Running down the middle of Mak Sitha’s newly renovated fashion boutique in Phnom Penh is a crack that is splitting her floor tiles in two. Yesterday, part of that floor at Lady Penh Designs began to cave into the ground.
The walls, ceiling and floor of her silk boutique—located in a shophouse constructed in the 1920s under French colonial rule—are slowly changing shape and sinking. Nobody knows if Ms Sitha’s shop will be left standing by the end of the week.
“Oh my God, the floor is caving in,” Ms Sitha said yesterday from her boutique along the popular Sisowath Quay.
Like several other business and property owners on the block, Ms Sitha is living with the fear that construction work being carried out on adjacent land by Vattanac Properties Ltd Co has caused irreparable damage to the buildings on this part of the capital’s historic riverfront.
Ms Sitha’s business is flanked by a row of successful entrepreneurs both new and old. An Italian and German restaurant—both of which have been cooking up dishes for years—are on the block. The stretch is also home to a fashion boutique, art studio and travel agency, all of which cater to the growing numbers of tourists visiting Phnom Penh.
Vattanac Properties, which is part of a family-owned group of companies that includes Vattanac Bank, started work to lay foundations on its plot of land in mid-April, though the company has kept what it is building a secret. The company is also building the Vattanac Capital Development, a 38-story tower in Phnom Penh’s Daun Penh district near Monivong Boulevard.
While Vattanac Properties has hired TFP Farrells, a world-renowned architecture firm, to design the tower, and South Korea’s Posco E&C to build the tower, it is unclear who is in charge of the building work at Vattanac’s riverside project that has already lead to the collateral damage of the nearby buildings.
Outside Ms Sitha’s boutique yesterday morning municipal police and military police gathered before taking away building equipment being used for construction by Vattanac Properties. Municipal authorities told Vattanac to halt construction on Monday, but the company did not comply.
Ms Sitha opened her business in January after taking out a microfinance loan of $20,000. Every month she must make repayments of $800 on her loan. She also pays a total of $1,000 per month in rent.
At 37, she is one of a growing generation of entrepreneurs in Cambodia. Since establishing her business she has managed to sign deals with buyers in Japan and Norway for her silk products. But if her business, like her shop, collapses, she says it will be impossible for her to relocate without fair compensation from Vattanac Properties.
Privately, residents and business owners are suspicions of the true intentions of Vattanac Properties. Many are asking why Vattanac Properties was building foundations so close to the adjacent colonial-era buildings.
It is also unclear whether Vattanac Properties conducted the proper structural safeguards prior to digging a large trench beside the foundations of the colonial-era buildings. When building next to existing properties it is often necessary to strengthen their foundations before construction commences, a process known as underpinning.
Prak Sideth, a representative for Vattanac Properties, said yesterday that he was not authorized to comment publicly, but his firm had taken out insurance with the local branch of Forte Insurance. He also declined to comment on Vattanac Properties’ building practices at the site or likely compensation for the affected business and property owners.
Sao Vanna, assistant general manager for Forte Insurance in Cambodia, said that Vattanac Properties had reported receiving a claim from third parties.
“So far they just hear the claim from the third party, but so far they don’t really come out with a figure on how much they want to claim for,” he said.
Mr Vanna added that an independent claims specialist had already examined the damage to the properties and that Forte would be looking into whether or not the claim is in line with the terms and conditions of Vattanac’s insurance policy.
“It depends on the loss adjuster to look into our terms and conditions. They will look and determine how much they should pay,” he said.
Meanwhile, businesses inside the colonial-era building on Sisowath Quay are left waiting and wondering.
“If the cracks get bigger of course for me its time to close,” said Giorgio Arcasi, owner of the well-known Pop Café restaurant, a successful establishment, which has been doing business since 2003.
Mr Arcasi said that up until three days ago, workers at the Vattanac site were using jackhammers that would make the entire block shake. He expects Vattanac to fully compensate businesses and property owners for any damages and refurbish the buildings whose structures have been damaged.
“As you know they are extremely rich,” said Mr Arcasi. “For them to pay some money for compensation is like you and me buying a box of peanuts.”
Like other business owners on the block, Mr Giorgio remains hopeful that Vattanac will come up with some compensation.
“If I have to close this place, maybe for one or two months and find another location and move out, then we are talking about a different ball game. That is big money,” he said, looking at a two-inch gap in his doorframe that has recently appeared due to the building around him changing shape.
Next door, Thaing Heng, 61, the owner of a ground floor shop, is investing $25,000 in a new restaurant. Large cracks have appeared along the walls of his property, but he says he will continue renovation work until the building falls or becomes too dangerous to work in.
Laurence Karatau, general manager of Orange River, a silk boutique situated on the ground floor of the famous FCC restaurant and bar, said relocating would bring him to demand compensation for both the loss in revenue and the costs associated with relocation.
“Here is a good position and good retail exposure,” he said. “If we move somewhere else we lose that market.”
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