Wednesday, June 4, 2008

Loan restricted has stabilized land prices

According the Cambodia Daily date on 04 June 2008:
"Loan Curbs, Poll Concerns Cool Land Prices"

After more than a gear of soaring growth, land prices appear to have stabilized, officials in the business community said Tuesday, citing a curb on bank loans and July’s national election among a host of likely reasons.

The slowdown began in May after the National Bank of Cambodia doubled bank reserve requirements to 16 percent. The government introduced the reserve increase-the amount of total cash deposits banks must keep a t the central banks- as a move to curb the country’s double-digit inflation by reducing credit to private sector.

But the plateau in land prices also coincides with concerns about political stability as investors await the outcome of the national election before they resume purchasing property, some businesspeople said.

Sung Bonna, president of Bonna Realty, said his company has not completed a report on property prices since April but have one planned for release in July. If things continue as they have of late, he said, that report will show prices having hit a plateau.

He added that the levelling off of what were skyrocketing prices is likely a positive thing.

The price is stable not only in Phnom Penh but also across the country, Sung Bonna said, adding land speculators, who have been driving up prices but not actually developing land, will be most affected.

The beginning of the rainy season, which makes travel in the provinces more difficult for buyers, is another reason for the levelling off, he said. But concerns about political stability and what kind of government will form after July are key, he added.

Debasish Pattnaik, director of business development, project and investment at the Royal Group, said land prices were to level off after so much growth.

Foreign investors have been responsible for some of the price increases, he said, but as many of them have become more familiar with the business landscape here, they have become more savvy about prices.

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Anonymous said...

Actually, the government should not apply the new banking regulations to double the deposit amounts of any Commercial Banks with National Bank of Cambodia as it would freeze the funds for the present economic development.

Look at now, everything is at the stage of slowdown.
To stop real estate speculation, the government should reinforce on increase % of tax for unused land or of tax on real estate transaction etc...

We can look at Thailand or Vietnam as an example.

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