Inside Phnom Penh’s empty new skyscraper: ‘This is only for excellencies’

http://www.theguardian.com/cities/2015/jul/17/phnom-penh-empty-skyscraper-vattanac-capital

The Vattanac Capital tower – the tallest building in one of the world’s poorest countries – has an occupancy rate below 30%. Customers at its high-end boutiques are likely to be ‘excellencies’, members of Cambodia’s ultra-rich elite of business tycoons and MPs. So, what is the point of such a building?

The Vattanac Capital Tower in Phnom Penh is Cambodia's tallest building.
The Vattanac Capital tower in Phnom Penh is Cambodia’s tallest building. Photograph: Getty Images/Age fotostock RM/Dave Stamboulis

At 617ft, Cambodia’s first true skyscraper dominates Phnom Penh’s skyline. Its gleaming veneer can be seen from almost anywhere in the city, looming over the neglected colonial-era railway station, the Chinese-style shophouses and the snack shops.

After years of construction, the $170m (£110m) Vattanac Capital tower finally opened its doors last year. It is designed to look like the arched back of a dragon. “According to mythology, dragon kings live in crystal palaces,” said Stefan Krummeck, director of TFP Farrells architects, who designed it. “The sum of this marriage between modern architecture and traditional references, with deference to the local environment, is a dynamic building which literally appears poised to leap into a new era of prosperity.”

It may be “poised” for some time. It’s almost empty.

Phnom Penh is still a dusty, rambunctious place filled with ramshackle markets and sizzling roadside barbecues. But all that fades to an eerie hush when you step through the doors of its skyscraper. On a recent Saturday morning, the place was deadly quiet. Orchestral music seeped through loudspeakers. Sales assistants pottered about in high-end stores such as Longchamp, Clarins and Hugo Boss. Cleaning staff mopped spotless floors. A maître d’ in black tie waited at a cafe where a box of tea was on sale for $50. In another shop, baby clothes retail for more than $100. The basic wage of an worker in the garment industry, the city’s largest, is $128 a month.

About 10 people come in on a good day, said a young sales assistant in one of the boutiques. “There will be maybe two who can buy,” she said in a whisper. At the Hugo Boss shop, an employee claimed they pulled in 30 customers per day. “Very high-class people,” she said.

Cleaning staff mop spotless floors in the deadly quiet skyscraper.
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Cleaning staff mop spotless floors in the deadly quiet skyscraper. Photograph: Poppy McPherson

The food hall in the basement was busier, but hardly bustling. At one cafe, empty except for a woman working on a laptop, the manager said business was slow. “We’re not breaking even.” Why not? “Because the offices are not full, there are not so many clients.”

He’s right: above the shopping mall, more than a dozen floors of office space lie empty. “The occupancy speaks for itself – it’s low,” said Philip Scott, the British head of commercial agency at the local branch of US firm CB Richard Ellis, a leasing agent for the building. Floors two to 23, marked out for office space, are still largely vacant, he said. Rosewood Hotels has bought up the top 14 floors, but its “ultra-luxury” retreat is yet to open. One tenant, Japan’s Tri Asia Group, has already vacated. “They’re targeting the best-quality tenants in Phnom Penh,” he said. “The best-quality tenants in Phnom Penh aren’t necessarily targeting that building.”

Indeed, anyone shopping in Vattanac is likely to be a member of Cambodia’s tiny ultra-rich elite, comprised of business tycoons and MPs, known as “excellencies”, whose SUVs clog the narrow streets. But most businesses new to Cambodia choose somewhere cheaper. Then there are questions about the practicalities of running a building as complicated as Vattanac in a country as underdeveloped asCambodia. It is no small architectural feat: interlocking panels make up the glass facade, and an arched structure extends in a boot-like shape at the bottom.

How will the windows be cleaned? It’s a touchy subject. “Ask them,” said Scott, referring to Vattanac Capital. “Nothing to do with me. That’s a question that a lot of people ask.” Vattanac Capital’s general manager, Reno Mueller, did not respond to multiple requests for comment.

The company’s senior leasing manager, however, did. Thavrith Lim declared the occupancy rate was around 30%, adding that 11 of the 21 office floors had at least one tenant.

“This is the area that we do not want to talk about,” he said. “It’s not that we are in low occupancy, but [it’s] because our building is three times bigger than any other office development in Phnom Penh.”

Prime Minister Hun Sen has done his best to turn Phnom Penh intothe urban ideal of a 'city with no smoke and no sound'.
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Buddhist monks at a square in front of the Royal Palace, Phnom Penh. Photograph: Getty Images/Robert Harding Worl/Yadid Levy

For the past few years, Thavy Tan, a bubbly woman in her mid-20s, has watched the steel behemoth rise up beside her cafe. As men slurp bowls of condensed milk and bread, Tan gestures at the glass facade, which looms over the stall. “This is just like a wonder, you know?”

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Elsewhere, it wouldn’t be: its 39 floors would be unremarkable. But here, in one of Asia’s last low-rise capitals, the building is unparalleled. Phnom Penh is a noisy city packed with swerving scooters, tuk-tuks and street sellers. The landscape is one of crumbling colonial villas and chic bars and restaurants.

Back in the 1960s, the Cambodian capital was an elegant garden city, full of New Khmer architecture, often referred to as the Asian Bauhaus. The city reportedly inspired Lee Kuan Yew, the founder of Singapore.

That vision came to an abrupt end with the arrival of the Khmer Rouge in 1975. The communists emptied the city, sending its inhabitants on a long, slow death march to labour in the fields. Survivors returned four years later to a post-apocalyptic wasteland, where pigs grazed in the National Library.

The present government, which came to power shortly after the fall of the Khmer Rouge, prides itself on the changes it has wrought, especially since the violent and chaotic 1990s. In 2005, a government official described the urban ideal as a “city with no smoke and no sound”.

Prime minister Hun Sen – the long-serving leader who was nearly ousted in a disputed election in 2013 – has done his best to realise that ideal. He is fond of grandiose development projects: in 2010, he announced the country would boast the world’s second-tallest building, behind only Dubai’s Burj Khalifa (which stands at 2,717ft). The idea was scrapped, but a developer is now in talks with a Chinese firm to build a 1,640ft twin tower project, to cost $3bn – about one fifth of the country’s GDP.

The tower’s high-end shops cater to the city’s small proportion of ‘excellencies’, whereas 20% of the population lives below the poverty line.
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The tower’s high-end shops cater to the small number of ‘excellencies’, in a city where 20% of the population lives below the poverty line. Photograph: Poppy McPherson

There’s no doubt that Cambodia’s economic fortunes have improved drastically in the past decade. Its GDP climbed more than 7% each year between 2010 and 2013. Every morning, trucks of garment workers pour into Phnom Penh from the provinces, supplying factories on the city’s outskirts that fuel the booming industry. The capital shows signs of a burgeoning middle class: a local coffee chain where students crouch over laptops, a megamall that opened last year.

But you don’t have to look far to see the cracks in that picture. Most of the urban poor have been pushed to the edges of the city, but some still live in slums in the centre. The government refers to them with the Khmer term anatepadei, meaning “anarchy”. As journalist Sebastian Strangio notes in his book, Hun Sen’sCambodia, were the poverty line of 5,326 riels ($1.33) to be raised by just 30 cents, the country’s poverty rate would double, to 40%.

“Like many south-east Asian countries, large-scale urban construction projects are one way for the Cambodian government to project an image of modernity and development,” Strangio said. “The problem is that there are very few regulations on what gets approved. The government seems eager to approve all manner of crackpot ideas, without regard for whether there is demand for the projects, or whether they are financially or logistically feasible.”

So many high-profile skyscrapers have stalled mid-construction that the fact Vattanac Capital was finished at all surprised many people.

“There has been a lot of construction – a lot of buildings go up, but at the same time we don’t really have a plan to control that construction,” said Pen Sereypagna, an architect in his twenties. Despite the city’s rapid expansion, there is neither a standardised building code nor binding zoning rules. In 2005, French experts drew up a masterplan for the city in 2020. It was never implemented. Sereypagna says high-rises like Vattanac, which also has apartments for rent, offer “one kind of solution” to overcrowding. Low-cost housing – of which there is little of any quality – would be another.

The man behind Vattanac Capital is Sam Ang Vattanac, the son of tycoon power couple Sam Ang and Chhun Leang. Little is known about them. “Information on the owners of the Vattanac Bank, like many of Cambodia’s business figures, is hard to come by,” said Strangio. “Likewise, their activities and relationships with those in government are opaque. Many business deals are cut behind closed doors and are shielded from public view by layers of corporate masks.

“Old-guard tycoons such as Sam Ang and Chhun Leang rose in parallel with Hun Sen and his close allies in government. To this day, they are bound by the shared experience of the 1980s, when Cambodia was a Soviet clone under international embargo by the China and the west. In a country with such weak bonds of trust, these ties have proven enduring.”

Despite the lack of a national building code, Vattanac said it has employed “international standards” for safety, but Phnom Penh’s under-resourced emergency services are only equipped to deal with fires in low-rise buildings. And safety standards in the construction industry are notoriously poor.

Tinou Kong, who owns a garage just a few dozen metres from the building, recalled glass and steel crashing down from the high-rise. “Steel fell from the sky and hit my car,” he said. He said he was given more than $2,000 in compensation.

Most estate agents say the market will catch up to Vattanac Capital. Burger King and Dominos were among last year’s foreign entrants, and the World Bank has projected 6.9% economic growth for 2015 to 2016. Nor is empty skyscraper syndrome unique in this region. Scores of high-rises shot up in Hanoi and Ho Chi Minh City in Vietnam at the end of the last decade. Some failed, others did not, and in Ho Chi Minh City the occupancy of Grade-A office space now stands at around 92%. For the people behind Vattanac, the most important factor right now isn’t occupancy but prestige. “Look, I don’t think it’s too ambitious,” said Scott. “It’s a statement.”

For Thavy Tan and her streetside cafe, the new skyscraper has brought good business, and she has been through the doors a few times herself, to buy coffee from the food hall. At $1.50, it costs three times what she serves. “I just wanted to taste it,” she said. The other shops don’t interest her. “This is only for excellencies.”

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