Cambodia is one of the few countries in South East Asia with a very high land mass to coastline ratio. And its natural that as the country progresses its only a matter of time before offshore islands are developed.
One of these islands is Koh Rong. The second largest island off Cambodia’s coast. The largest being Koh Kong.
According to the website www.kohrong.com.kh Cambodia’s Royal Group has leased Koh Rong for 99 years. It plans to develop the island into ‘a truly ecologically sustainable large scale resort community’.
I came across these aerial views of Koh Rong and have to admit its a beautiful island.
Its good to know that the Royal Group has a master plan to manage the development of the island with a mind toward sustainability. At the same time, I’ve some thoughts on the master plan that’s useful to keep in mind.
Master Plans and Parcel Sizes
Master planning is always a highly recommended approach for any large greenfield land development project. However, the land parcel sizes of the Koh Rong master plan got me thinking about another similar but larger project in the region – Bintan Resorts (an Indonesian resort island located Southeast of Singapore).
Koh Rong has a land area of 7,800 hectares and if you refer to the master plan above you’ll realize there are more than 15 land parcels over 100 hectares. Comparatively, land parcel sizes in the original Bintan Resorts master plan (below) developed in the early 1990’s was no different. In fact many land parcels here were over 200 hectares and some as large as 400 hectares. You can find more information about the Bintan land bank from the Gallant Venture IPO Prospectus here.
Are these master plans market-driven?
If you’ve followed Bintan’s progress over the years you’ll come to realize that selling large land parcels is far tougher than riding a bicycle into a head wind. Question is: How many entities can purchase 200 hectare sites to develop resort related facilities? And how many of these large sites are available?
Because of this I continually wonder whether resort land developers that have been granted large tracts of land are in tune with tourism investment markets? And that includes municipal governments as well.
Putting in the infrastructure is the easy part. Making the project commercially successful is a whole other challenge. Do resort land developers need to embrace the knowledge gap that exists between marketing and project development before projects become more market-driven? Governments can absorb the costs if the projects is less than successful but a private developer ends up with a non-performing asset on its balance sheet.
Then again, the dynamics in Koh Rong may differ with the provision of gaming locations (blue parcels). And a favorable land mass to coastline ratio adds to demand for coastal real estate. But I believe the early lessons from Bintan still holds true – at least for the initial stages of a land development project.
To take a page out of the marketing text book: to be successful as a large scale resort land developer it makes sense to think like a resort hotel owner, resort retailer, resort F&B operator, resort attractions owner and resort villa owner.
A more sensible approach?
Several of Bintan’s centrally located 200 hectare land parcels were eventually amalgamated and replaced by a more sensible resort master plan at Lagoi Bay. Land parcels for sale addressed what investors wanted to buy – from as small as shophouse lots to no larger than 10 to 15 hectares. Guess what? Investors and resort developers found these parcel sizes more digestable and most, if not all, water front lots have been sold and are under construction. See more on Lagoi Bay’s development progress here.
Likewise, a revised Koh Rong master plan (below) appears more sensible with a focus on the southeastern part of the island.
Opportunity Cost and Master Planning
Not many will discuss, but there’s an opportunity cost associated with master planning in terms of time, $$$ and risks. What if your initial master plan fails to attract resort developers off plan? It takes time to re-evaluate the original position, it takes time re-engage a planner and its takes time to re-master plan.
Even worse, if the supporting infrastructure is already in the ground based on the initial master plan you’ll be wondering when you’ll recover the investment.
With Asia regional tourism competition picking up it makes a lot of sense to master plan and develop a resort product that addresses the tourism investment market right from the start. After all they are the intermediary between the resort land developer and the tourists end users.
Location of Koh Rong from Sihanoukville airport (white circle: 20km radial distance from airport)