As Cambodia’s middle class grows, the foundations are being laid to fill the housing gap. BY MARISSA CARRUTHERS
Song Sithy and Tep Rit gaze across the horizon that shows the rapidly booming skyline of Phnom Penh – the place they call home. Both hailing from Kandal province, the couple came to the Cambodian capital for work, and as they prepare for their first child in September after marrying last year, they want to start planning for their family’s future. Their ultimate dream is to one day own their own home.
However, with the rapid rise in high-end apartments, condos and villas, the young couple, like many of their peers who form part of the country’s swelling middle class, have been pushed out of the market. “We cannot afford to buy a house in the city on our wages,” Tep, a hotel manager, says. “Even small apartments and houses are out of our range. Now, unless you have a lot of money, it is impossible.”
A property boom is currently underway in Phnom Penh, where the skyline is littered with high-end condominium projects targeting the luxury living market. As reported previously in ASEAN Forum, 2015 brings with it more than 40 new strata title projects – meaning they can be foreign-owned if above the first floor – set to enter the capital’s market alone. This is in addition to the launch of the capital’s first luxury condominium developments in the form of De Castle Royal’s 32-storey project last year, and the 44-storey twin tower The Bridge, set to be completed by 2018. Add a swathe of other developments spread across the city, with prices from between $88,000 and $160,000 for a one-bedroom apartment, and from $168,000 to $260,000 for a two-bedroom, and you get a picture of the increasingly crowded urban mix.
As the country’s economy continues to grow, so does expendable income, the middle class and urbanisation. But with the current boom directed towards foreign investors and the wealthy local market, the emerging young middle-class is being squeezed out of the housing market. However, the private sector is starting to take the leap to tap into this forgotten sector in the form of social housing. And it is hoped business can help steer the government towards meeting its recent pledge to tackle the rising accommodation gap.
“The Cambodian government has improved the infrastructure, the economy is growing and people are being lifted financially,” says Dato’ Johnny Ong, Group CEO of HLH Group Limited, which heads CamHomes and has pioneered a series of successful public housing initiatives in Singapore.
In May, the Ministry of Land Management, Urban Planning and Construction announced plans for the government to kick-start projects to develop housing aimed at “lower middle-income people, low-income people and vulnerable people” by 2017 or 2018. A memorandum has already been signed with the Asian Coalition for Housing Rights to start surveying the population’s housing needs ahead of any planning. Minister Em Chun Lim recently visited Japan to study public housing projects there. Japan has pledged to provide experienced housing specialists to help Cambodia improve its offerings. Initial plans will see the government create two types of public housing – homes for sale and rental homes for lower- to middle-income workers.
Using the highly successful Singapore public housing model, which has seen the government and private sector work together to provide affordable, social housing to anchor the economy and bring the city from housing squalor to one of the world’s greatest financial hubs, CamHomes hopes to help stabilise Cambodia’s economy in similar ways. “Decent, affordable social housing is a key driver of economic development, without it you cannot push a country forward,” says Dato’ Ong.
The younger generation of Cambodians is also realising the importance of investing in their future, sparking the desire to become homeowners. “We are like animals,” Dato’ Ong says. “First we find the food, which Cambodia is doing, then we make the nest. For a country to grow, it needs comfortable, decent, affordable housing.”
The company has already started building homes in Sihanoukville, and by 2017 plans to create 10,000 units annually for middle-income households earning between approximately $600 and $1,500 a month. Up to 25-year mortgage loans are available through partner banks, for borrowers aged up to 65 who can prove a sustainable income. “We want to build affordable homes eventu lly in all of the provincial cities,” says Dato’ Ong. This is a statement backed up by UN Habitat, which claims providing such accommodation can add 3.5 percent to the country’s GDP annually.
Raising living standards across the board is also pivotal to the work of NGO Habitat for Humanity, which targets some of the country’s poorest. Its five-year plan aims to provide more than 6,000 families across six provinces with decent shelter to cater for their demands. With a total of 65 percent of the population not owning property or land, according to figures from the Kingdom’s Social Department of Statistics, the work carried out by the organisation is essential.
To date, with the help of partners, projects include a total of 22 houses built in Oudong, Kandal province, and 330 homes in the specially created Smile Village in Phnom Penh. “Habitat provides a fresh start for families by empowering them with the independence and self-respect that come from owning their own home,” says Habitat for Humanity’s chair, Renee Glover.
Social housing is not a new concept in Cambodia, dating back to the 1960s. However, it was one that fell with the reign of the Khmer Rouge. The capital’s now crumbling White Building, or Boudeng as it is referred to locally, was one of the country’s first projects aimed at providing cheap public accommodation. Once surrounded by manicured gardens, the building is today known as a slum for drug dealers and houses brothels, although it is slowly regaining its reputation as a hub for artists. Revered architect Vann Molyvann also created the Grey Building, which has since been razed to make way for the Phnom Penh Centre in the 1990s.
However, the dawn of a new era could see the country awash with accommodation catering for the bulging middle sector of society – a step that could help Cambodia on its way to becoming a strong, developed state like the country from where the housing model is moulded, Singapore. If carried out successfully, it will help a generation of Cambodians, such as Song and Tep, realise their dreams of taking that first step onto the property ladder.
SINGAPORE HOUSING MODEL
The Singapore Housing Model has been lauded as one of the most successful in the world. In 1947, a British Housing Committee report revealed Singapore had “one of the world’s worst slums”, with the average person per building density sitting at 0.2. By 1959, the problem had worsened, triggering the dramatic proposal for plans to form a Housing and Development Board (HDB). It aimed to establish public housing for the people while lifting living standards dramatically in the form of a five-year building plan.
The HDB estimated that an average of 14,000 houses a year would need to be built to fill the gap. With the private sector only able to provide 2,500 a year and at costs still unattainable by those with low incomes, the HDB was forced to fill the gap. It went on to help Singapore wipe out the worst of the housing by creating 54,430 units for lower-income earners in the form of high-rise flats between 1960 and 1965.
Its success has been mainly due to the government backing it received in the form of heavy financial funding. The organisation was also granted legal powers, such as being able to resettle squatters. It went on to build apartments aimed at the middle-market in the mid-1970s, and today develops exclusive condominiums and executive flats. Today, more than 80 percent of Singaporean residents live in social housing.