An affordable- housing initiative announced by the government last year aims at providing tens of thousands of new homes to limited-income families, but the plan has received a cool response from the private developers it was hoped would lead the way.
With private developers focused almost entirely on building residences for the upper-middle and luxury markets, the government is trying to shift some of their efforts towards providing simple homes for limited-income families, especially in rapidly expanding urban areas.
Last year, the government announced its first affordable housing initiative, which aims at filling the glaring gap in homes priced under $30,000 that are suitable for Cambodians earning from $200 to $400 per month.
Chea Sophara, Minister of Land Management, Urban Planning and Construction, said in June 2017 that 800,000 low-cost urban homes must be built and added to the Kingdom’s 2015 housing stock to meet demand as the national population swells to 19 million by 2030. He said the government was working to establish affordable housing prices, as well as tax and regulatory incentives that would encourage the private sector to shoulder the task.
While initiative requires the construction of nearly 55,000 new homes a year, the response from private developers has been limited, with less than 10,000 units announced.
To date, only three affordable housing projects have received the government’s nod of approval, which qualifies them for tax incentives, regulatory support and state assistance in the form of infrastructure such as roads, electricity and water networks.
The first project, Worldbridge Homes, is a $60 million affordable-housing development occupying 24 hectares on a total 45 hectares of land in Saang district of Kandal province. Announced in January 2017, the project will see the construction of 2,297 two-storey flats priced between $25,000 and $30,000.
“This price bracket is still affordable for civil servants and low-income families earning less than $500 dollar a month,” according to Sear Rithy, chairman of Worldbridge Group, the developer behind the project. “For this project, we basically want to help the government help people obtain proper houses. If we were focused just on profit, we would stick to building condos and commercial centres.”
Rithy said families whose monthly income does not exceed $500 per month are eligible to purchase the low-cost homes, though the primary target is government officials who are married with kids but due to their low salaries and pensions are unable to afford a home within market value.
He said more than 500 families have purchased homes since sales kicked off three months ago.
“We have not yet received a list of names for civil servants eligible for this project, so we have not sold any units to them yet,” he noted. “Now we are waiting for the government to provide the list and once we get those names, we will start selling houses to them.”
Yuk Sothirith, general manager of Worldbridge Homes, said the government has assisted in developing the infrastructure for the project and construction of the units is scheduled to start later this year.
“Most of the infrastructure has been completed and we will begin building the houses in two or three months,” he said. “After this project, the company will consider building another [affordable housing] project with support from the government.”