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Everything you need to know is included in our Cambodia Property Pack
Are you considering buying real estate in the Kingdom of Wonder? Are you unsure if it's better to buy now or wait until next year?
When it comes to market timing, everyone has their own opinion Your childhood friend who now lives in Phnom Penh may suggest that now is a perfect time to invest, while your Cambodian wife might have a different view and suggest waiting for stability.
At BambooRoutes, when we create articles or update our pack of documents related to the real estate market in Cambodia, we dvocate for a fact-based mindset, rejecting unfounded opinions and baseless rumors.
We have collected and examined all the official reports and statistics from government websites. Based on this extensive research, we have compiled a complete and reliable database. Here's what we discovered, which can assist you in deciding whether now is the right time to purchase real estate in Cambodia.
Ready? Let's go!
How is the property market in Cambodia now?
Cambodia is, today, a relatively stable country
Neutral
If you want to invest in properties, prioritize stability as it reduces risks and provides a secure investment landscape. It is an information you need as a foreigner buying a property in Cambodia.
These days, Cambodia is experiencing a notable degree of stability. The last Fragile State Index reported for this country is 78.6, which is an acceptable number.
Cambodia's relative stability today can be attributed to the long-standing rule of the Cambodian People's Party (CPP), which has maintained political control and implemented economic reforms that have spurred growth and development. Additionally, the country's integration into regional frameworks like ASEAN has fostered diplomatic ties and economic partnerships, contributing to its stability.
Let's examine other data now to see if it's the right moment to purchase property in this country.
Cambodia is projected to grow (a lot!)
Positive
Make sure the country's economy is strong before deciding to buy a property.
In accordance with IMF projections, Cambodia will end 2024 with a growth rate of 6%, which reflects the country's accelerated progress. As for 2025, the experts say 6.1%.
That's not all - this impressive growth will keep going on since Cambodia's economy is expected to increase by 27.5% during the next 5 years, resulting in an average GDP growth rate of 5.5%.
The expected massive growth in Cambodia means that property values are likely to increase, offering the potential for significant returns on investment. Additionally, as the economy expands, there will be a higher demand for housing and commercial spaces, making real estate a lucrative opportunity.
On top of that, there are other indicators to pay attention to.
Cambodia's population is growing and getting richer
Positive
When you're exploring real estate options, population growth and GDP per capita demand thorough consideration because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Cambodia, the average GDP per capita has changed by 7.4% over the last 5 years. It's a satisfactory number. Furthermore, the Cambodian population is growing (+10% in 5 years).
This means that, if you purchase a traditional house in Siem Reap and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, there might be a rise in rental demand in Cambodian cities like Phnom Penh, Siem Reap, or Sihanoukville in 2025.
No high rental yields in Cambodia
Neutral
Next, we will explore the rental yield.
It's the annual rental income of a property divided by its price. For example, if a property in Cambodia is purchased for 500,000 KHR and generates 20,000 KHR in annual rental income, the rental yield would be 4%.
Based on the data provided by Numbeo, rental properties in Cambodia promise gross rental yields from 3.5% and 6.2%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Cambodia.
It indicates a moderate level of income generation.
Everything you need to know is included in our Cambodia Property Pack
In Cambodia, expect minimal inflationary effect
Neutral
In two words, inflation is when prices go up.
It's when your favorite tuk-tuk ride in Phnom Penh costs 4,000 Cambodian riel instead of 3,500 Cambodian riel a couple of years ago.
If you're considering investing in a property, high inflation can bring you several advantages:
- Property values tend to increase over time, leading to potential capital appreciation.
- Inflation can result in higher rental rates, thereby increasing the cash flow from the property.
- Inflation reduces the real value of debt, making mortgage payments more affordable.
- Real estate can act as a hedge against inflation, preserving the value of the investment.
- Diversifying into real estate provides stability during inflationary periods.
Based on the IMF's outlook, the inflation rate in Cambodia will increase by 1.0% over the next 5 years, with an average annual increase of 0.2%.
This data is telling us that Cambodia is anticipated to experience negligible inflation. Unfortunately, in the absence of inflation, purchasing a property now may not result in substantial price increases or substantial profits in the future.
Is it a good time to buy real estate in Cambodia then?
Time to conclude !
While Cambodia is currently a relatively stable country, the anticipated economic growth over the next few years might make 2025 a less ideal time to buy property. With the economy expected to grow by 27.5% over five years, averaging a GDP growth rate of 5.5%, this rapid expansion could lead to increased property prices. As a result, entering the market in 2025 might mean paying a premium compared to current prices, potentially reducing the immediate return on investment for new buyers.
The expected massive growth in Cambodia's economy suggests that property values are likely to rise significantly. This could be great news for those who already own property, as they might see substantial appreciation in their investments. However, for new buyers, this means that the cost of entry into the real estate market could be much higher, making it more challenging to find affordable options that offer good value for money.
As Cambodia's population grows and becomes wealthier, the demand for housing and commercial spaces is likely to increase. This heightened demand could drive property prices even higher, making it a competitive market for buyers. While this scenario presents lucrative opportunities for those looking to invest in real estate, it also means that waiting until 2025 might result in facing stiffer competition and higher prices, which could impact the overall affordability and attractiveness of property investments.
According to data from Numbeo, rental properties in Cambodia currently offer gross rental yields ranging from 3.5% to 6.2%. While these yields are promising, the potential for minimal inflationary effects in the country suggests that the real value of these returns might not increase significantly over time. Therefore, buying property in 2025 might not offer the same level of financial benefit as investing earlier, when prices are lower and the potential for capital appreciation is greater.
We sincerely hope this article has provided you with beneficial information!. If you need to know more, you can check our our pack of documents related to the real estate market in Cambodia.
-Will real estate prices go up in Cambodia?
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.