Cambodia: Real Estate Boom Widens Growing Gap Between Rich And Poor

Foreign investment in Cambodia has caused an upsurge in construction that is furthering the gap between the rich and the poor in the country.

"Cambodia is experiencing a construction boom fueled by foreign investment, particularly by South Koreans, and buying and selling among the country's few nouveaux riche -- while leaving the poor majority behind," according to a recent article in the Taipei Times.

"The biggest projects are being funded by South Korean investors and companies, which have been the leading investors in Cambodia following the resumption of diplomatic ties between the two countries in 1997. Investment and tourists from South Korea have surged following a 2006 visit to Cambodia by former [South Korean] president Roh Moo-hyun," according to the article.

The disparity between the rich and the poor in Cambodia is so great that about 10 percent of the population owns nearly 90 percent of the land in Cambodia, Naly Pilorge, director of the nonprofit human rights group Licadho, said in the article. Such a situation could result in social and political unrest.

Hospitals have been torn down and replaced with condominiums and residents in run-down areas have been displaced.

"Prime city land prices have tripled over the last two years to US$3,000 per square meter. Those kinds of returns have drawn rich and middle-class Cambodians, as well as those living abroad," according to the article. And while real estate prices in Cambodia have risen dramatically in the last few years, they are still lower than real estate prices in Vietnam and Thailand.

Construction begins in Phnom Penh next month on Cambodia's first luxury residential building, a 42-story tower that will have 500 apartment units, each priced between US$112,000 and $1.8 million, according to the article. Half of the units have already been purchased. The tower will be the tallest building in Cambodia.

"Thrilled with the boom, Prime Minister Hun Sen has said it has been made possible by the political stability he has brought. In a recent speech he warned that if he is not re-elected in July elections, property prices could nosedive," the article said.

In addition to the political ramifications of the construction boom--many developers have connections with Cambodian government officials, and some suspect that much of the cash going into the real estate boom is the result of money laundering--there are ramifications for the nation's impoverished citizens.

"Poor residents like Chhorn Et, the former slum dweller who was moved outside the capital, are left to cope with a stark reality in their new village, which has no running water or sewage system," according to the article. "Although each family has been given a small piece of land, they complain of the lack of means to support their livelihoods. They have to travel daily to the capital to do odd jobs as motorbike taxi drivers, construction workers or scavenge for bottles and cans to sell to buy food. Many of them are too poor to afford a latrine and have to use a nearby rice field as a toilet."

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October 22, 2009 at 8:26 AM Anonymous said...

This article about sums it up. I've been there several times and have been quite surprised by western style real estate prices in a country where the average construction worker makes $3 a day...BTW, that's a 10 hour day and there's no paid sick days, holidays, health insurance, or OSHA! It's just another banana-republic crap economy. Big foreign investment comes in, corrupt government officials get paid, and the average citizen gets treated like disposable garbage.
The last time I was there was in August of 07. I predicted a great real estate crash and now it has happened.
$150,000+ house prices can't be justified in an economy where the majority of citizens make between $2 and $7 a day.

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