district
surrounding the airport is attracting more Chinese residential development
and investment.

Like Prince Real Estate’s developments, the Star City project in the Sen Sok
district is also using the Belt and Road initiative to attract buyers. The
nearly 400,000-square-foot joint development by the Cambodian
conglomerate Thai Boon Roong and China’s Xinghui Property is being built
by a company from China’s Sichuan Province. It will feature five condo
buildings and a hotel, apartments and offices, with a total of 2,112 units for
sale.

Star City’s location near Phnom Penh’s airport and the highway to
Sihanoukville is made even more attractive by lower costs for condo and
apartment buyers, the Star City deputy sales manager, Chhiv Vining, said.
The Sen Sok district is an up-and-coming area with units starting at $1,600
a square meter.

Ms. Chhiv said that 80 percent of Star City’s Tower A had been sold, and
sales had just begun on Tower B, but were limited to studios and one-
bedroom units. She estimated that Chinese investors accounted for 80
percent of buyers so far.

“We’re looking to the Chinese market first,” she said.

A version of this article appears in print on , on Page B6 of the New York edition with the headline: New Skyline in
Cambodia Catches the Eyes of Chinese Buyers