Cambodia's beleaguered property sector may be showing the first signs of recovery, with a number of projects nearing completion. Koh Puos Investment Group, the local firm behind a US$1bn development on Koh Puos, a small island off the coast of Preah Sihanouk province, said earlier this year that construction of its first phase of 36 villas had begun. The firm said that the first phase of villa construction would be finished by the end of 2011. A 900-metre-long bridge connecting the island to the popular resort of Sihanoukville was said to be 85% finished and on schedule for completion in June. The development is planned to include a luxury residential complex, four- and five-star hotels, business centres, shopping malls and casinos.

Meanwhile, in Phnom Penh the four 29-storey towers making up the US$70m Rose City development should be completed by mid-2011, the developer, the Overseas Cambodian Investment Corporation (OCIC), has claimed. The OCIC has stated that over 400 condominium units at Rose City, part of the larger Bassac Garden City development, have already been sold for US$100,000-200,000. The OCIC also holds stakes in the developments of Canadia Bank, Diamond Island City (Koh Pich) and Canadia Tower, at present Cambodia's tallest building. In 2010 the OCIC revealed controversial plans to construct Asia's second-tallest building on Koh Pich.

Nevertheless, the number of transactions is far below the peak recorded in the first half of 2008. Anecdotal accounts indicate few transactions, partly because Cambodians are reluctant to reduce their sale price; most property is not leveraged, meaning that distressed sales are rare. Banks only offer low loan-to-value ratio mortgages, generally at a maximum of 30%. The situation is further worsened by developers' preference for building high-end property, which is out of the reach of most Cambodians. Many finished properties on the periphery of Phnom Penh sit empty, and work has been halted on several half-finished high-rise buildings.

In 2010 officials liberalised restrictions on foreign ownership of apartments, a measure which was expected to stimulate additional demand. But uncertainty owing to the poor rule of law and declining prices make Cambodia unattractive. Despite the signs of progress at Koh Puos and Rose City, work has yet to resume at two South Korean-financed property developments in Phnom Penh, the Star River and Gold Tower 42 projects, valued at US$300m and US$240m respectively. Work on the two projects was suspended in September.