Chinese Money Is Driving One of Asia’s Fastest Property Booms

By Philip Heijmans / Bloomberg | September 11, 2018 6:15 PM SGT
Cambodia’s capital may be experiencing one of the world’s fastest property booms — thanks to Chinese builders and buyers.
When Chinese President Xi Jinping arrived in Phnom Penh in October 2016 to expand the footprint of his Belt and Road initiative, he brought in tow more than 200 Chinese investors eager to fill the Cambodian capital’s skyline with billions of dollars in new properties.
Now, a city once known for its French colonial villas and modernist “New Khmer Architecture” in the 1960s is becoming unrecognizable. Heritage structures are being replaced with expensive high-rise condominiums in a city where the median household income is only around $11,000 per year.
“The pace of development for me is mind-blowing,” said Ross Wheble, country head of international realtor Knight Frank. “The high-end condo market is certainly oversupplied and what we are seeing now are sales and rentals are slowing. There are only a limited number of Cambodians who can buy these condos and for a market to be sustainable there needs to be domestic demand.”
A man fishes along a river across from a building under construction. Photographer: Taylor Weidman/Bloomberg​
Phnom Penh is one of the more extreme examples of a real estate binge that’s being played out across Asia as Chinese developers and speculators that became rich during the mainland’s property boom travel down Xi’s New Silk Road looking for governments willing to offer prime land for investment.
Many of those gambits are coming unstuck as the governments that approved the projects are voted out and the resulting Chinese-owned enclaves push up prices and alienate local populations. Malaysian Prime Minister Mahathir Mohamad last month warned against new “colonialism” and banned foreigners from buying property at a $100 billion Chinese project in his country that was approved under his predecessor, Najib Razak. He later said foreigners can buy property but won’t get visas.
In Cambodia, the pipeline of Chinese-backed projects shows little sign of slowing down. Prime Minister Hun Sen, who has built a close relationship with China, extended his 33-year run in power in July in an election that the U.S. said was neither free nor fair after he disbanded the main opposition party.
Average prices for high-end...