Land Privatization and Affordable Housing in Cambodia

Elite Town? Land Privatization in Phnom Penh

The privatization of land in the Cambodian capital has gathered pace and is taking on a diversity of forms. For instance, the conversion of agricultural plots to residential uses in and around Phnom Penh is leading to enormous increases in land value. This conversion occurred on Koh Pich, also known as “Diamond Island”, where the Bassac River meets both the Mekong and the Tonle Sap. Small-scale farmers were offered minimal compensation payments and were evicted off the island to make way for Phnom Penh’s newest and most exclusive development site.[3] The former agricultural land became the city’s latest urban development site.

Today, visitors to the wide streets of Koh Pich are given no illusions as to who the island is aimed at. Situated on Diamond Island, “Elite Town” is one of Phnom Penh’s most recent gated neighbourhoods with a grid of streets named after American universities. Overlooking the ostentatious villas at the corner of Princeton and Harvard streets is the reigning vanity project of Phnom Penh, a re-creation of the Arche de Triomphe. The replica is part of another Diamond Island neighbourhood called “Elysee”. Boulevards designed to look like Parisian streets lead up to the local city hall modelled on an elaborate Hotel de Ville. Golf driving ranges and expensive international private schools intersperse the housing developments. All that is missing are actual residents. While there has been a trickle of newcomers, the streets of both Elite Town and Elysee are largely empty. Such luxury developments are destined to predominately be foreign investments.

Diamond Island is another example of the shadowy nature of land privatization in Phnom Penh. The island is owned by the Overseas Cambodia Investment Corporation, an entity controlled by Cambodian financier Canadia Bank. There are scant details available on the land acquisition like so many pieces of prime real estate being bought by private developers. Researchers claim that swathes of public state land have been converted behind closed doors into private land for sale.[4] This has proved damaging not only to the majority of residents but also to Phnom Penh’s urban heritage.

The fate of many traditional Khmer, modernist, and colonial-era buildings has been determined by murky deals between the state and business. It has been common for prime inner-city land and property including government offices, universities, and hospitals to be gifted to private interests in exchange for lesser-valued plots of land on the urban fringe.[5] In one instance a government office building was transferred into the ownership of Cambodian conglomerate Pheapimex as part of an undisclosed deal. The company had recently acquired the colonial-era “Hotel Renakse” next door to the office building. [6] The hotel had previously been under the leasehold of the ruling Cambodian People’s Party (CPP). To complete this sorry tale, Pheapimex is owned by the wife of Lao Meng Khi, a Senator from the CPP. Beyond the loss of heritage architecture, it is the city’s disadvantaged who have borne the brunt of the high-end construction boom. Housing and land rights organization Sahmakum Teang Tnaut has catalogued the various deals and developments leading to the eviction of 29,700 families between 1990 and 2016, including on Diamond Island. Thousands more have the threat of imminent displacement hanging over them today.

Each case of eviction reveals how land privatization and speculative development can dramatically disrupt urban communities. One high-profile mass eviction was of residents who had built their lives around Boeung Kak Lake in central Phnom Penh. In order to build a “multi-purpose living and recreation” development, over 20,000 residents were forcefully evicted and the 133-hectare lake was filled with sand. It sparked a series of protests and local and international outcry, which was vividly catalogued in the documentary film Cambodian Spring. The site was leased for 99 years by the government to Shukaku Incorporated, a front company of Pheapimex. The lake was reportedly leased for US$79 million, a fraction of the estimated US$1.3 billion price the land would fetch on the open market.[7]

Boeung Kak is indicative of an approach to land management that fails to protect the rights of the urban poor communities in most need of support. Successive governments and development partners like the World Bank (WB) have prioritized an individual land titling regime that fails to tackle many of the systemic land inequalities in Cambodia and which largely excludes alternatives to the market-first approach.

Individual Land Titling: A Failed Approach?        

The awarding of individual land titles has been a conventional approach to land management in the Global South. Proponents of individual titling claim that it supports people with informal tenures to gain economic prosperity. The argument follows that formal property titles not only provide long-term security during which people can renovate and improve their homes, but also an asset that households can use to access credit.[8] Furthermore, advocates point to the need for titling in the efficient operation of land markets. This enables property transactions to be underpinned by legal surety.

In 2002, the WB funded the Land Management Administration Project (LMAP). It aimed to address land titling issues dating from the post-Khmer Rouge era. Under the Khmer Rouge, as part of the regime’s descent into genocide the city had been cleared with vast sections of the population forced into harsh agricultural labour camps. There were only 60 residents in Phnom Penh when the Khmer Rouge regime fell in 1979. Thousands flocked back into the city and squatting in available properties supported many low-income families. However, the new provisional government annulled all pre-1975 land claims leaving many in precarious positions with no legal recognition of their tenure.[9] This post-civil war settlement inevitably favoured those with bigger pockets and connections to authority. LMAP was designed to provide some certainty to those with claims to land. While thousands of titles were created through the program, LMAP largely failed to intervene in cases where land was disputed. This contributed to the residents of Boeung Kak being denied access to the LMAP process when fighting eviction from the land.

In 2009, LMAP was scrapped after a scathing report detailed the failures at Boeung Kak.  Belated pressure from the WB and other international donors led to small concessions to the remaining 700 families battling against eviction from Boeung Kak. A 12.44-hectare resettlement site was carved out of the original 133 hectares.[10] Today, evictions in Phnom Penh have slowed to a degree, as authorities are wary of another case like Boeung Kak gaining attention. However, smaller land disputes still occasionally hit the newspaper headlines and there is no sign of slowdown in expensive condominium developments across Phnom Penh. Development of luxury apartments is now underway on top of the former Boeung Kak Lake, including 1,600 units of the “One Park” complex. To compound the misery embodied in “One Park”, it was recently revealed that the construction had used “blood bricks”.[11] These are bricks sourced from kiln sites marked by child labour, practices of bonded indebtedness, poverty wages, and workers impaired by severe health issues. Blood bricks were also used in the construction of the Elysee neighbourhood on Diamond Island. The phenomenon shows how the unregulated boom of development, facilitated by land privatization, has damaged lives in other ways beyond eviction.

Affordable Housing Projects Struggle to Compete

Real-estate companies are making mega profits from luxury constructions, aided by the sale of public land. Beyond the high-end projects, could developers be incentivized by government policy to support affordable housing? Such reforms are destined to be frustrated by the land market. Without addressing land commodification, speculative developers will inevitably choose larger profits over the housing needs of low- to middle-income Cambodians. Currently, only a small number of companies are diversifying into what has been defined as mid-tier or “affordable” housing. They are partially responding to the estimated countrywide demand for 1.5 million new homes between 2015 and 2030. In 2019, 8,331 “affordable homes” were built along with what the authorities term 38,488 “general houses”.

As well as receiving favourable terms for what was previously public land, developers are now able to benefit from Cambodian Government incentives aimed at encouraging “affordable housing”. Tax breaks and fast-tracked approvals processes are in place for projects of 100 housing units and above which are marketed between 15,000 and 30,000 US dollars. The full impacts of such incentives are yet to be seen, but on current evidence, the “affordable” homes are too few, and in reality are not truly affordable. Cambodian conglomerate Worldbridge group has been lauded by the government for its recent “affordable housing” project. Prices for the 2,457 units in Koh Kor village, over 20 kilometres from the centre of Phnom Penh, vary between 25,000 and 30,000 dollars. One housing practitioner argued that house prices instead need to range from 10,000 to 20,000 to be truly affordable. This would meet the great demand from families earning 500 dollars per month, defined by the Cambodian government as “middle-income families”. This begs the question: if current projects are not even meeting the needs of middle-income families, then what hope do low-income households have in benefitting from so-called “affordable housing”? Additionally, the financial burden of home loans is damaging to the tenure security of many low- to middle- income families. This will be discussed in the last section.

If the skyrocketing land market goes unaddressed, the majority of citizens will be left in insecure and poor quality housing relegated to the urban fringe. Such marginalization leads to long commutes for work or study and inner and outer suburbs divided by wealth. While Worldbridge’s affordable housing development is 20 kilometres from Phnom Penh’s centre the same company is responsible for three luxury developments in the inner core. As Cambodian housing analyst Ross Wheble states: “Particularly for city centre projects, it is just not feasible for private developers to construct affordable housing unless there is some form of incentive”.

With land values continuing to increase, it is hard to discern how government incentives could keep up. Developers will inevitably follow the biggest profit and escalating land values will always favour high-value developments. According to one housing insider, the price of land in Cambodia is growing by between ten and 100 percent per year, varying by location. Increases in income cannot compete with such a steady rise. Significant change is needed to address the perverse effect of soaring land values. In rejecting the sugar hit of speculative development that destroyed communities like at Boeung Kak Lake, land should instead be treated like a vital, finite, and public resource. Steps can be taken to remove land from an overheated property market while also supporting the inclusive, sustainable development of the city. This includes providing existing residents with the ability to feel secure from land evictions. The final section of this paper will outline some principles and policies for change.

Principles and Policies for Change

Open for Public Discussion: Transparent and Open Land Management

One positive starting point would be an approach to land management that emphasizes public discussion. Analyses from Bugalski[12] and Brugman[13] have argued for the informed participation of residents, a need for transparent decision-making from authorities, and recognition of current political and economic power dynamics. There is a need for public debate on citywide land-use plans with iterations of the Phnom Penh land-use master plan not open to the public.[14] Engagement needs to go deeper to include consultation on individual land parcels such as those surrounding and including the cities’ lakes and wetlands. These areas of land not only support the livelihoods of existing urban communities but also are ecologically significant for cities like Phnom Penh. This includes their ability to help regulate waste and flood waters.[15]

This uncontroversial call for transparent, participatory planning and land management practices has been echoed by key development partners in Cambodia.[16] These reports have also pointed to the need for integration between transport and land-use planning.[17] A number of studies have shown the interrelationship between infrastructures like public transport, which is severely lacking in Phnom Penh, and the planning of affordable housing.[18]

Going beyond transparent land-use planning means recognizing that the continued commodification of land will create inequalities particularly in access to stable, affordable housing. Without this appreciation for how land commodification happens we can overlook the perverse outcomes of otherwise good land management policies. Take for instance the above-mentioned call for integrated land and transport planning. A number of studies have detailed how the development of new transport or utility connections in informal urban neighbourhoods can often lead to the displacement of long-standing residents[19] [20] [21]. Wealthier arrivals are able to pay higher amounts for housing in an area newly connected to a road, bus route or electricity network. Often this leads to the removal of communities who had long advocated for the new infrastructure with speculative developers instead gaining the unearned benefits of the increased land value. This outcome, common to Phnom Penh as well as other cities in the Global South, exposes how rising land values impact on housing affordability, particularly for urban poor communities.

Holding Land in Common

Changing this dynamic relates to another alternative principle of land management which enables communities to permanently take land out of the property market. One policy to facilitate this is the communal ownership of land. Communal rather than individual private ownership would mean that changes in land values, like those resulting from new infrastructure, would not lead to displacement by gentrification amid broader speculative activity. Instead, communities would be supported to maintain affordable land for the long-term. A method that has gained attention in recent years is that of communal titling. This allows a number of people to collectively own the land beneath a group of houses.

Before further discussing the advantages of communal titling, it is worth acknowledging that access to an individual title is preferable to the insecurity of informal land tenure. However, the benefits of individual titling have been oversold and there are perverse impacts from its widespread application. Aside from the noted failings of specific schemes like LMAP, recent studies have suggested that the expected socio-economic benefits from individual titling have been overestimated. One particular overstatement is its role in supposedly enabling access to stable credit.[22]

The dominance of individual land titling stokes the fires of the property market and speculative development. The marketization of land invariably benefits the wealthy particularly when the underlying inequalities of the Cambodian economy leave so many in an insecure position. One manifestation of this precarity is the enormous levels of micro-finance debt in Cambodia. Approximately fifteen percent of the Cambodian population holds some form of micro-finance debt, a total of at least 8 billion US dollars. The median debt is 3,370 dollars per loan, the highest average for small loans in the world.[23] This rising debt also underlies the flawed emphasis on individual titles. Many families may have put forward their land, gained through titling, as collateral to gain the loan. But when an economic shock or loss of employment comes this can create huge difficulties in paying for the high-interest loans associated with micro-finance. Selling land and property may be the only choice for many indebted families. Brugman links this process of “market-based dispossession” to the ease of sale of land and property under individual title. As she argues, the use of individual titles in Cambodia could “make residents' tenure security vulnerable, as it could incentivize the sale of land at a higher price to obtain an immediate and short-term financial benefit”.[24]

The Community Land Trust Model

In contrast to this vulnerability, communal titling provides an extra level of security to householders while also addressing the underlying commodification of land. One model of communal titling is the Community Land Trust (CLT). While there are a number of variants, Williamson has defined four key aspects which comprise the CLT model.[25] The first is collective land ownership with residents coming together to jointly own a defined area of land. Second, the homes sitting on the land are usually owned individually. Third, the community as a whole maintains structures and rules through the Trust that control what happens to the land in question. This community control contributes to the crucial last feature: permanent affordability of housing. As the land is owned collectively a large part of the cost of individual houses is reduced. To ensure that affordability is maintained if the house is sold, the not-for-profit CLT structure owns the land for the long-term. This permanently removes it from the market. For Williamson: “the community-based aspect of CLTs offers the potential to reduce the speculation and displacement that can accompany titling programs that target individual plots”.[26]

Beyond the affordability and security that come with the CLT model there are a number of other benefits. A CLT could build on existing urban community structures rather than duplicating them. In recent years, decentralization reforms have stalled in Cambodia with local authorities at the commune level (sangkat in Khmer) expressing frustration at a lack of power and resources.[27]

CLT groupings can further support decisions made at the local level including any efforts at greater public participation in budgeting for small-scale infrastructure. This would help ensure that decisions that affect the status of land, such as infrastructure improvements, are brought closer to the landholders themselves. As Williamson states in relation to the favelas of Rio de Janeiro: “Decisions about the future of these communities are therefore best made by residents, who are the only people capable of evaluating the true value of their settlements, which is often noneconomic and thus hard to quantify”.[28] In many cases, communal ownership may lead to better stewardship of the land rather than the neglect often shown to habitable areas of state land. Lastly, by uniting through a CLT structure communities can collectively address economic changes in their neighbourhood. They could guard against speculative growth while managing the periods of economic decline that often destabilize property and land markets.

Working with Communities

While recognizing the points of similarity between the communities studied by Williamson and neighbourhoods in Phnom Penh, practitioners must be wary of simply replicating a communal titling model from one country to another and expecting success. As Gillespie discussed in her analysis of the exportation of Western property law to Cambodia: “Legal concepts of property need to be more place sensitive so as not to potentially undermine or destabilize existing and evolving social norms and conditions”.[29]

In the case of the CLT model, it is important that it should be voluntary and community members can opt-in to joining the trust. Rigon’s analysis of the introduction of collective titling in Nairobi attests to this.[30] In this Kenyan example, community members perceived that a collective titling scheme had been imposed upon them without their proper deliberation. Consideration also needs to be given to the existing power dynamics at play in Cambodia. In particular, the relationship between powerful landholders and those in authority.[31] With an intensely speculative real estate sector so dominant in the Cambodian economy, any model that removed land from the conventional property market would require significant advocacy. As Peredo and McLean state: “the commodification and marketing of land have established a cycle that can be difficult to break”.[32]

Communal titles are used in Cambodia but currently only exist for agricultural land and some small forested areas used by local Indigenous populations. A number of studies have been undertaken of the application of communal titling in these rural areas.[33] These analyses and the experiences of Indigenous populations with communal titling are instructive to any wider application in Cambodian cities. However, there are obvious differences between titling programs in rural as opposed to urban areas. While beyond the scope of this paper, further research is required to understand the legal or practical obstacles to communal titling in cities. Key questions include: what would the minimum size of a land trust be, how could land trusts be organized along existing community structures, how could land trusts be formed through an opt-in process, and, importantly, what mechanisms could be created to enable land to be affordably acquired?

Conclusion

The Cambodian government has recently committed to review the 2001 Land Law. Amidst a number of other potential changes, mechanisms should be created to facilitate communal land ownership for urban communities who want to join together in safeguarding their tenure and housing affordability. While not the only solution to some of the housing problems in Cambodian cities, the option of communal ownership of land would provide one method to address an increasingly unequal land and housing market. It would provide ordinary citizens a greater degree of control and say over the economic forces impacting on their homes and neighbourhoods. It could contribute to a different model of urban transformation resistant from the worst aspects of the market system.

Cambodian cities like Phnom Penh could forge a healthy and vibrant built environment that is distinctly Khmer. There is no lack of alternative ideas that could both guide its development and deliver sustainable and safe housing for all.

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