Is a Declining Real Estate Market Good or Bad for Cambodia?

 

Before the COVID-19 pandemic, investing in real estate was a dream for many. Land and property prices in Cambodia, especially in Phnom Penh and Sihanoukville, soared like a storm. Those who owned assets found themselves presented with abundant opportunities. Some even became millionaires overnight, making real estate seem like an easy path to wealth. The market became feverish, and people rushed to buy, creating endless opportunities for property owners.

This ease of profit attracted many from other sectors, who shifted their focus to real estate. Everyone thought prices would continue to rise, and the path to wealth would only accelerate. Some, even without specialized skills, became rich in this sector due to the seemingly effortless buying and selling.

However, this “golden era” was short-lived. Unbelievable events began to unfold. The COVID-19 crisis arrived, bringing uncertainty. Before the pandemic even settled, the Russia-Ukraine war added further pressure. The global economy shifted, and Cambodia’s economy began to change as well. This combination of uncertainty and rapidly increasing property values hit the market hard. Even those who had become wealthy from this sector became victims, caught off guard by the sudden shift. Some almost committed suicide, others fled the country, and some even ended up in prison due to these unexpected changes.

Is a Declining Real Estate Market Now Good or Bad?

For me, I see this as a positive turning point and a good sign for the long-term economy. Of course, I deeply sympathize with those who have been severely affected by this issue.

But if we look deeper, allowing this “bubble” of price increases to continue for too long would have led to even more severe consequences. When only one sector offers easy money, people lose interest in other endeavors, hoping for quick and effortless profits without considering long-term growth. Such rapid price increases make it increasingly difficult for the general population to afford decent housing, as property values outpace incomes. Because it was so easy to make money, people stopped pursuing other professions and turned to developing and subdividing land. Professionals with decent salaries also started to get distracted, wanting to get rich quickly, quitting their jobs, and entering this sector due to social pressure.

Is it truly possible for a country’s economy to rely on just one sector for growth? Absolutely not. For me, a robust economy must depend on diverse sectors for sustained and healthy growth. When land prices rise too quickly, it can hinder investments in factories and other projects, as profitability diminishes or costs become too high. And this game of quick profits from soaring land values doesn’t benefit everyone; it only benefits a select few, potentially harming the majority.

Lessons for the Future and a Shift in Perspective

I’ve observed that after this situation, it has taught many people a valuable lesson about future planning. Before, when I warned some about the risks of quick profits, such as investing in land plots or other ventures, it was difficult to get them to listen. They saw with their own eyes how quickly money could be made in this sector and didn’t perceive the risks. But after this experience, it has served as an excellent lesson for their future.

Furthermore, I’ve noticed that individuals with capital and capability, who previously focused solely on quick real estate gains, have begun to diversify their investments into other sectors. This is a positive development for the long-term economy. We need investment across multiple sectors for our national economy to thrive. They’ve started to develop themselves further after this situation, learning new things, and beginning to look further ahead with clearer visions, rather than just short-term profits.

Why Am I Saying This?

Perhaps some of you are wondering why, as a real estate professional, I would say that a declining real estate market is a good thing. It’s because I want to see this sector grow scientifically, step by step, for long-term stability. I want to see growth across all sectors to transform our country into one full of potential and attractiveness.

Naturally, when other sectors perform well and businesses gain momentum, the real estate sector will also flourish. However, if everyone focuses solely on developing construction and land, the market will inevitably be flooded with sellers and no buyers. Supply will exceed demand, and sooner or later, we will all face difficulties, just as we are experiencing now.

Therefore, let’s focus on what we are skilled at, do what we love, and develop those professions or skills well. Only then will our country’s economy grow rapidly. When the economy is strong and all sectors are thriving, the demand for real estate will undoubtedly follow suit.

 

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