Cambodia & Construction: Real estate debt rises to $18 billion

The construction and real estate sectors in Cambodia enjoyed nearly two decades of robust growth before a downturn began in early 2020 due to the global economic impacts of the pandemic.

According to official data, the total debt in the country's construction and real estate sectors has reached approximately $18 billion

Chou Vannak, director-general of the Real Estate Business and Pawnshop Regulator (RPR), emphasised the pivotal contribution of these sectors to the country's economic growth prior to the pandemic during a roundtable discussion titled "The Debt Situation in Cambodia", hosted by the Cambodian Academy of Sciences on 4 December.

Vannak observed that the annual growth rate exceeded 7%, with a surge in construction activity and property transactions occurring alongside rising incomes, which drove demand for housing and business premises.

The National Bank of Cambodia (NBC) has reported that as of September 2024, debt in the construction and real estate sectors has reached $18.4 billion.

Turning to the residential sector, Mr. Vannak revealed that developers who borrowed under personal and corporate names accounted for approximately $2 billion in debt. Furthermore, individuals who borrowed from banks to repay developers for residential properties contributed an additional $1 billion to the total debt.

A breakdown of the figures reveals that 83 companies that borrowed under personal names accumulated approximately $1.5 billion of debt, while corporate borrowers accounted for close to $600 million. Informal loan repayments between home buyers and developers were estimated at approximately $1 billion.