Zoning Plans REF#6124

22 Sep 2023 | Real Estate & Construction Issue Tackled

Last modified date: 22 Sep 2023

Issue Description

Currently, the Ministry of Land Management Urban Planning & Construction has been working diligently on extensive infrastructure planning on a local and national level. Although the Ministry of Land Management Urban Planning & Construction has been working on zoning plans, they are yet to come to conclusion. Furthermore, with all of the new infrastructure being constructed, it is often a grey area when it comes to zoning as the private sector is unable to pre-determine what can and cannot be built as there is no clear zoning plan in place known to the private sector, apart from what is noted in Sub-Decree No.42. Unfortunately, this has led in the past to the vacuum of policy being filled by rumor of new infrastructure locations, giving rise to land values being often subjective to the impact of speculation based on these rumors. 

Not being able to establish the actual facts of zoning of relevant areas makes it difficult for developers to work in harmony in developing the complimentary infrastructure for different types of residential, commercial, and manufacturing zones. Simply put, providers of light industry infrastructure might be tempted by the thought of coexisting with affordable housing zones, but might end up with malinvestment should the area end up being established as an entertainment zone. 

Zoning is a planning control tool for regulating the built environment and creating functional real estate markets. It does so by dividing land that comprises the statutory area of a local authority into sections, permitting particular land uses on specific sites to shape the layout of towns and cities and enable various types of development. Zoning has a relatively short history as a tool for land-use planning. It determines the location, size, and use of buildings and decides the density of city areas.  

The purpose of zoning is to allow local and national authorities to regulate and control land and property markets to ensure complementary uses and sustainable urban development. Zoning can also provide the opportunity to stimulate or slow down development in specific areas. On a macroeconomic level, where construction and real estate are core components of the economy, it is often used to throttle economic activity between boom-and-bust scenarios and prevent harsh downturns after periods of inflationary expansion. Real estate and construction sectors are heavyweights within the overall economic mix of Cambodia, so zoning could play a part in not only regulating the economy as a whole, with district and provincial targeting being able to bridge the wealth gap between metropolitan and rural populations. 

The planning and zoning process functions differently around the world and is controlled by different levels of authority. Most commonly on an international level, a local authority such as the Phum or a Sangkat controls zoning, however on an international level zoning is sometimes governed by a combination of the two approaches. Beyond these immediate controls, additional regulations that affect zoning are often used, such as planning scheme overlays or impact assessments. It is also not unusual for different thresholds of regulation (and therefore vary the costs of) between metropolitan and rural areas, thus tending to restrict the population density growth of dense metropolitan areas, favoring creations of new communities in more sparsely populated places, leading to less pressure on the communal infrastructure, such as roads and public spaces. 

Impact on business

Zoning is of interest to the Royal Government of Cambodia (RGC) as, in addition to the three main categories (residential, commercial, manufacturing), zoning includes complementary rules that address specific types of development, as well as the design and quality of public spaces. Some initiatives allow for the modification of underlying regulations when developing large sites, whereas others fine-tune those same regulations to address lower-density areas or the particular challenges and opportunities of development projects on the waterfront.  

Urban regeneration projects are usually developed on large parcels of land that span several zoning districts and overlays. In order to allow for a better site planning exercise and relationship between buildings and open spaces, the local government may ease the baseline zoning regulation to allow for a more consistent site planning across all lots and blocks. In addition, to stimulate private sector interest in development, the government can allow for the transfer and merger of development rights. Alternatively, it can fine-tune other regulations to allow for higher density development in exchange for some form of a public good, such as mass transit options, privately financed public spaces or inclusionary housing. In this case, the zoning regulation is amended to allow for more density in exchange for privately financed public space or affordable housing units within a housing complex.  

It is recommended that the RGC study the best practices, lessons learned in similar regional contexts and adopt systems developed to regulate the growth of real estate development activity – on the basis that the role of planners is just as important for the creation of liveable cities as it is to protect the overall value of property through the avoidance of oversupply scenarios.   

Recommendation

  • Adopt clear zoning plans.

We respectfully recommend that the Royal Government of Cambodia adopt a zoning system to give precise permissions, prohibitions within the real estate and construction sector.

If clear zoning is implemented on a local and national level, then it will assist in reducing blind speculation on land values and development activity, create zones for individual business types/industry types, reduce congestion/pollution, allow for well planned communities, create additional public areas, and assist in boosting affordable housing.

Furthermore, it will create a stable and transparent environment for EuroCham to then be able to recommend investment to its members. EuroCham would welcome the opportunity to assist the Royal Government of Cambodia in developing the regulations and controls related to the zoning on local and national levels.

Dialogue with

Royal government of Cambodia

Initiative from Eurocham: The issue has been raised by the Real Estate & Construction Committee within The White Book edition 2024 in the Recommendation No. 52.

No response from the Royal Government of Cambodia

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