Bank loans

Bank lending to real estate and construction sectors tops $10 billion

The Cambodian banking sector’s combined exposure to real estate and construction loans amounted to 31% of the sector’s total loan portfolio of $33.9 billion at the end of June, or about $10.5 billion, according to the central bank.

Broken down by segment, mortgages, construction and real estate accounted for $4.44 billion (13.1%), $3.22 billion (9.5%) and $2.84 billion (8. 4%), the National Bank of Cambodia (NBC) said in its first half. report published last week.

NBC said that although the prolonged Covid-19 outbreak threatens national economic development, a series of government policies have supported a positive outlook.

Global Real Estate Association Chairman Sam Soknoeun told The Post on July 28 that the remarkable breadth of the banking sector’s exposure to real estate and construction signals that the market remains hot even during the crisis. Covid-19, emphasizing that banks carry out in-depth analyzes of candidates. financial flows.

“Although the crises unfolding with the Covid-19 pandemic in Cambodia persist, I have observed that construction activities, housing purchases and investments continue as usual.

“Improvements in this sector will be the cornerstone of Cambodia’s economic growth, especially once the Covid-19 situation subsides,” he said.

At the same time, the main demand from real estate players for the banking sector is to reduce interest on loans, he said, pointing out that rates in the Kingdom are notoriously high compared to other country.

“I urge the BNC to examine this possibility, or other innovative approaches to lowering interest rates on construction and housing loans.

“Low interest rates will create more opportunities for people to invest and develop their abilities, as well as improve the standard of living for families,” Soknoeun said, noting that home loans in the Kingdom have typically 6 to 12 year annual interest rates. percentage range.

The real estate veteran hinted that the growth momentum in the construction and real estate sector would pick up in the second half as the government’s vaccination campaign was the main driver of Cambodia’s economic recovery.

Founder and CEO of Advance Real Estate Co Ltd, Po Eavkong, highlighted the important role of the banking sector in real estate and construction, noting a steady upward trend of Cambodians using loans from financial institutions to buy properties. houses.

A significant portion of bank creditors are young, newly married and looking to start a new life, he said, noting that some homebuyers pay installments directly to the developer, while others choose to take out loans. banking.

The construction of public and private construction projects remained active in the first half of this year, resulting in a 16% year-on-year increase in imports of construction materials and equipment, after a contraction of 18 .6% from January to June 2019, according to the CNB.

But new projects slowed in January-June this year, registering declines of 11.4%, 34.3% and 29.9% in number, combined value and construction area, respectively, it said. he indicated, noting a significantly poorer performance in the areas of tourism and trade.