Gambling ban turns Cambodia’s boom town to ghost town

Sihanoukville’s casino boom has come to a sudden halt © Arno Maierbrugger

Cambodia’s beach resort of Sihanoukville, which saw a boom in investments in casinos and hotels from China since 2016, is suffering from the fallout of a mass exodus of Chinese after an online gambling ban came into force on January 1 this year.

Construction work and casino openings have come to an abrupt halt when Prime Minister Hun Sen unexpectedly announced in August last year that Cambodia would criminalise online gambling. Of 72 casinos in the city, so far four have shut down and 23 have laid off employees, with more than 7,000 workers affected, according to Ministry of Labour officials.

And residents expect more to come as there were around 200 online gambling operators prior to the ban, employing more than 200,000 people.

The boom went to bust as an estimated 100,000 Chinese left the city, leaving behind them stalled projects, debt-saddled local developers, broken infrastructure and a mass of shuttered businesses. As a result, demand for hotels, guesthouses, apartments, restaurants and other properties and services have dropped.

From boom to bust

Since August, almost 800 restaurants have shut and daily orders have plummeted by more than 80 per cent. Restaurants’ daily earnings have fallen from an average of $1,500 to $200, while monthly earnings from food delivery dropped from $3,000 to $800.

Land prices were quoted at about $4,000 per square meter before August last year. Prices for the same plot of land are now half at $ 2,500 per square meter. At the height of the market, rental fees for commercial space ranged from $200 to $500 per square meter which did not at all reflect the real market value of only $20 to $30 per square meter.

The number of daily real estate transactions shrunk from an average of 1,020 before August to around 40. While most major developments are continuing, albeit at a slower pace, small to midsize projects have either reduced their scale or ceased construction at all.

Burdened with speculative loans

In addition, a number of local residents are now burdened with debt as they took out loans to invest in buildings meant for online casino operations and related hospitality projects.

However, roadworks, along with other vital infrastructure in and around Sihanoukville, are currently undergoing rehabilitation since the ban was enforced. The Cambodian government has earmarked almost $300 million to rebuild Sihanoukville’s roads, while Beijing has pledged billions for infrastructure, including a $2 billion expressway linking the coastal city with the capital Phnom Penh. Millions more have been pledged to improve drainage. With several natural watercourses filled in by developers, last year’s rainy season saw catastrophic flooding.

The focus now seems to be on the construction of a special economic zone as a multipurpose industrial area. Chinese companies have invested in the zone and in related ports and power stations, and Japanese investors are being approached. This should lead the city on a more sustainable growth path for long-term investors, analysts noted.



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Sihanoukville's casino boom has come to a sudden halt © Arno Maierbrugger Cambodia’s beach resort of Sihanoukville, which saw a boom in investments in casinos and hotels from China since 2016, is suffering from the fallout of a mass exodus of Chinese after an online gambling ban came into force on January 1 this year. Construction work and casino openings have come to an abrupt halt when Prime Minister Hun Sen unexpectedly announced in August last year that Cambodia would criminalise online gambling. Of 72 casinos in the city, so far four have shut down and 23 have laid off...

Sihanoukville’s casino boom has come to a sudden halt © Arno Maierbrugger

Cambodia’s beach resort of Sihanoukville, which saw a boom in investments in casinos and hotels from China since 2016, is suffering from the fallout of a mass exodus of Chinese after an online gambling ban came into force on January 1 this year.

Construction work and casino openings have come to an abrupt halt when Prime Minister Hun Sen unexpectedly announced in August last year that Cambodia would criminalise online gambling. Of 72 casinos in the city, so far four have shut down and 23 have laid off employees, with more than 7,000 workers affected, according to Ministry of Labour officials.

And residents expect more to come as there were around 200 online gambling operators prior to the ban, employing more than 200,000 people.

The boom went to bust as an estimated 100,000 Chinese left the city, leaving behind them stalled projects, debt-saddled local developers, broken infrastructure and a mass of shuttered businesses. As a result, demand for hotels, guesthouses, apartments, restaurants and other properties and services have dropped.

From boom to bust

Since August, almost 800 restaurants have shut and daily orders have plummeted by more than 80 per cent. Restaurants’ daily earnings have fallen from an average of $1,500 to $200, while monthly earnings from food delivery dropped from $3,000 to $800.

Land prices were quoted at about $4,000 per square meter before August last year. Prices for the same plot of land are now half at $ 2,500 per square meter. At the height of the market, rental fees for commercial space ranged from $200 to $500 per square meter which did not at all reflect the real market value of only $20 to $30 per square meter.

The number of daily real estate transactions shrunk from an average of 1,020 before August to around 40. While most major developments are continuing, albeit at a slower pace, small to midsize projects have either reduced their scale or ceased construction at all.

Burdened with speculative loans

In addition, a number of local residents are now burdened with debt as they took out loans to invest in buildings meant for online casino operations and related hospitality projects.

However, roadworks, along with other vital infrastructure in and around Sihanoukville, are currently undergoing rehabilitation since the ban was enforced. The Cambodian government has earmarked almost $300 million to rebuild Sihanoukville’s roads, while Beijing has pledged billions for infrastructure, including a $2 billion expressway linking the coastal city with the capital Phnom Penh. Millions more have been pledged to improve drainage. With several natural watercourses filled in by developers, last year’s rainy season saw catastrophic flooding.

The focus now seems to be on the construction of a special economic zone as a multipurpose industrial area. Chinese companies have invested in the zone and in related ports and power stations, and Japanese investors are being approached. This should lead the city on a more sustainable growth path for long-term investors, analysts noted.



Support ASEAN news

Investvine has been a consistent voice in ASEAN news for more than a decade. From breaking news to exclusive interviews with key ASEAN leaders, we have brought you factual and engaging reports – the stories that matter, free of charge.

Like many news organisations, we are striving to survive in an age of reduced advertising and biased journalism. Our mission is to rise above today’s challenges and chart tomorrow’s world with clear, dependable reporting.

Support us now with a donation of your choosing. Your contribution will help us shine a light on important ASEAN stories, reach more people and lift the manifold voices of this dynamic, influential region.

$
Personal Info

Donation Total: $10.00

 

 

6 COMMENTS

  1. The world made the Chinese middle class rich everything we buy was made in China now there taking the money and buying up the world so plain your grandchildren will be working for Chinese unless we kripple them and stop buying their products and letting greed get the best of us by selling them our property. Happy new year

  2. Absolutely get rid of the concieted, selfish chinese that only respect the $$$. And they are doing this around the world especially the poorer countries like Myanmar ad the Pacific Islands. Taking advantage of these people is gutless and needs sorting out.

  3. Great, get rid of the sly, selfish imbeciles back to where they belong – China.
    They’ve wrecked Sihanouk ville, for their own selfish ways, and it’s time they got stopped. This shows they weren’t in Sihanoukville for anybody’s good, even their own. Good riddens.

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