I have never made any political or economical predictions on my blog because a) I am no Walter Kronkite and b) I like to keep it simple for the masses who want a chuckle or a little insight into life in Cambodia. However, I am going out on a limb today and I am going to make a call ; I think Cambodia(ns) has finally caught up to the rest of the world with the realisation that *gasp* * shock* * horror*….things are critical economically.
Last night I dined privately with a prominent Financial CEO who outlined some of the HARSH realities of where the Cambodian Economy is at and he says his view is shared by all major Corporate CEOs and heads of International institutions here. These are the guys who daily check the pulse of the Khmer economy and the reality is..Cambodia’s economy is up shit creek without a Lexus. Any dummy can guess that bank vaults are chockers full of land titles being held as security on property based loans that are now being defaulted on at an alarming rate. The flip it quick days are done and dealt.This in turn is going to lead to a land and house fire sale by major banks the likes of which Khmers have never seen before.
Today’s Phnom Penh Post has some very interesting articles ;
Acleda Bank has posted a 54% plunge in profits due to loan defaults, stricter lending procedures and I am guessing less fees coming out of ATMS etc as people now have no money to withdraw for that new gold watch or Moto etc. To further add fuel to the already diluted mix – would you believe there are still new banks opening up in Cambodia ?. I mean – who the hell is doing their due diligence ? A monkey ?
Land prices have dipped by half YTD 2009 compared to same time 2008. We are now down from $5000/m2 in the posh areas to *groan* $2700 odd. Tin fences on large plots of inner city land with FOR SALE written on them are rusting away as owners blindly hold out for a miracle like a lemming that doesn’t want to jump but rather needs a bloody good push off the cliff. All major Realty Agents like Bonna, Visal and CPL are disclosing massive downturns in profits, clearance rates and sale prices and the bravado of those who were declaring “absolutely nothing to worry about – it’s only a 6 month dip” has at last turned into a quivering “maybe we might recover in…ahem… 2011” . In the absence of any open house inspections,I am guessing they are drinking (and finally therefore FINALLY smelling) much stronger coffee. Certainly not from Metro though -they can’t afford it !
Strangely, there are still some absolute muppets willing to have a go.Plans for an $11m / 40 Villa Gated development some way out of Phnom Penh are going ahead. Prices will range from US$240k to US$340k and *woweeeee* for that you get a communal swimming pool AND a badminton court. The same muppets are the brains behind De Castle developments and my….aren’t they doing well !
Whilst we are talking property. Let’s have a look at rentals. There are now more for rent signs hanging on balconies then ever before. Villa rents have ceeerashed. Piles that owners were Miss Piggishly demanding $2500 for 6 months ago are now to be had for half that. And you can take your pick as there are plenty in the papers. I pity the poor UN staff who are all locked into retarded rental contracts.I went looking on behalf of a mate last weekend for an apartment. His budget was no more than $300. We looked at several apartments that the owners were STILL asking silly rents for. 3rd level 2 bedders with no parking for $400. Interestingly, all of the owners said they would actually move (no doubt to other,smaller apartments they owned ) if my mate actually wanted their apartment ! Within an hour we had found him a 4 storey complete shop house with secure gated parking and two rooftops in a stunning tree lined street in a nice location for *dramatic pause* $300 a month. The landlord actually has his head screwed on tighter than any I have ever met ( except maybe our landlord Panha ! ) and said ” I want to rent it ASAP..not have it vacant at $600…”. AND he is going to give it all a fresh coat of paint for my mate ! I honestly couldn’t believe my mate’s luck.
WAKE UP ALL YOU LANDLORDS. LOST RENT =LOST INCOME FFSake.
Next ; Cars. As you know, I recently sold my beloved Jeep. I paid $4200 over a year ago and that was then the standard rate for that type of 4×4.Now the same garage I bought from is selling them for $2-2.5k. Luckily I got the timing right on the sale of mine. Street 108 ( the "car market" street ) has more Camrys and Corollas than ever before for sale and you almost get molested if you give off the air of ” I might be interested in buying a car” about you.Again….there are still some completely deluded dickwads out there. My mate Mark recently asked me to keep an eye out for a truck capable of carting diesel drums out to his Telco towers in the provinces and I found the one below.A 10 year old ++ Landcruiser flat bed 260,oookms on the clock, resprayed and a cheap cheap $38,ooo. TWAT. The owner had the gall to laugh as I drove off saying in khmer that I could understand perfectly " ha ha he cannot afford $38k". I stopped my bike and said "Hey,niyak ch’goot, k’ynom skoa-ul larn doach-kneea thmei dop chnum munh kroan-un dtai buy mern dollar..aloh, knyom ot jen loy j’rarn jeeung muey mern dollar"
( ” Hey, crazy dude, I know that a car the same as that was only $30k NEW 10 years ago, now I wouldn’t pay you more than $10k….”). That shut his greedy little mug up.
Into the gold market ? Gold traders at the larger markets like Psar Thmei are losing hundreds of thousands of dollars as they are forced to honour contracts that guarantee a 90% trade-back price on their own jewellery. As Khmers scramble to sell off whatever tangible assets they have, gold bling is the first to go. I actually love this aspect of the downturn ; the de-chaving of khmer society. I pity the poor gold sellers though. We have good friends who are the top golden dogs at Central Market and they have dropped a cool half$mil on hocked gold.
So there you have it. My first thoroughly analytical overview of the Cambodian Economy. Soon to be released as a Phd White Paper at a newsagent near you.Dr Pen Phd Khmer Ec. I like it.
Oh………..In a hilarious finale to my extensive economic analysis – it seems even shit isn’t selling at the rate it was. That stinks !