The Phnom Penh Special Economic Zone (PPSEZ) manages 357 hectares of land along highway number 4, and hosts over 90 international companies. The zone offers a strategic location for manufacturers: 8 kilometers from the international airport; 18 kilometers from Phnom Penh's city center, easy access to the Phnom Penh River Port, and along the highway to Sihanoukville’s deep sea port - a journey of just over 3 hours.
PPSEZ is the only publicly listed SEZ in the country, and offers investors unique exemptions from customs tax, income tax and other taxes. It also offers trade permits, customs clearance, recruitment support, onsite electricity, water supply and amenities for workers.
With over 17,000 workers on site at PPSEZ and expansion underway, residential development is also rising quickly around the area to cater for the increase in both workers for the zone and a new international managerial class.
Borey Pipum Thmey, otherwise known as Borey New World, has brought more than 2,000 units of shophouses to the area. Located directly alongside the boundary of PPSEZ, the development has become a popular place for workers and related professionals to rent and buy property nearby the SEZ. Other developments in the area include Borey Sen Monorom and Borey Kamkor.
According to a local media report in November 2012, Dith Channa, general manager of VMC Real Estate Cambodia, noted that land was selling from as low as $30 to $100 per square metre along National Road 4 from Chaom Chao intersection to the car toll bridge. Beyond the toll gate, prices were just $15 to $25 per square metre, and $5 to $10 per square meter further out from the city.
A report by Vtrust Appraisal in October 2016 indicated that land parcels along a 3.43-kilometer stretch of National Road 4 running from Chaom Chau Circle westwards until the Crossing Railroad, which is within the commune of Chaom Chau, could be marketed between US$270 and US$1,450 per square meter, dependent on location and zoning characteristics.
Hoem Seiha, Director of Research at Vtrust Appraisal and author of the report, noted that, along National Road 4, the farther the parcels or landed properties from Chaom Chau Circle, the lower the prices they could be sold. “So nearby PPSEZ, which is located in Kantaok commune, farther west of Chaom Chau commune and farther from the bustling parts of Pou Senchey district, the market prices for land parcels could be marketed about US$200 per square meter,” he said.
Mogan Lee, Director of the CORE@PPSEZ project said that, “Land price appreciation in this area is growing steadily year on year - as is the occupancy of the PPSEZ.”
Industrial development is apparently fueling residential development - and vice versa along road number 4.
“Another trend the area has been seeing is the investment of small and medium size manufacturing enterprises outside of the PPSEZ,” says Lee. These manufacturers may not be able to afford the space within the PPSEZ, or may not require sufficient space to occupy allotments within the zone.
“SMEs are instead buying, renting or building lower quality factories in this area. Some are also modifying existing buildings and shophouse to start their manufacturing operations,” says Lee.
These investors can benefit from the increasing labour pool in the area being attracted by PPSEZ - and the same logistical access to the Sihanoukville port and central Phnom Penh. Yet, these operators outside of the PPSEZ do not gain the benefits of the SEZ regulation, namely tax breaks and customs assistance.
Setting up outside the SEZ may offer a more affordable option for SMEs and, additionally, investors are able to buy the land on which they build their factory operations. Inside PPSEZ this option does not exist. PPSEZ offers only 50 year extendable leaseholds and they have to construct their own space.
In response to this gap in the market, Singaporean developer CORE@PPSEZ has launched an integrated business hub along National Road 4, within the PPSEZ premises, to offer a more affordable and flexible option to this class of SMEs. This multi-purpose freehold development will feature 40 office units, 10 shop units and 14 units of 3-storey terrace factories - set for completion in the second quarter of 2018. Companies within CORE@PPSEZ can benefit from the same tax breaks other manufacturers receive in the licensed SEZ, with the added benefit of being able to own the property outright.
“The concept seeks to offer SMEs the chance to place their company in a smaller yet high quality development - alongside the major brands operating there,” says Lee.
The launch of CORE@PPSEZ marks the advent on a new real estate product for the Phnom Penh industrial market, which responds to a growing interest from SMEs looking to enter the Cambodian manufacturing sector.
“Meanwhile, pure investors can purchase units in the project and benefit from the appreciation in this growing industrial and residential quarter of outer Phnom Penh,” concludes Lee.
Click here for more information about CORE@PPSEZ on Realestate.com.kh