PHNOM PENH: Cambodia’s construction industry is experiencing mixed signals, according to a recent World Bank report. While there’s a positive trend with a significant increase in imports of essential building materials, real estate development remains sluggish.
The report offers encouraging news after a period of decline. There’s been a substantial jump in imports of construction equipment (19.9%), steel (33.5%), and cement (15.0%) in the first quarter of 2024 compared to the same period last year. This growth is further bolstered by a rise in import volumes, particularly for steel (35.9%) and cement (24.1%).
The report also highlights a shift in investment focus within the construction sector. Private financing for real estate development remains subdued, but there’s a growing emphasis on non-residential projects.
This includes public and private investments in infrastructure projects like roads, bridges, logistics, and port facilities. This trend aligns with the rise in industrial building permits and approvals for Foreign Direct Investment (FDI)-funded non-garment infrastructure projects.
Despite the positive developments in infrastructure, the report acknowledges an ongoing decline in real estate development activity. This is reflected in the downward trend of approved permit values for such projects.
The total approved value of property development projects in the first quarter of 2024 reached US$786 million, a significant 38.8% decrease year-on-year. Sihanoukville province, which experienced a pre-pandemic construction boom, saw a particularly sharp decline (54.7%) in approved permit values.
The World Bank report suggests a potential revitalization of the construction sector, driven by increasing imports of building materials and a shift in investment focus towards infrastructure projects.
However, the report also acknowledges the ongoing slowdown in real estate development. Whether the infrastructure push can fully offset the decline in real estate and how this will impact the overall health of Cambodia’s construction industry remains to be seen.