- The construction industry shows improvement, yet full recovery is still questionable.
- Investment tumbled four times in comparison to the pre-pandemic level
- Experts have mixed feelings regarding whether investments in the construction sector will rise in 2023
“The rise in construction investment supporting tourism and business sectors has led to a forecast for construction investment will potentially increase by 7 percent in 2023. The real estate market will likely increase by 5 percent,”
Although the construction industry has made some positive moves, the full recovery remains uncertain, predictions were made in different prospects as to when construction, which was once a main engine of the Kingdom’s economic growth, will gain momentum to the pre-pandemic level.
In 2022, the Ministry of Land Management, Urban planning, and construction approved about 3 800 projects nationwide, covering 6,500,000 sqm of floor areas. Capital investment in these approval projects amounts to $2.6 billion, which is translated into four times lower compared to 2019 when a whopping $11 billion was injected into the sector.
The rise in construction investment supporting tourism and business sectors has led the Ministry of Finance and Economy to forecast that investment in this sector will potentially increase by 7 percent in 2023. The real estate market will likely increase by 5 percent, thanks to rising property transactions and rental demand for condos and apartments. Additionally, demand for affordable and medium properties, which are backed by the local people, will likely surge as well.
Investment in the construction sector depends heavily on the country’s economic growth. Thus, real estate experts believe it will take up to three years for investment in this sector to return to its pre-pandemic level. The Ministry of Economy predicted Cambodia’s economy will grow at 7 percent in 2024.
In its latest report, World Bank stated that it is still unclear whether or not investments in the construction and real estate sectors will rise. Given the excess supply, it is difficult to predict whether the construction industry will resume its role as the main engine of the nation’s economic expansion in the near future.
Approximately $ 5 billion of foreign direct investments were poured into the construction and real estate industry from 2014 till June 2020. The amount accounts for one-third of the total investments.
Translated by : Kem Sreyneth