For what it is worth, here are some advisory words to assist the less-worldly visitors of this remarkable place. For the seasoned, take it or leave it. In our experience, there are nine sides of the Phnom Penh dice and they have about equal weight in the grand scheme of things. Too often we see casualties that have ignored them, taken them too lightly, or placed too much importance on one of them. Of course, you needn’t, but we suggest you take note. One day you may be thankful:
- Decisions: make them quickly or you will miss out, but not immediately as the first may be wrong.
- Beauty: just like Mama said, it’s deeper than skin and it takes time to appreciate true beauty.
- Cost of living: yeah, you can live cheaply like a local, otherwise not. It’s up to you – just be aware.
- Don’t be distracted: like a magpie attracted to shiny objects, Phnom Penh is full of distractions. If you’re not careful, you will let them steal your money, your camera, and your dignity, knock you off your bike or stick Rohypnol in your drink. Be vigilant and look after your friends too.
- Health: easy to forget, but this is the most important. The cheap beer and unregulated pharmacies seem like a gift from heaven. Don’t be fooled.
- Exercise and rest: time works in strange ways here, so learn to regulate yourself. It won’t be easy at first, but your body, your friends, your family, and your workmates will appreciate it.
- Enjoy every smile – old and young: They’re mostly genuine. Don’t abuse them.
- Traffic: it is getting worse, there are more Tonka trucks driven by young guns on their phones. They may be relatively slow and innocuous during the day, but by night they are lethal weapons. Be mindful that most drivers after 10 pm will be drunk or on some mind-altering substance. I’m not saying don’t go out… just be aware. Avoid rural roads at night.
- Above all, be calm: No matter the circumstance, Khmers will more likely support Khmers. Being calm and reasonable may extricate yourself from a difficult circumstance gracefully.
PHNOM PENH: THE RIVERINE CITY
Sitting at the confluence of the Tonle Sap, Bassac, and Mekong Rivers, Phnom Penh has been Cambodia’s capital since the 1860s. Dubbed the ‘Pearl of Asia’ in the 1920s, this historic town has evolved into a significant regional hub for foreign investment, construction, and tourism. Phnom Penh is one of the fastest-growing cities in SE Asia and, with an average GDP growth rate of 7%, a seemingly ongoing economic boom has put Phnom Penh among the world’s top cities. Despite an historic disconnect between the rich and poor, the rising middle classes are now pushing demand for products and services on an unprecedented scale. The emergence of shopping malls, coffee shops, fashion outlets, restaurants, bars, and other retail outlets are collectively shaping the new metropolis.
A POTTED HISTORY
Siem Reap (Angkor) was the original capital and the center of the Khmer empire, however in the 14th century the then king, Pohea Yat, founded the capital. Legend has it that a local lady ‘Srey Daun Penh’ found four relics of Buddha in a tree floating on the Mekong. She claimed this as a profound discovery and decided that this become the new capital, placing the hill shrine, now known as Wat Phnom.
Once a French colonial urban center, Phnom Penh is known as one of the most delightful Asian cities. Its wide tree-lined avenues, pretty gardens, and exquisite stately homes gave her that ‘Pearl of Asia’ status. Over the ensuing 40 years, the city experienced rapid growth under King Sihanouk with the construction of the Phnom Penh-Sihanoukville railway, Central Market, Chaktomuk Hall, Independence Monument, the Royal University, and others.
Then between 1975-1979, the Khmer Rouge army took control of Phnom Penh, ordering its two million inhabitants to evacuate. The city was left a ghost town until January 7, 1979 (Prampi Makara) when Vietnamese troops entered Phnom Penh, driving Pol Pot to the Thai border. This occupation lasted 10 years, during which the Khmer people continued to experience exploitation and famine under Vietnamese control. During this ugly period, land titles across the nation were either destroyed or lost, and returning inhabitants staked claim to empty properties. It wasn’t until the late 1990s that the land title system was reinstated. Even today there are still examples of disputed property ownership.
In 1993, Norodom Sihanouk was restored as King after returning from exile only to find that all power was with the government established by the UNTAC-sponsored elections. Samdech Hun Sen became prime minister, the position which he still holds today. The now-stable, post-UNTAC period created new opportunities for foreign investment and aid, including many investor-friendly laws. To provide security and economic stability, the Khmer Riel was pegged to the US dollar. Although still in place, there has been a policy shift to encourage the use of the Riel with a view of complete control over national monetary policy.
ECONOMY AND INDUSTRY
The largest industry in Phnom Penh is textile, clothing, and footwear (TCF) and most companies are small and medium enterprises (SMEs). These are found in the outskirts of Phnom Penh and Kandal province where you will find large tracts of land full of garment factories. This low-skill sector, with agriculture, has been Cambodia’s primary industry since the war. In 2015, the TCF industry contributed 26% to Cambodia’s GDP (and 80% of the country’s total exports), Agriculture 29%, and service sector 39%. Cars, textiles, and energy products make up the country’s major imports.
The tourism industry is considered the most valuable to the sustained growth of the economy, although construction has become a more recent significant contributor. With an abundance of shopping centers, entertainment venues, retail outlets, and other attractions opening, Phnom Penh is becoming a major tourist destination alongside Siem Reap and Sihanoukville. Consequently, this has rapidly increased real estate prices across Phnom Penh.
Foreign Direct Investment (FDI) is a significant factor influencing economic growth, due to the availability of low-priced labor, rapid urbanization, growing middle-class, relatively open policies for foreign businesses, English as the main business language, attractive tax incentives/duty exemptions, improved infrastructure and logistic networks, alongside the stabilizing effect of the US dollar.
Regionally, Phnom Penh is well located: it is surrounded by robust economies that are increasingly outsourcing operations to the Kingdom. Cambodians have an unusually high mobile phone penetration, with around 35% of the population active internet users, so is well positioned in the blossoming digital era.
However, as a result of this development, there is a city-wide problem with congestion and a lack of parking. The city Master Plan 2035 was commissioned as a means to address these issues, especially since the city has had no real urban planning in place since Vann Molyvann.
Before 2010, villas were the preferred building type for office space but modern businesses are looking for more suitable, bespoke properties. The demand for quality office space in the city is growing and a variety of projects have either been completed or are due to be completed in the coming years. More recently, there has been an interest in mixed-use and co-working spaces. The growth commercial market will likely continue, partly due to Cambodia’s membership of the AEC and its emerging business class.
The retail property market is altering the face of the city and many international brands are making their mark on Cambodia. Some new brands are specifically targeting the aspirational middle class, while others focus on the high-end retail market. Local retailers continue to expand their operations on the ground.
Given personal incomes across the city are still relatively low, there remains huge potential for the retail market they rise. The retail market has already shown signs of growth which is driving rental prices higher and redefining retail zoning in light of CBD city congestion, lack of parking, and affordable housing options.
Not surprisingly, inner city corner blocks are popular for retail and food and beverage outlets given they benefit from having more available parking space.
Parking is a vexing issue in high-density areas as more vehicles are registered and more people live and/or work in central urban areas. Companies are increasingly seeking corner properties in areas outside the CBD, such as Chbar Ampov, Chroy Changvar, and Russey Keo as this is where the middle-class Khmers are heading.
Similar retail development is happening in other areas like Sen Sok and Phnom Penh Thmey, also because of traffic congestion and the arrival of quality shopping centers and malls. Aeon Mall, Cambodia’s first international shopping mall, opened in 2014 and its sister Aeon 2 opened its doors in 2018 which provides fertile ground for international franchisers. It is now clear to these companies that opportunities exist in Phnom Penh. Parkson Mall, Lion City, and TK Avenue are all offering great retail investment opportunities.
The city’s condo market has provided early investors with 30% appreciation from off-the-plan purchases. High-end condominium developments are continuing to be released to the market as previously they were dominated by foreign investors, now the Khmer middle-high income earners are investing. This has stimulated local developers to offer low-range condo development projects (predominantly $30,000 – $60,000 per unit). Domestic demand is a key element of a successful project for any developer given that foreign ownership of individual buildings cannot exceed 70%. Other emerging trends are the provision of mixed-use developments (with residential, office, and retail spaces) and housing for low-middle-income earners. Both offer sizeable investment opportunities in catering to these large demographic groups.
To cope with the city’s expansion and rapid growth in vehicles, more infrastructure projects are expected to be completed in Phnom Penh before 2020. Since 2000, construction projects completed in the Kingdom have a total value of more than $44 billion.
An expressway linking Phnom Penh and Sihanoukville, with an estimated cost of $1.9 billion is currently underway. Thousands of kilometers of roads are also being paved for the first time.
The rail line connecting Phnom with Poipet and the capital with Sihanoukville are now complete and there are discussions underway to expand rail services across the Kingdom.
The port at Sihanoukville has been upgraded and the ports of Koh Kong, Kampot, Phnom Penh, and Kampong Cham are looking at upgrades too.
Siem Reap is looking forward to a second international airport located in Sotr Nikom (50km from the city) and Phnom Penh will have its second built in the coming years. The Sihanoukville facility has also been upgraded to manage the influx of passenger traffic.
Internet use has grown enormously since 2000. In 2015, 25% of the population was estimated to have internet access compared to the then-global internet penetration rate of 42 percent. By 2018, this was 50%, compared nicely with the global estimate of 53%. The government expects this to rise to 870% by 2020.
Similarly, the Kingdom had 19.4 million SIM card users in 2018 (an increase of 4.5% in 2017). This represents 120% of Cambodia’s total population. At the end of 2018, 6.4 million people (30% of users) had 2G SIM cards, 4.6 million (24%) had 3G, and 8.2 million (43%) had 4G.
Phnom Penh consumes 90% of the country’s electricity, and the expansion of power distribution lines to rural areas is also now being constructed to even up the supply. In 2013, 22.5% of households had access to electricity. By 2017 68% of homes had some form of electricity.
In 2014, the Prime Minister announced a commitment to ensure “[All] Cambodian villages would have electricity by 2020, while 70% of households would have power by 2030″.51 Large projects expanding the distribution network are underway to meet the NSDP targets of adding more than 12,800 km of transmission lines to the network by 2018.
Water supply: The Phnom Penh water supply has improved significantly between 1993 and 2006. In 2017 the Phnom Penh Water Supply Authority (PPSWA) signed a construction deal with Vinci Constructions to update and expand the Chamkarmon Water Treatment Plant, boosting its capacity from 20,000 cubic meters per day to 52,000. In 2019 PPSWA opened bidding for a US$350 million water treatment plant, which will provide up to 400,000 cubic meters of clean water daily to 50,000 households.
WEATHER, CLIMATE, AND GEOGRAPHY
Phnom Penh lies south of the country where the waterways of the Tonlé Sap, Mekong, and Bassac rivers meet. Monsoonal flooding is a seasonable problem where the rivers sometimes break their banks. The cool seasons are between November and March (22-28 degrees); the hot season is between March and May (28 – 38 degrees) and the wet season is between May and October (24 – 38 degrees with humidity up to 90%).
Monsoons generally blow from the Southwest, bringing winds from the Gulf of Thailand and the Indian Ocean between May to October. The dry season lasts from November through to March. In short, the city of Phnom Penh experiences the most rainfall in September and October, with its months in January and February.
Phnom Penh City covers approximately 678 sqm with a government status equal to that of any other Cambodian province. It is divided into 12 administrative divisions ‘Khans’ which fall under the governance of the Phnom Penh Municipality. These Khans are subdivided into 76 Sangkats (communes) and, on the last count, Phnom Penh had 637 Kroms (villages) within communes. Phnom Penh City is home to around 2.5 million people and Khmers make up the majority of ethnic groups (approximately 90%). The next three ethnic groups are Vietnamese, Chinese Cambodian (Khmer Chen), and Cham (Muslim). The largest majority of Cambodia’s 80,000+ ex-pat population reside in the capital city, making it the nation’s cosmopolitan hub.
SHOPPING & EATING
Starting with Aeon Mall, Phnom Penh has seen a flood of new shopping complexes, hotels, townships, and condo projects springing up across the city as Cambodia rides a flood of high financial development rates in recent years. The Phnom Penh market will see plenty of new options for shopaholics shortly.
Phnom Penh has a wide selection of cuisines available and a mix of tastes has been imported by the historic influences of the Khmers, Vietnamese, Chinese, Japanese, French, Thais, Russians, and others.
The oldest structure in the city is Wat Phnom, constructed in 1373, and has existed in Phnom Penh since its original founding. Other main tourist attractions are the Royal Palace, Silver Pagoda, and the National Museum. The Independence Monument, built in the 1950s, is constructed in the Khmer style. But many travelers delve into the Khmer Rouge history, with visits to the S21 Prison/Toul Sleng and the Killing Fields.
Phnom Penh has a variety of nightlife options. Bars and clubs are dotted all over the city. The riverfront/riverside area along Sisowath Quay has numerous bars and restaurants, many with great views of the river. The riverside is more catered to tourists, but expect to see a range of bars and upmarket lounges from Wat Phnom to the Royal Palace. Up the side streets of 172, 136, 130, 110, and 104 are the hostess bars and there are some good live music venues and intimate hangouts. Street 51 and Sorya Mall is another nightspot, open very late. The two most famous nightclubs Heart of Darkness and Pontoon keep the area full of punters till 7 am. The Boeung Keng Kang 1 (BKK1) area is home to some good venues, especially on Streets 278/51, Bassac Lane, and Street 308. These are dominated by ex-pat patrons and tend to be more expensive than other areas.
Phnom Penh offers a wide range of institutes and the selection is growing every year. Many of these ‘international’ schools are internationally accredited, so students can move between schools inside and outside of Cambodia. However, be wary that not all ‘international schools’ are created equally, nor are they necessarily accredited. Best to check.
Phnom Penh has several international standard hospitals and clinics, including the government-managed hospital Calmette and the Thai-affiliated Royal Phnom Penh Hospital. Other options include the International SOS clinic offering English-speaking primary care and evacuation services, Krema Clinic, and Naga Clinic which provide a range of medical care with multilingual doctors. There is also a wide range of clinics offering full and reasonably-priced dental services.
Phnom Penh International Airport is the main airport in the kingdom, located approximately 7km west of the city. Cambodia has a few local airline companies and a growing selection of international carriers and destinations. New direct flight is international and regional routes are announced regularly.
Taxis, minivans, and buses are available to reach most destinations throughout the kingdom and beyond to Thailand and Vietnam. Phnom Penh also has a rail service. Motor taxis (moto-dops) and tuk-tuks are readily available. Phnom Penh also has a bus transit network and three bus lines now operate in the capital. Boats: River ferries between Phnom Penh and Siem Reap are offered daily, departing at 7 am daily from the Phnom Penh Port on Sisowath Quay (approximately 4-6 hours travel time).
CONDOS & SERVICED APARTMENTS
The latest breed of luxury sky-rise condominiums is tailored to the demand of international investors, who can buy condos, apartments, and offices in Cambodia – as long as they are in a co-owned building and above the first floor. Budget options are increasingly available and are proving popular with local investors as live-in properties and rental earners. Catering to the high-end ex-pat market, Phnom Penh has several serviced apartments. They are fully furnished, come with a range of services, and are available for long or short stays.
FLAT HOUSES, VILLAS & BOREYS
Highly popular with locals, flat houses are the most popular kind of home in central Phnom Penh. They are affordable, able to be used for multiple purposes, and usually include land ownership in the title.
Phnom Penh offers opulent French-inspired villas located throughout the city and many borey developments cater to this highly popular market for Khmer buyers. Borey homes are homes in a township, a gated community. They can be villas, flat houses, or link houses. All infrastructure is supplied by the developer, and each buyer can buy a property within the borey with individual hard titles over that land plot. Normally, boys also offer community facilities for all buyers to use. Boreys are seeing huge demand from local buyers in Phnom Penh.
INDUSTRIAL / COMMERCIAL:
New developments are bringing increasing options for serviced and non-serviced office space throughout Phnom Penh. There are still good opportunities for real estate developments in the middle-end office market. There are many commercial opportunities in the capital to invest in established businesses such as bars, restaurants, and guesthouses, as well as land for commercial development, petrol stations, and school premises. New developments and off-plan homes are plentiful, allowing opportunities for local and international investors.
Rising land prices have instilled confidence in the economy and encouraged foreign investors to invest which have yet to have detrimental effects on intra-city trade. Phnom Penh has many Special Economic Zones (SEZs) which are well suited to industrial ventures with attractive conditions for businesses. Phnom Penh’s largest and most-established SEZ is the Phnom Penh Special Economic Zone (PPSEZ) which recently announced plans to join the national stock exchange.
Phnom Penh is overseen by the Governor and every district also has its own head Chief. Investment projects with capital less than US $2 million are assessed by the Royal Government and then given to the Phnom Penh Investment Sub-Commission to decide if it qualifies as an investment project. The Sub-Commission has its Secretariat office located in the capital. The General Department of Taxation provides up-to-date information on tax regulations and the official website is well laid out. Business registration is available online and you can check the Ministry of Commerce website for more details.
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