These are certainly tough times, as if, indeed, serious market watchers need to be told. For those operating in 'Frontier' markets, raising funds can become a significant challenge when even experienced investors worry about holding cash in a bank (lest the bank go the way of Northern Rock/Dexia/Iceland), let alone about holding investments in an emerging and faraway market. Understandably, fear comes to dominate greed and the objective of creating wealth takes a poor second place to the preservation of existing wealth. Of course when the dust settles it all comes down to risk and to valuations and whilst Cambodia is certainly not without its considerable problems, the country's dollarised economy (who doesn't feel comfortable with the currency at this time-indeed who hasn't made some money on the currency translation to date?), political stability, low valuations and almost complete lack of national gearing mean that the risk in the medium term remains very much on the upside, albeit for now, with more perceived country risk and with less immediately obvious upside. Sure, the economy will grow at only 5% or so next year and some of the soft loans extended to the country may not be quite so soft for a while but-on a regional or even on a global basis, 5% looks pretty attractive and cheap is, well, just that: cheap. So despite global market and currency falls and despite general despondency, the tourists still come (perhaps up to 2m by y/e), spending their dollars, pounds, yen and euros, the (superb jasmine) rice still grows and the clamour of the rising middle class for consumables of all kinds tails off only a little: the basic dynamics remain good and investors continue to see this. So 'Tough Times' notwithstanding, we are delighted to say that we have made very considerable fundraising progress this month: in fact assets under management have virtually doubled to $23m and we wish to extend both a warm welcome and also our thanks to those investors who have indeed been convinced of the value and who have joined us over the course of this last, turbulent month, probably one of the rockiest in the markets which any of us remember.
 
Growth and value for the moment to one side, we respect the unalterable reality of that bane of financial analysts: sentiment. And given that external demand even for cheap assets in Cambodia has eased off a shade this last quarter we are in no rush to invest and believe that patience and caution will pay dividends in the months to come in the shape of keener prices for solid investments.
 
Monthly closures continue with the next close taking place on the 28th November 2008. Please contact our Chief Operating Officer Thomas Hugger for offering documents, subscription forms and general enquiries at: [email protected].
 

Angkor Residences ... moving forward with confidence
 
The past two months have been a busy period for the management team of Leopard's first investment, Cambo Fund Limited (CFL) in which Leopard Cambodia Fund has a 24% interest, and its residential housing project, the 'Angkor Residences'. Below we provide an update on the property market in Siem Reap and a discussion of the progress made by CFL management.
 
Siem Reap residential property market is buoyant-driven by fundamental demand.
In contrast to Phnom Penh, where several large, foreign led condo towers and commercial projects may be delayed, the less developed Siem Reap market appears healthy due to a limited supply of high end housing for wealthy Khmers and expatriate managers. The plan of Angkor Residences is modest in its goal to develop and sell 200-250 units over the next 3-4 years at an average price of US$1,400-1,600 per square meter. Management informs us that a competing residential project in Siem Reap has been successfully selling units at a significantly higher price.
 
Construction costs look reasonable, may soften in 2009.
Recent construction estimates have been consistent with CFL's estimates and several factors suggest that construction costs will soften in Cambodia in 2009. The prices of building materials (largely imported) in Cambodia are falling alongside declining oil prices and a construction slowdown in the neighbouring countries of Thailand and Vietnam. Moreover, development costs should also benefit by the slowdown or cancellation of some large projects in Phnom Penh. Some previously "unavailable" contractors are now finding themselves with fewer projects in hand and some excess capacity.
 
Land acquisition for Angkor Residences is nearly complete.
Currently, CFL has acquired 2.6 hectares of land (80% of the planned total) at an average price of US$167 per square meter. This compares favourably with the current market price in this location, which appears to have firmed in the second half of 2008. Management is now negotiating for the acquisition of a few adjacent land plots. If successful, these will be incorporated into the design and upcoming pre-sales launch. If management does not purchase these plots in the near future, then they will keep an eye on these plots and consider their use in a follow on stage of development.
 
CFL directors meeting sets priorities for next six months
At the first 'directors meeting' in late September, the plan for Angkor Residences was reviewed by its directors. The priority tasks were identified as follows:
 
a) Conclude the final design for Angkor Residences. A prominent list of local and foreign architects have submitted their design concepts for the project and are now under management review.  
 
b) Prepare to launch unit pre-sales in the second or third quarter of 2009. Our Cambodian partners have been discussing the project with their contacts and interest appears to be favourable. Some VIP buyers have expressed an interest to buy units even before the completion of the design and pre-sale documents.  A decision will be made in December whether to launch and pre-sell all 200-250 units at once, or whether to build and sell the units in two stages. The latter strategy may be taken in anticipation of even higher land and unit values in 2010 and 2011. Secondly, given the attractive location of the land and its large plot size, some property consultants have enquired as to the possibility of building a high end boutique hotel or serviced apartment on half of the site.
 
c) Construction of a new access road into the site is to begin in December and should take six months to complete. The directors anticipate that this work will enhance land values further.
 
d) Select project manager to oversee the build out of Angkor Residences and update final development costs. CFL expects to make its final selection of the main contractor in the first quarter of 2009.