Japanese Mall Buys Swathe of Prime Real Estate

Realtors say Japan’s entry into Cambodian market significant

In one of Phnom Penh’s biggest land deals to date, Japanese shopping mall developer Aeon Mall Co Ltd has bought 6.7 hectares of prime real estate from South Korea’s GS Engineering & Con­struction, a firm that was once slated to build the tallest building in Cambodia.

Sok Cheng, deputy director at the municipal land management department, confirmed that Aeon Mall had purchased land next to the recently opened Sofitel Pho­­kee­­thra hotel in Chamkar Mon district and said that the deal had gone through with the help of a Cambodian investor, whose name he declined to reveal.

“They bought the land more than a month ago,” he said. “Our country welcomes Japanese in­vestment, and we are happy that they will start to develop the land soon.”

Though officials and a representative from GS Engineering & Construction declined to reveal how much the deal was worth yesterday, land between Sothearos Boulevard and the Tonle Bassac river, where Aeon purchased the site from GS, is valued at about $1,500 per square meter, according to the Cambodia Valuers and Estate Agents Association.

At that price, the Aeon deal could be worth in the region of $100 million.

Property experts said the entry of such a large Japanese investor was welcome news for Cambodia’s property market, which crashed during the global financial crisis in 2009 and has since failed to properly recover.

While investors from Thailand, Vietnam, South Korea and China have been bringing businesses to Cambodia for years, Japanese businesses have been slow to enter the market.

“I think it’s great news that there is a large Japanese retailer which is investing in Cambodia,” said Daniel Parkes, country manager of the global realtor CB Richard Ellis.

“Previously we’ve seen Malaysians and Vietnamese investors and now we’re seeing investors from Japan and Hong Kong, which are premium developers, entering the market,” he said.

In April Hongkong Land, a subsidiary of the investment giant Jardine Matheson, paid $33.65 million for a 1,625-square-meter plot between Wat Ounalom and the Tonle Sap river, a 10,500 square meters site directly behind the US Embassy, and two serviced apartment buildings near Monivong Boulevard called Colonial Mansion I and II.

Vattanac Tower, which is being built by South Korea’s Posco E&C in Phnom Penh’s emerging central business district, has been designed by the internationally renowned Hong Kong-based architects TFP Farrells.

Sunny Soo, country head for Knight Frank, a global realtor, said that Aeon’s development on such a large swathe of land would need to be multi-purpose in order to generate enough demand.

“I think for that piece of land it is too big for just a single shopping center, it would need to be a mixed development,” he said.

Him Hean, director of the business registration department at the Ministry of Commerce, said that AEON Mall had registered with authorities on August 8. “The company’s objective is to develop a mall, supermarket and other real estate,” he said.

According to business registration documents published on the website of the Ministry of Commerce in September, AEON Mall’s chairman in Cambodia is Chea Samrech.

Sok Chenda, secretary-general of the Council for the Development of Cambodia, confirmed that AEON Mall had purchased the land but declined to elaborate on the deal.

GS Engineering & Construction’s original objective for the site purchased by Aeon, which was to be called the International Finance Complex, was a project that included a 52-story tower and six other modern building blocks.

Earlier this year GS, which broke ground in 2008 and became one of the largest and earliest victims of the financial crisis, scaled back its plans and said that it was instead aiming to build a gated community dubbed Kings’ Estates.

A representative for GS Engineering & Construction, declined to comment on the deal, while questions submitted to AEON Mall went unanswered.

Officials at the Japanese Embassy and Japan External Trade Organization (Jetro), the Japanese government’s trade arm, also declined to comment, though they acknowledged that a Japanese company had purchased the land.

“The company will make a press release in Cambodia when they are ready,” said Kiyotaka Doho, a representative for Jetro in Cambodia.

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