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Formal real estate investment trust market expected in 2023

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High-rise buildings in Phnom Penh, as seen in April. Hong Menea

Formal real estate investment trust market expected in 2023

The Securities and Exchange Regulator of Cambodia (SERC) expects to formally authorise real estate investment trusts (REIT) within the year, in a move to boost the real estate and construction sectors, which have attracted a flurry of investment in recent years, according to its director-general Sou Socheat.

A REIT is an investment vehicle that operates similar to a mutual fund by pooling the capital of individual investors to purchase – and often to manage as well – income-generating real estate properties such as apartment complexes, hospitals, warehouses, hotels and shopping malls.

Socheat told The Post that the SERC has approved licences for “some” fund management firms ahead of the establishment of the formal REIT regime, although he was admittedly unable to provide a concrete number or any names as of press time.

“The REIT market will be rolled out within this year, and will offer new financial products created by the fund management companies, to collect funds to develop the real estate sector and generate profits to investors.

“We’ll work with the fund management firms to establish and ensure that the industry runs smoothly,” he said.

Century 21 Mekong CEO Chrek Soknim lauded the initiative, which he believes will deliver a powerful boost to the real estate industry and ensure sustainable growth.

“We think the launch of the REIT market will be a great move, better enabling real estate industry players to raise funds from the public. REITs, supervised by the SERC, will build trust among public investors and other relevant players who may want to invest in the sector in Cambodia,” he said.

The Ministry of Land Management, Urban Planning and Construction approved a total of 4,275 construction investment projects in 2022 – down 28 projects or 0.65 per cent from a year earlier – with total registered capital of $2.968 billion, down 46.8 per cent on a yearly basis from $5.580 billion, according to data published by the Ministry of Economy and Finance.

The finance ministry’s statistics indicated that the housing segment represented 3,768 of the projects – up from 3,720 a year earlier – or an 88.14 per cent share of the total, up from 86.45 per cent in 2021.

The ministry broke down the 2022 approvals by category: residential (3,768), commercial (228), industrial (184), public (58), tourism (36) and other (1). The corresponding 2021 figures were: residential (3,720), commercial (301), industrial (184), public (47), tourism (49) and other (2).

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