Suzy Khimm

A South-Korean-backed firm has announced plans to build a Hong Kong-style satellite city in Phnom Penh at a cost of US$2 billion in hopes that the development will attract Cambodia's growing ranks of upwardly mobile homeowners.

World City, a joint venture between South Korean and Cambodian companies, is developing the first phase of the massive project with financing from South Korea's Shinhan Bank, Kim Duk-kon, the company's executive director, said after the ground-breaking ceremony on Wednesday.

The 119-hectare development on Boeung Kak Lake will include skyscrapers, high-rise condominiums, and glass-walled office towers that would dwarf the modest buildings in the capital.

Shinhan Bank will provide US$65 million to build Camko City's first thousand residential units, and infrastructure for the development, which is expected to take between 11 and 15 years to complete, Mr Kim said.

The first phase is due for completion in =two years and the latter phases would include a university, a hospital and schools, the firm said.

South Korea's Busan Mutual Savings Bank, property management firm Landmark Worldwide and Hanil Engineering and Construction are also partners in the project, Mr Kim said, adding that the group would solicit funds from other foreign investors after finishing phase one.

The development is the latest outgrowth of Cambodia's building boom - one of the country's most visible signs of recovery after decades of civil war and destitution.

"Some of the growth is still related to `catch up' and reconstruction, but it is increasingly a reflection of the dynamism of Cambodia's economy," said Robert Taliercio, senior Cambodia economist for the World Bank.

Bolstered by its newfound political stability and large injections of donor aid, Cambodia achieved GDP growth of 10.5 per cent last year.

Expected oil and mining revenues are also adding to investor optimism about the country's prospects.

The investor group was initially wary, but a visit to the country proved "the things we heard weren't true - actually Cambodia is very stable", said Mr Kim.

With a starting price tag of about US$120,000, the residences are being marketed to the growing numbers of young, upwardly mobile Cambodians, and foreigners settling in the country, said Mr Kim.

Cambodia's younger generation has just begun to amass significant purchasing power, said Hang Chuon Naron, secretary-general of the Ministry of Economy and Finance.

"After the Khmer Rouge regime ended [in 1979], there were more children than average. Now they are 25, 26 years old, and they have families who need homes," he said.

"There's a growing middle class, and they tend to live independently from their parents."

Some gated communities have cropped up in Phnom Penh, but Camko City could itself become an engine for economic growth, given the magnitude of the project, said Kang Chandararot, of the Cambodia Institute of Development Studies.

"It's a capital investment that could create a lot of linkages - to service industries, job opportunities for the middle class, with students and businesses coming in," he said.

Others, however, have voiced concern about Cambodia's ability to manage its urban growth, particularly when 35 per cent of the population still lives below the poverty line.

"We should not have huge developments surrounded by slums, with the poorest of the poor looking up at the skyscrapers," said Mu Sochua, secretary-general for the opposition Sam Rainsy Party.

Noting Phnom Penh's "limited and inadequate housing supply", Dr Taliercio cited the capital's need to manage its building boom without losing its character. "[I]t would be a shame if it became just another generic-looking East Asian megalopolis," he said.

Cambodia's real estate boom is unlikely to cool off any time soon, said Hang Chuon Naron.