According to Nikkei Asia, Sihanoukville, the coastal city in the south of Cambodia, is now swamped with unfinished real estate projects abandoned by Chinese companies.
Standing in front of the unfinished construction on his land, Pan Sombo, a 51-year-old primary school teacher exclaimed: “It’s unimaginable.”
 One of the ‘ghost’ buildings in Sihanoukville city, Cambodia. Photo by Hiroki Endo |
According to Pan Sombo, in 2019, when Cambodia’s real estate market was booming, a Chinese company approached him about building a 10-story condominium on his vacant 750-square-meter plot of land.
The investor promised to complete the building by 2021 and pay the elementary school teacher $5,000 per month to use the land, which is 10 times his salary as a teacher, so Pan Sombo agreed to the deal.
When the COVID-19 pandemic hit, the Chinese investor returned to their home country and said they could not come back to Cambodia. That was the last Pan Sombo heard from the company.
The elementary school teacher has since worked with the local authorities to figure out how to get out of the contract with the Chinese investor.
In Sihanoukville, ‘ghost’ buildings like his are not uncommon. According to the city’s authorities, there are about 360 unfinished buildings, and about 170 more that are finished but unoccupied.
In the 2010s, Sihanoukville became a popular destination for Chinese investment, due to its prime location on the Gulf of Thailand.
Cambodia’s Prince Real Estate Group built a string of developments, including luxury hotels and a sprawling shopping mall in the city. Sihanoukville was once dubbed the “new Macau” with dozens of casinos sprouting up.
Last year, Cambodia only received around 550,000 Chinese tourists, down 77% from 2019, according to the country’s Ministry of Tourism. Only 15,754 passengers arrived at Sihanoukville International Airport last year, down 98% from 2019.
This is in stark contrast to the robust recovery of tourism in Siem Reap, which is home to the UNESCO World Heritage Site of Angkor Wat.
The slow return of investment to Sihanoukville since the pandemic is due in part to the Cambodian government’s crackdown on casinos and the downturn in China’s real estate market. The government estimates that it will take another $1.1 billion to finish the unfinished buildings.
In January 2024, Prime Minister Hun Manet announced a policy of tax breaks and incentives aimed at encouraging investors to rescue the ‘ghost’ buildings in Sihanoukville.
However, Dr. Ky Sereyvath, an economist at the Royal Academy of Cambodia, said that in the current global economic climate, such policies are unlikely to be effective.
The surge in Chinese investment into neighboring countries has exposed those nations to the volatility of China’s economy. Cambodia is not alone. The debt problems of Country Garden have spilled over into Malaysia, where the Chinese real estate giant invested in a $100 billion development.
In 2022, the Council for the Development of Cambodia approved $1.9 billion in foreign investment. Notably, about 90% of that investment came from China.
“It’s tough to fill the gap left by China with investment from other nations,” said the director of a construction company in Cambodia.
Long Dimanche, deputy governor of Preah Sihanouk province, said that Sihanoukville needs to diversify its industries and the countries it receives investment from, in order to have a more resilient economy. Prime Minister Hun Manet’s government has shown openness to attracting investment from other countries.
Japanese companies are among those being courted. Compared to Thailand or Vietnam, Cambodia has received less investment from Japanese companies. However, Japan has provided support for the Sihanoukville Autonomous Port, Cambodia’s only deep-sea port, for the past three decades.
Anh Phuong
