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    Is this the next Shenzhen? Chinese buyers buy Phnom Penh property

    2019-02-11 06:38:24

    Daily Economic News Every Reporter

    The huge wealth effect of China's property market has made buying a house the most important way of managing money for Chinese people. They not only buy and buy in China, but also buy houses in developed countries such as Europe and the United States.

    However, last year's major cities in the world fell from highs, and Sydney, Vancouver, London and other hot cities that bought houses were affected by Waterloo. In stark contrast, the potential cities of Southeast Asia have become the new darling of Chinese buyers.

    Next Shenzhen? Chinese buyers buy Phnom Penh property

    "Phnom Penh is Shenzhen 30 years ago, Shanghai 20 years ago, Singapore 10 years ago." This is an advertisement from a Chinese developer.

    In recent years, the Cambodian capital of Phnom Penh, a Southeast Asian country, has gradually attracted the attention of Chinese buyers. Nowadays, a large influx of Chinese buyers has driven the rapid development of the Phnom Penh real estate market. This expensive high-rise apartment has been built in Southeast Asian cities, once famous for French colonial villas and modernist “New Khmer architecture”.

     Is this the next Shenzhen? Chinese developers are coming, and speculators are coming.

    Reuters report screenshot

    According to media reports, according to the report of the Ministry of Land Planning and Construction of Cambodia, from 2000 to 2017, there were 287 real estate projects developed by foreign companies in Cambodia, with a total investment of 4.297 billion US dollars.Among them, Chinese-funded companies have 110 projects with a total investment of 1.656 billion US dollars, accounting for nearly 40% of the total. China has also become the largest investor in Cambodia's real estate.

    Bloomberg reported that Guangzhou Yuetai Group's project in Phnom Penh includes 24 high-rise buildings along the river bank. Guangzhou R&F Group also took the land in Phnom Penh and plans to build 5,000 housing units. The new construction group in Macau, China, plans to spend $2.7 billion to build a 133-story twin tower in Phnom Penh, which will become one of the tallest buildings in the world.

     Is this the next Shenzhen? Chinese developers are coming, and speculators are coming.

    Bloomberg report screenshot

    These developers have targeted the target group to Chinese buyers. According to media reports,A local Chinese insider told reporters that more than 80% of the real estate of Chinese developers was sold to Chinese investors, and a small part was sold to the upper class in Cambodia.

    Reuters visited five real estate sales departments in Phnom Penh, including projects sold by developers in Singapore and South Korea, and they all received Mandarin-speaking sales agents.

    According to data provided by the overseas overseas real estate website to the daily economic journalists, Phnom Penh is the city with the largest number of Chinese buyers in all cities in Cambodia.In 2018, the number of inquiries from Chinese buyers surged by more than 550% from the previous year, with 78% of Chinese inquiries asking for property prices ranging from $50,000 to $250,000. Of all Chinese buyers who buy houses in Cambodia, 88.7% are for investment.

    Luo Xuexin, CEO of Juwai.com, told the Daily Economics reporter that "Chinese buyers' interest in Cambodian property has increased year by year. Chinese buyers are hoping for future appreciation of Cambodian property, which is related to buying and selling in developed countries. Not the same. We believe that Chinese buyers should do their homework in Cambodia to eliminate the information gap, because higher than the usual return on investment, often accompanied by market uncertainty."

    According to CBRE data, the average price of high-end apartments in Phnom Penh was $3,200/m2 in the second quarter of 2018, an increase of 60% over the same period in 2013. CBRE also expects that the supply of managed apartments in Phnom Penh will double to more than 20,000 units this year. For Cambodia, the second poor country in Southeast Asia, some of the huge projects approved have been particularly dazzling.

    According to the International Monetary Fund (IMF), Cambodia’s per capita GDP in 2017 was only $1,390, ranking 153th in the world.

    In an interview with Bloomberg, the international real estate brokerage KnightFrank China director Ross Webb said: "In my opinion, the development speed of Phnom Penh is amazing. The high-end apartment market is definitely oversupply, although sales are now slowing down. Rents are falling. However, there are still only a handful of Cambodians who have the ability to buy these apartments. In order for the market to be sustainable, there must be demand from Cambodia."

    "Sell more than 20 apartments in a month, all Chinese."

    Another Southeast Asian country favored by Chinese buyers is Thailand.

    According to local media reports in Bangkok, Chinese buyers are already the largest foreign buyers in the Thai apartment market. Since 2015, Chinese buyers have invested more than $10 billion in managed apartments in Thailand, equivalent to the sum of buyers from Japan and Singapore.

    Bangkok local opener Ruisi Real Estate said,For every five apartments built in Thailand, there is a set of buyers owned by mainland China or Hong Kong.Since Thailand prohibits foreigners from owning land, the apartment is the only type of property that Chinese buyers can purchase in Thailand.

    "We sold more than 20 apartments in July 2018, and the buyers were all Chinese," Bangkok agent Fame Zhu said in an interview with the Nikkei Asia Review.

     Is this the next Shenzhen? Chinese developers are coming, and speculators are coming.

    Nikkei Asian Review Report Screenshot

    The Daily Economics reporter noted that the buying spree of Chinese buyers has spread from Bangkok to Chiang Mai in the north of Thailand and Phuket in the south, as well as to Pattaya – a real estate advertisement in Chinese.

    The Bangkok Post reported that in the past, very few developers in Bangkok have gone to China for commercial roadshows. But in the past ten years, all the Bangkok apartment developers have been paying close attention to Chinese buyers due to the surge in Chinese tourists visiting Bangkok.

    Currently, tourists from China account for 30% of foreign tourists in Thailand. Some Chinese tourists visiting Thailand will take time to see Bangkok's apartments and major resorts.

     Is this the next Shenzhen? Chinese developers are coming, and speculators are coming.

    Chinese real estate advertisements everywhere in Pattaya

    So, what makes Thai apartments so popular with Chinese buyers?

    The Nikkei Asian Review reported that this is because regulators in other places have taken stricter measures to prevent real estate speculation. For example, in August last year, New Zealand banned most foreigners from buying property in their home country – in Auckland, New Zealand, local house prices soared by 75% in four years, making locals increasingly unaffordable. In addition, cities such as Vancouver, Singapore and Sydney also impose heavy taxes on foreign buyers.

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