Sihanoukville— In 2018, Kheav Sothanny leased his 600 square meters of land in central Sihanoukville to a Chinese investor to build a 14-storey condo. The contract offered him a rental fee of $20,000 a month.
After signing the contract, Sothanny received a deposit equal to a year’s worth of rent. “I took the money to buy land elsewhere in Sihanoukville, to buy a $200,000 Villa in Phnom Penh, and a new car,” he said.
Counting on the revenue from land lease, Sothanny then borrowed more than $500,000 to invest in property and personal use. Each month he pays back around $10,000 on his loan.
But things have dramatically changed from mid-2019 after the government banned online gaming and the outbreak of COVID-19 stalled all Chinese investment projects in Sihanoukville.
In the years since, Sothanny has already sold a house and villa in Phnom Penh to pay back his loan.
“I thought that COVID-19 would last only one year, and Chinese investors would return soon,” he said.
Sothanny said that since mid-2019, the investor had asked for repeated rent decreases, eventually paying just $2,500 a month.
“There are a lot of landowners that received no rental fee since Chinese investors [had to] delay the projects. For me I have no choice but to accept the small amount of fee rather than nothing,” he said.
The investor told Sothanny he would return in December to restart construction and urged him not to terminate the contract.
“I am waiting for the Chinese investor to return from year to year because I cannot do anything with the building, I don’t have money to further invest on the building, I have no choice but to sell out the building as a last resort,” he said.
In just a few years, Cambodia’s seaside resort of Sihanoukville had been transformed into a bustling casino town as skyscrapers sprang up throughout the city.
Since the influx of Chinese starting from 2018, local rental and real estate prices have risen steeply, making local property owners rich overnight.
But fortunes have changed dramatically after the government outlawed online gambling in late 2019 and the world was struck by the COVID-19 pandemic.
Tens of thousands of Chinese citizens who moved to Cambodia to work in the gambling and hospitality industry have left the coastal city, leaving the economy in limbo and hundreds of high-rises unfinished across the city.
In July, provincial authorities met with representatives of local investors and landlords who have leased to Chinese investment projects to discuss the crisis.
According to Sihanoukville provincial authority, more than 1,000 buildings in Sihanoukville have been abandoned for more than two years.
Long Dimanche, deputy governor of Sihanoukville, told CamboJA that provincial authorities and the Ministry of Economy are discussing how to resolve this issue.
“What we need to do now is to get all the buildings back in operation, possibly with the participation of new investors,” he said. “We need to set up policy as well to assure that the buildings are put into operation.”
China’s development projects in Sihanoukville, in addition to providing most of the jobs in the casino sector, also employs local informal workers serving in the construction sector. Much poorer than the landowners, many of these workers have been struggling to earn a living during the pandemic.
Yorn Borin, 40, from Kratie province came to work as a construction worker in Sihanoukville in 2019.
After the construction project he worked on was delayed, his family set up a tent in the building compound, selling drinks to earn a daily living.
“Now, it is so quiet, I hope that when the construction resumes, I could earn more and more Chinese will come,” he said, adding he could earn around $20 per day
“Before, I planned to work in Thailand, but my relatives told me to come to Sihanoukville because there are a lot of construction building projects,” he said.
Oem Senghour, regional director at Century 21 Zilllion Holding in Sihanoukville estimated that the value of the abandoned buildings total at least $5 billion. While some projects have gradually resumed, he said many owners will struggle to recoup their losses.
“We may find it hard to attract other investors to replace the Chinese though some local investors may buy them at a lower price,” he said.