Driven by huge pockets of foreign investment across the country, the economic boom experienced in Cambodia over the last 10 years has seen its economy steadily increase. The last decade has seen consecutive GDP increases year in, year out of between 7.1% and 7.5%, way above the global average.
In the real estate sector, rental yields have pushed between 8% and 10%, whilst asset appreciation has been as high as 15%. With the country’s exports surging to 17.6% last year, partly in thanks to Chinese investment in infrastructure and partly in thanks to companies relocating from Southeast Asian mainland, the Kingdom of Wonder has further cemented itself in the top ten world rankings by economic growth.
Backed by the likes of Toyota, Samsung and Nike the capital, Phnom Penh has seen much greater demand for higher quality accommodation to support expats and investors now working in the city. This demand has created a backdraft of investment potential and with Cambodia’s loose foreign investment laws, FDI has increased over 800% in recent times.
In Phnom Penh’s central and western districts many older apartments are being bought, renovated and resold. By example, for a $50,000 property, with $20,000 renovation investment you could expect to see returns of $100,000.
Outside of the capital, many smaller towns are now teeming with construction projects, incoming FDI and subsequent growth. With so much opportunity laying undiscovered, it’s easy to see why Cambodia is currently one of the most exciting prospects in Southeast Asia for property investment.
With Cambodia actively encouraging foreign investment, setting up business with 100% foreign ownership is simple. For $250 you can acquire a one-year multiple entry visa. A long-term visa is simple to set up and more cost effective for those wanting to take up residency in the country.
Real estate investors can own strata titles for condominiums or any property above the first floor, but strata titles for ground floor properties are restricted to Cambodian nationals. Restrictions are also in place for land ownership, although there are ways around these issues.
It is possible to set up a nominee agreement with a Cambodian citizen or land holding company. Through these routes you can obtain hard and soft titles, both which give you legal freehold status. There are a few notable differences between hard and soft titles, hard titles are registered at a national level, soft with local governments.
Soft titles, none the less cover 90% of Cambodian properties and serve as government recognised proof of ownership. A soft title alone is enough collateral for the acceptance of a secured loan through almost any bank. The benefits to a soft title are also the reduced fees and the minimal processing time when compared with a hard title, which may take months rather than day to obtain.
For soft titles we would still of course advise hiring a lawyer and speaking to locals regarding property. It is also best to make contact with the land registry office and check that the seller has the rights to the land deeds and no encumbrances attached to the property.
With hard titles, a land holding company provides further security from a legal standpoint, but also requires an annual licencing fee, monthly tax filings and can take months rather than days when processing. This option is usually more suited to larger scale property projects.
Whatever your goal, Cambodia’s property market provides ample opportunity for quick ROI. Their transparency on foreign investment allows for confidence in your commitments. Economists worldwide suggest the boom has not yet peaked so with another decade of growth to look forward to, Cambodia’s open market system remains firmly cemented in the world’s top ten for economic growth.