Incentives Rolled Out as Solution to Sihanoukville’s Abandoned Buildings

Preah Sihanouk province’s deputy governor has pledged to take decisive action by launching an incentive package for the unfinished buildings that plague Sihanoukville city
A man walks past an abandoned half-built building in Preah Sihanouk province. Kiripost/Penh Chamroeun
A man walks past an abandoned half-built building in Preah Sihanouk province. Kiripost/Penh Chamroeun

Preah Sihanouk deputy governor has devised a string of measures to resolve the issue of the more than 1,200 incomplete buildings found in Sihanoukville.

On Thursday, Long Dimanche said it is essential that solutions are found to solve the issue of the incomplete constructions that dog the city.

The majority were abandoned after a ban on online gambling was introduced, followed by the Covid-19 pandemic that impacted economic development and infrastructure.

In response, the Ministry of Economy and Finance has held an inter-ministerial meeting to explore the creation of incentives and a package of measures to resolve the issue with the stalled investment projects.

Dimanche said that unfinished buildings in Preah Sihanouk Province were identified after the initial inter-ministerial meeting and a process to determine incentive packages is being developed.

He said the major goal of the meeting is to address the circumstances, difficulties, legal considerations, and methods for resolving the issue.

"We need to clarify what sort of buildings we are addressing and offering in the building modification incentive package," the official said.

He added this cannot yet be determined because problem-solving needs to consider any court system conflict.

According to Ngeth Chou, the number of incomplete structures, totalling more than 1,200 buildings, is enormous given the current uncertain economy. He added it is difficult and expensive to restore and complete the structures, which requires more investment.

The growth in real estate in Sihanoukville values was beyond the market portfolio, which is the supply of stagnant buildings, and rentals are quite high, he added.

The supply is greater than demand, which is caused by the weakness of the Chinese flow prior to the shutdown of online gaming, and the remedy is believed to be additional investment to finish the more than 1,200 buildings, and decrease the rent and sale prices.

Despite more investment to complete the unfinished buildings and a decrease in rental and sales based on actual demand, Chou added that “the supply is more than the demand”.

Chou added that he has little hope for demand to return in the short-term, and predicted this solution will remain ineffective for the next three to five years, depending on the scale and speed of Sihanoukville's economic growth.

In China, Beijing plans to set up a $44.4 billion real estate fund to bankroll the purchase of unfinished housing projects and complete their construction. They will then rent them to individuals as part of the government's drive to boost rented housing.