Renovation nation: what owners need to know
Renovation nation: what owners need to know
Phnom Penh and other cities in Cambodia aren’t just sprouting high-rise offices and pking new malls. Many developers are renovating existing stock, so Post Property asked experts for their advice on these projects.
As the number of new buildings in Phnom Penh grows, so does the prevalence of old buildings being renovated and turned into shops, offices, and residences all over Phnom Penh. This practice is so widespread that real estate experts say in some areas of the city almost a third of construction jobs are renovations. They also say that project owners need to be more familiar with the history of the buildings that are being renovated.
“Normally, most of the shops and some offices and residences are renovated from old buildings in just three to ten years,” said Chrek Soknim, CEO of Century21 Cambodia. “If we look at the level of activity in modernizing real estate through renovations, it’s more prominent in the outskirts of the city, especially in Khan Touk Kork. In areas in the city center, such as Beoung Keng Kang, this practice is less seen because it is a good location and there is a lot of investment in brand new and huge buildings.”
Sokhim added that regardless of the success of any business, spending money on modernising old buildings is essential.He continued, “When a company hires you to renovate a building into an office, or a shop, they not only take into account the atmosphere of the building, but also the accessiblity of the builidng, the space, how to use the building so as to coincide with their aims, and the return on investment.
“A smart investor calculates beforehand what their major expenses are going to be aside from the staff payroll, once they become the leaseholder of a property; and they should know that these expenses are mostly going to be spent on tailored renovations.” Sokhim added that calculating the return on investment for renovated properties requires a range of different inputs. “What sort of income they can expect from those renovations? These can be calculated based upon a number of factors, such as the property’s location, its commuting convenience, its capacity to attract customers, and its spaciousness.“These calculations can yield an estimated result, and can help an investor decide whether or not that property is worth modernizing. As for utilities, raw materials, and appliances, these expenses depend on the length of a lease.”
As a successful renovator himself, Soknim observed, “These types of renovations are most successful in the riverside area (Sisowath Street), where a great number of project owners are foreigners. They mostly rent out properties taller than one storey on a limited lease. They then turn the place that they rent into lodgings serving tourists.”
Soknim estimated that, “If we add up the numbers in hot renovation zones, there have been about 20 to 30 percent of construction jobs are renovations, and they are quite diverse as well, turning up residences, offices, and most of all, shops.”
Even with Chrek Soknim’s years of experience in the industry and his knowledge of the local property scene, he says it’s too difficult to put a figure on the yearly investment capital spent on property renovations because these investment projects are mostly small-scale and more in line with a family business. Many renovators never apply for the requisite permits.
Engineering professor Sat Dara, believes that the flourishing construction sector in Phnom Penh could operate more efficiently. He said, “[The construction sector] is still very loosely managed in Cambodia, and sometimes there’s an overlap of duties among those working on a building project whether it’s an existing building, a building in construction, or a project at the planning stage.”
Speaking of the quality and the safety of projects to renovate old buildings and their interior structures, former engineering professor Prak Min, who heads the Board of Engineers Cambodia (BEC), stated that, “No renovations on a building’s interior that abide by the correct standards will have a negative impact on the main body of the structure.
“It’s true that in renovations there’s bound to be demolition of one thing or another, such as walls or stairs, but these demolitions shouldn’t use so much force as to create vibrations to the foundation of the building or house.”
Min said most buildings can have a shelf life of more than half a century if they’re well maintained. “If the building receives proper attention, its constitution can be strengthened to last 30 or 40 years more than it would otherwise last.” However, leaseholders and property owners need to do their homework. “The project owner should study the building’s history and familiarise themselves with it as much as possible, in order to avoid accidents and losses.”
He said the biggest problem renovators cause is overloading old structures. “When renovators add a storey or more to the building, this causes great damage to the building’s foundations, because the previous engineers already calculated the load that a certain foundation can carry.”
