Cambodia’s economy has seen an influx of business investors from China, which has driven demand for housing and hospitality services in the Southeast Asian nation.

Two million Chinese visited the country last year, an increase of around 67 per cent from 2017. They represented the largest overseas group, about a third of international arrivals. Nearly a quarter of them came for business, according to the World Bank.

“The business environment being favourable, combined with a stable political environment, has brought more business investors and travellers to Cambodia,” said Timothy McNally, chairman of Hong Kong-listed NagaCorp, the largest hotel, gaming and leisure operator in Cambodia. It runs NagaWorld, a casino resort in the capital, Phnom Penh.

China is Cambodia’s biggest aid donor and investor, pouring in billions of dollars in development assistance and loans through the Belt and Road Initiative, which aims to bolster land and sea links with Southeast Asia, Central Asia, the Middle East, Europe and Africa.

The initiative has driven a large number of business travellers to Cambodia, resulting in a construction boom in the city of Phnom Penh and business growth across the country in recent years.

A thriving job market as a result of the booming economy has boosted demand for housing in Cambodia. This has pushed rental yields to 8 to 10 per cent, and asset appreciation to 15 per cent per year, making the nation’s property sector an ideal bet for Chinese investors seeking overseas assets as a hedge against yuan devaluation, say market observers.

“If you took a picture of NagaWorld in 2009, you would see one tower, and behind us at that point they were just building the Ministry of Foreign Affairs and the National Assembly. Everything around us was really just open land,” said McNally.

“Phnom Penh has been in suspended animation for the better part of three decades. There were no buildings [being constructed], whether they were public buildings or from the private sector.

“Today, the skyline of Phnom Penh but specifically around our area are new hotels, new office buildings and new residential facilities.”

NagaCorp is seizing the opportunity provided by the boom. It plans to build phase three of NagaWorld by adding four high-rise hotels, a 48-storey condotel – a condominium project operated as a hotel – and additional entertainment facilities such as theme parks, restaurants and nightclubs.

“Right now we have about 1,800 to 1,900 rooms with Naga 1 and 2, but we’re going to add better than 4,000 rooms, and that’s going to be contributing to accommodating that growth of tourism,” said McNally.

Cambodia approved over US$2.7 billion worth of real estate projects during the first four months of 2019, a 67 per cent increase from a year earlier, according to a Xinhua report quoting local media.

The economy has sustained an average growth rate of 7.7 per cent between 1995 and 2018, making it one of the fastest-growing in the world.

Cambodia is heavily reliant on capital and tourists from China, so a sharp slowdown in the Chinese economy could dampen growth prospects, according to the World Bank.

But that could be slightly counterbalanced by the US-China trade war which has prompted many Chinese firms to relocate factories in lower-cost countries like Cambodia, according to a CICC report.

“If somebody were to decide between going to Shanghai, Singapore or Cambodia and you only have so much money, your money’s going to take you further in Cambodia right now,” said McNally.

Cambodia’s tourism authorities expect visitor arrivals to the country to increase to 12 million by 2025, with five million of those projected to be from China.

“We’re building for the future … to contribute to those tourism, leisure and hospitality requirements that any country and jurisdiction needs to compete with someone else,” said McNally.