© The Financial Times Ltd 2014 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
May 17, 2013 3:43 pm
On rue 178, known as Art Street, behind high walls and a wrought-iron gate, sits an exquisite, yellow, two-floor colonial villa encircled by a lush garden. The house is not large and is in need of some tender loving care. But that is beside the point. It sits on 7,031 sq metres of land on which planning consent has been granted for a building up to seven storeys high. The property is on the market through Knight Frank for more than $14m.
The nostalgic image of Cambodia’s capital, Phnom Penh – that heady mix of decadent oriental opium dens with chic Parisian boulevard cafés – is a gift of the French colonialist era. From the 1870s to independence, in 1953, the French set about creating a cityscape of grand administrative buildings, lavish, balconied mansions, and enlivened their grid of streets with shade-giving trees to create a city known, by the 1920s, as the Pearl of Asia.
The reality today is quite different. Many of these beautiful old buildings survive in a state of neglect; many more have been demolished to make way for more lucrative developments.
“The old houses are disappearing” says Anne Lemaistre, head of Unesco’s Cambodia office. “Over the past 10 years, at least 50 per cent along Norodom Avenue have disappeared. One remarkable house, which had become rundown, was demolished during a holiday, when no one was around to notice. With land being more valuable than property, developers prefer to destroy these houses and build condominiums. Laws should be enacted that oblige owners to preserve heritage properties or, if they cannot afford to, to sell them to those who can.”
It is not only buildings of the colonial period that suffer, she adds, but also those of the Sangkum regime – the New Khmer Architecture of the post-independence period, from 1955-1970, whose most notable exponent was Vann Molyvann. His landmark National Theatre was demolished five years ago.
An urban master plan, drawn up in 2007, with a chapter on preserving old houses, has yet to be adopted, and laws remain flexible. In the meantime, the skyline is rising, with a 555m-high tower – the second tallest in the world – planned on Diamond Island, to the southeast of the Royal Palace, where other residential projects under way include apartments revelling in names such as Versailles and Victoria.
Walk along Sisowath Quay outside the palace, where the confluence of the Tonlé Sap and Bassac rivers, along with the Upper and Lower Mekong, form their famous H-junction, and you will see an ugly structure – destined to become a hotel – blocking the palace’s feng shui on the opposite shore. An even more controversial development – involving the filling in of Boeung Kak Lake and the forcible eviction of 4,000 families from a 114-hectare site not far from the Raffles hotel – has also been rumbling on, since 2007, the area now a wasteland. “Government ministers are shareholders in both these projects,” says my guide, who must remain nameless. Everywhere, one hears talk of the “flexible” laws of an emerging nation. According to the World Bank’s 2011 Doing Business report, 24 per cent cited corruption as the greatest restraint on investment in Cambodia.
And yet, amid such depredations and undoubted poverty, there is a new Phnom Penh rising from the ashes of the Pol Pot years; a city that is rediscovering its culture and artistic heritage, destroyed under the Khmer Rouge. Cambodians who were able to escape their war-torn country in the 1970s have returned to help develop it, creating, along the way, a renaissance in traditional Khmer arts and crafts, a growing fashion and design scene, and instilling a new-found pride in being Cambodian. Elegant boutique hotels and world-class restaurants are springing up, many of them in restored historic buildings. The cost of living is low, dinner rarely costing more than $50 a head, even in the smartest restaurants. With growth at around 7 per cent, while the rest of the world is in free fall, for the “haves”, life is looking good.
At the same time, investment pouring into the country is fuelling a building spree in and around the capital. Whereas Cambodians remain resistant to living in high-rises, instead choosing to buy condominiums for rental and investment purposes, foreign buyers of condos increased 40 per cent (according to Bonna Realty) in 2012, boosted by the 2010 Foreign Ownership Property Law, permitting foreigners to own property outright, above the first floor. “The Chinese and Japanese were the first wave of property investors,” says Mara Tep, co-owner of Rooftop real estate. “Now we are also seeing more Koreans, Australians, French and Americans who are involved in businesses and development here.”
To cater for this influx of foreigners, there is an abundance of international schools, with classes from English and French to Turkish – while the Cambodia Daily, an English-language newspaper, recently announced the launch of a bimonthly German edition.
While the serviced apartment market has seen the greatest growth and is the largest property sector in the city centre, the Khmer elite still dominates the prime property sales. “Wealthy Cambodians are the majority investors in villa sales,” says Owen Williams of CBRE Cambodia, “although the elite rich will prefer to buy vacant plots or demolish an existing villa to construct their own.”
Many of these can be seen along the banks of the Mekong, on the outskirts of town – large properties with pools and river access, such as the seven-bedroom European-style villa near Chroy Changvar Bridge, on the market for $2.1m, on sale through Rooftop.
The edgy, up-and-coming district of Tuol Kork is also known for its large villas, where a five-bedroom, four-bathroom villa with pool is available through Bonna Realty for $500,000. But the area of choice for foreigners, embassies and international organisations in central Phnom Penh is the prime residential area of Boeung Keng Kang, known as BKK1. It is an area of broad boulevards, fashionable boutiques, restaurants and smart residences, with properties selling at around $2,000-$3,000 per sq m.
Nearby, around Vann Molyvann’s Independence Monument, grand mansions of government ministers can be seen. But turn into a side street and the colour of Phnom Penh reasserts itself, carts piled high with mangoes outside European-style coffee houses, beneath a tangle of overhead cables, and remorques (tuk-tuks) weaving among European and Japanese cars.
It is in BKK1 that Alain Garnier, a renowned Belgian antique dealer, bought a colonial-style house belonging to a senior minister of the late King, and spent eight months restoring it as a luxury boutique hotel. “I was offered the villa on Art Street,” he says, “but the house itself is small. Unfortunately, the property has been valued for the potential of its land.”
As the law stands, though, there is little to prevent a developer from knocking down this jewel of Phnom Penh’s fast-vanishing past.
●Buyers should check land title, and ensure the property has Hard Title, (recognised at national ministerial level) as opposed to Soft Title (recognised only at district level)
● Fees for the transfer of Hard Title are 4 per cent of the property value
● Restrictions on foreign ownership mean a foreigner may not own a ground-floor property or freehold land, except by establishing a landholding company whose majority shares are held by a Cambodian individual/ company; or by acquiring honorary Cambodian citizenship, by making a significant donation for good causes.
● There is no public transport to speak of but labour is inexpensive – a driver costs around $120 a month
● Political stability and easy repatriation of profits favour investment
What you can buy for ...
$500,000 A five-bedroom house near the Russian market or in Tonlé Bassac
$1m An 11-bedroom house, in need of modernisation, in the up-and-coming Toul Kork district
$5m A 16-bedroom colonial mansion near Independence Monument
Copyright The Financial Times Limited 2014. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.