Authored by the expert who managed and guided the team behind the Cambodia Property Pack
Everything you need to know before buying real estate is included in our Cambodia Property Pack
Are you considering investing in Cambodia’s real estate market? What are the legal steps, tax implications, and cultural differences you need to understand before taking the plunge? What challenges do foreign investors typically face, and how can you overcome them?
These are the questions we hear most often from foreign investors because we’re actively connected to this market. We’ve spent time working with local agents, developers, and investors, so we know what works—and what doesn’t. That’s why we’ve written this article: to provide a clear guide that answers the questions we get asked daily.
Our goal is to help you, as a foreigner, to navigate the property buying process with confidence. If you think there’s something we missed or want more details, let us know (please do!). Your input helps us refine and improve our advice for everyone.
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1) Foreigners can only own above-ground units in Cambodian condos, as direct land ownership is restricted
In Cambodia, foreigners can't own land directly due to local laws.
But don't worry, there's a workaround. Thanks to the Foreign Ownership Property Law of 2010, foreigners can own up to 70% of a building, like a condo. However, there's a twist: you can't own ground floor units because that would mean owning part of the land, which is off-limits.
The Strata Title Law, updated in 2015, backs this up. It allows foreigners to own strata-titled properties but with some rules. These include the 70% ownership cap and the no-ground-floor rule. This setup has made condos a hot choice for foreign investors.
Why condos? Well, they're the main option for foreigners wanting to own property in Cambodia. The legal framework is designed to encourage foreign investment while keeping land ownership local. This has led to a boom in foreign investment in the condo market.
Insider tip: If you're eyeing a property, focus on upper-floor units. They offer not just ownership but often better views and amenities. Plus, the demand for these units is growing, making them a smart investment.
So, while you can't own land, you can still enjoy a slice of Cambodian real estate. Just remember, it's all about the upper floors in those shiny new condo buildings.
Sources: Emerhub, IPS Cambodia, Offshore in Asia
2) Consider affordable housing in Cambodia, as it’s in high demand among the growing middle class
Urbanization in Cambodia is booming, especially in cities like Phnom Penh, Battambang, Kampong Cham, and Siem Reap.
With more people flocking to these urban areas, the demand for housing is skyrocketing. The Cambodian government is on it, pushing for affordable housing projects like the Arakawa condominium and the Grand Park Housing Project, which are set to provide thousands of new homes.
Economic growth is another big factor here. Cambodia's GDP is on the rise, with rates hovering between 6% and 7%. This means the middle class is growing, and more people have extra cash to spend, making homeownership more appealing than renting.
CBRE Cambodia's 2024 mid-year review shows a clear shift in the real estate market. There's a noticeable move towards affordable and mid-range housing, with developments like Times Square 7 and Capital Center City leading the charge.
These projects are not just about providing homes; they're about meeting the needs of a growing middle class eager to invest in property. It's a smart move, considering the economic backdrop and the increasing urban migration.
For anyone looking to invest, this is a golden opportunity. The market is ripe for affordable housing, and the demand is only going to grow as more people move to the cities and the middle class continues to expand.
Sources: CBRE Cambodia Real Estate Mid-Year Review 2024, Cambodia - Migrants & Refugees Section, What is the Affordable Housing Situation in Phnom Penh? - Urbanet, Cambodia Real Estate Highlights - Knight Frank
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Cambodia versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you’re planning to invest there.
3) Be aware that Chinese investment heavily influences Cambodia’s real estate market, causing rapid price fluctuations
The Cambodian real estate market is heavily influenced by Chinese investment.
In 2023, Chinese investors were behind more than 80% of Cambodia's fixed asset value, focusing mainly on infrastructure and industrial sectors. This means that if you're looking at property in Cambodia, you're likely seeing the impact of Chinese money. For instance, the development of the Dara Sakor airport and resort is a major project with significant Chinese backing.
By early 2024, Chinese investments made up nearly 40% of the total foreign direct investment in Cambodia, totaling over $1.3 billion. This influx of funds has led to the creation of large-scale real estate projects, which are reshaping the landscape and economy. The influence is so strong that changes in China's economy can cause property prices in Cambodia to fluctuate.
One of the most notable projects is the $1.9 billion expressway connecting Phnom Penh to Sihanoukville, partially funded by China. This expressway has not only improved connectivity but also boosted local property values along its route. If you're considering buying property in these areas, it's worth noting how infrastructure developments can enhance property appeal and value.
However, this heavy reliance on Chinese investment means that the Cambodian real estate market is vulnerable to shifts in Chinese economic conditions. If China's economy faces challenges, it could directly impact property prices in Cambodia, making it a market to watch closely.
For potential buyers, understanding the dynamics of Chinese investment in Cambodia is crucial. It can offer opportunities but also comes with risks due to the rapid price fluctuations that can occur. Staying informed about these developments can help you make better investment decisions.
Sources: Knight Frank, Phnom Penh Post, ASEAN Briefing
4) Avoid properties with unclear land titles in Cambodia, as legal disputes can be lengthy and costly
Buying property in Cambodia can be tricky due to frequent land disputes.
Between 2019 and 2023, there were 120 land disputes involving over 260 incidents like protests and arrests. These disputes often pit less powerful individuals against influential entities, and in Cambodia, they can drag on for decades due to its unique historical context.
In just one year, from October 2023 to September 2024, 40 forced evictions affected over 22,000 families. These evictions often involved force, legal threats, and poor compensation, showing how legal battles can be both lengthy and costly.
Foreign investors often face challenges with unclear property ownership, leading to legal complications. This uncertainty can make it difficult to sell or rent properties, as potential buyers or tenants may be wary of getting involved in disputes.
Legal costs can eat into your potential returns, and the risk of disputes can decrease property values. The average duration for resolving land disputes in Cambodia is long, sometimes stretching over decades, which can be financially and emotionally draining for investors.
It's crucial to be cautious and ensure that the property you're interested in has a clear title to avoid these pitfalls. Investing in properties with disputed titles can lead to significant financial and emotional stress.
Sources: Kamnotra, CCHR Fact Sheet, RFA
5) Consider Cambodia for long-term investments, as property taxes are relatively low
In Cambodia, property taxes are surprisingly low, making it a smart choice for long-term investors.
Imagine owning a house worth US$100,000 and paying just US$100 in property tax each year. That's because the annual property tax is only 0.01% of the appraised value. This rate is much lower than what you'd find in neighboring countries, making Cambodia a hotspot for savvy property investors.
Official figures back this up, showing a property tax rate of 0.1% for properties valued over KHR 100 million, which is about US$25,000. This is a significant draw for those looking to invest in the region.
Real estate experts and financial analysts often point out Cambodia's tax-friendly environment. Reports from KPMG and Deloitte highlight the minimal tax obligations that make the country attractive to foreign investors. This is a big deal if you're considering buying property here.
Comparative studies by the Asian Development Bank show that Cambodia's property tax rates are among the lowest in Southeast Asia. This is a key factor for anyone looking to invest in the region, as it means more money stays in your pocket.
Sources: Phuket Realtor, KPMG Cambodia Investment Booklet 2024, Deloitte Cambodia Highlights 2024, Asian Development Bank
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6) Understand cultural nuances in Cambodia, as local customs significantly influence property transactions
Buying property in Cambodia means understanding its unique cultural landscape.
In Cambodia, family-owned land and inheritance practices are deeply rooted in tradition. The Inheritance Law of 1972 ensures that a large part of an estate is passed down to descendants, reflecting the cultural importance of family ties. This means that when you're looking to buy property, you might encounter situations where family dynamics play a significant role in the transaction process.
In rural areas, it's common for people to rely on informal agreements and verbal contracts. Instead of written contracts, spoken promises often seal the deal. Community leaders or elders frequently mediate disputes, showing a preference for traditional authority over formal legal systems. This can be quite different from what you might expect if you're used to more formalized processes.
Traditional ceremonies or rituals are integral to land transactions, serving as more than just cultural displays. They help build trust and ensure commitment among all parties involved. Additionally, local beliefs and superstitions can influence property values, with some properties being more desirable due to their proximity to culturally significant sites.
Understanding these cultural nuances can be beneficial when navigating property transactions in Cambodia. For instance, knowing that a property near a temple might be more valuable due to its spiritual significance can give you an edge in negotiations. Similarly, being aware of the role of community leaders can help you approach transactions with the right mindset.
So, when considering a property purchase in Cambodia, remember that cultural factors can significantly impact the process. Embracing these traditions and customs can not only smooth the transaction but also enrich your experience as a property owner in this vibrant country.
Sources: Global Property Guide, Nop Legal, B2B Cambodia, CDRI
7) Consider properties near the new Phnom Penh-Sihanoukville expressway to maximize profit potential
Investing in properties near new infrastructure projects, like the Phnom Penh-Sihanoukville expressway, can be a smart move for maximizing profits.
The expressway opened in 2022 and has already made a splash by cutting down travel time between Phnom Penh and Sihanoukville. This makes the area more appealing for both residents and businesses. Imagine shaving hours off your commute or having easier access to the coast; it's a game-changer for many.
With this expressway, there's a buzz of economic growth. It’s not just about getting from point A to B faster; it’s about enhancing connectivity and facilitating trade. More businesses are setting up shop along the route, and this commercial activity is giving a nice boost to local economies and property markets.
Real estate experts are optimistic, predicting that property values will rise in areas surrounding the expressway. Improved connectivity and new economic opportunities are the main drivers here. If you're thinking about investing, these are the kind of developments that can lead to a solid return.
The government is also playing a big role with its comprehensive master plan. They’re not stopping at just one expressway; there are significant infrastructure projects in the pipeline aimed at transforming Cambodia's transportation and logistics network. This means more growth and potentially higher property values in the long run.
So, if you're eyeing property investments, keep an eye on these infrastructure projects. They’re not just roads; they’re pathways to economic opportunity and increased property value. Maximizing your profit could be as simple as choosing the right location near these developments.
Sources: Real Estate Cambodia, Focus Cambodia, IPS Cambodia
8) Consider offering cash upfront in Cambodia, as local sellers often prefer cash transactions for potentially better deals
In Cambodia, local sellers are increasingly favoring cash transactions for property sales.
One big reason for this trend is that high mortgage rates make financing less appealing. If you can pay in cash, you might find yourself with more room to negotiate a better price. Sellers love cash deals because they are quick and certain, reducing the risk of a sale falling through. In a competitive market, speed is crucial, and cash offers provide that edge.
Cash buyers often have the upper hand, not just in speed but also in cost savings. They can sometimes negotiate lower prices and avoid extra costs like interest payments and application fees. This makes cash transactions particularly attractive in Cambodia's real estate scene.
The simplicity of cash deals is another draw. Without the need for mortgage approval, the process is much smoother, involving less paperwork and fewer complications. This streamlined approach is a significant advantage in the Cambodian market, where ease of transaction is highly valued.
Local sellers might even prefer cash because it allows for a more straightforward and transparent transaction. This preference can sometimes lead to better deals if you can pay upfront. In Cambodia, cash is king, and understanding this can give you a leg up in negotiations.
Sources: CBRE Market Insights, Vaster Blog
We have made this infographic to give you a quick and clear snapshot of the property market in Cambodia. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
9) Learn basic Khmer to build trust and ease negotiations with local sellers
Learning some basic Khmer can be a game-changer if you're looking to buy property in Cambodia.
Even though internet use was high in 2023, many locals still prefer speaking Khmer, especially in business settings. This means that knowing a bit of the local language can make communication much easier. You might find it beneficial to learn some basic Khmer language skills, as this can help build trust and facilitate smoother negotiations with local sellers.
More expatriates are catching on to this trend, enrolling in language schools to improve their business interactions. Real estate agents often mention that speaking Khmer can lead to better treatment from local sellers, which is a big plus when you're negotiating a property deal.
Reports from organizations like the World Bank highlight that language skills can help overcome business obstacles in Cambodia. Expatriates who learn basic Khmer often secure better deals because they build trust with local sellers.
Understanding the cultural significance of language in Cambodia is also crucial. Speaking Khmer can help establish rapport and credibility, as local sellers tend to prefer buyers who make an effort to communicate in their language.
So, if you're serious about buying property in Cambodia, consider picking up some Khmer. It could be the key to unlocking better opportunities and smoother transactions.
Sources: DataReportal, Go Overseas, World Bank
10) Partner with a reputable local agent to navigate the nuances of Cambodia's real estate market effectively
Working with a reputable local real estate agent in Cambodia can greatly boost your success in the property market.
These agents have a deep understanding of the local market, which means they can connect buyers and sellers more effectively. According to a report by IPS Cambodia, they play a crucial role in navigating complex transactions, ensuring the industry grows sustainably. This insider knowledge is invaluable, especially when dealing with the unique aspects of the Cambodian property scene.
Foreign investors often share stories of success thanks to local agents. They appreciate the agents' market knowledge and their ability to guide them through the investment process. This guidance is essential for complying with local laws and regulations, helping to avoid potential pitfalls and ensuring a smooth transaction.
In 2023, many foreign property buyers have shown a heavy reliance on local agents, as seen in the significant number of trust registrations. This trend underscores the importance of these agents in facilitating property transactions and attracting foreign investment. Surveys also show that foreign buyers are highly satisfied with their local partners, highlighting their professionalism and expertise in managing transactions efficiently.
Local agents are not just intermediaries; they are key players in the Cambodian real estate market. Their role goes beyond simple transactions, as they help investors understand the cultural and economic landscape. This understanding can be the difference between a successful investment and a missed opportunity.
By partnering with a local agent, you gain access to insider knowledge that can help you navigate the market's complexities. This partnership can provide a significant edge, especially in a market as dynamic as Cambodia's. Understanding the nuances of the local market is crucial, and a reputable agent can be your guide.
Sources: IPS Cambodia, Asia Real Estate Summit
11) Consider properties in Phnom Penh and Siem Reap, as infrastructure projects are boosting property values in these rapidly developing areas
Consider investing in properties in the rapidly developing areas of Phnom Penh and Siem Reap, where infrastructure projects are driving up property values.
In Phnom Penh, the average house price is projected to be between $150,000 and $200,000 in 2023. This is expected to rise by 5% due to economic growth and urbanization, making it a promising investment. The city is buzzing with new developments, and the expanding middle class is adding to its appeal.
Siem Reap is also seeing a rise in property prices, thanks to a surge in tourism and the development of luxury resorts. This area has become a hotspot for international tourists and investors, further boosting its real estate market. The Cambodian government is pouring money into infrastructure improvements, which is expected to enhance property values significantly.
Phnom Penh is undergoing rapid urban expansion, with new road and public transport projects underway. This development is attracting both local and foreign investors. The city's growing appeal is undeniable, and the expanding middle class is a key factor.
In Siem Reap, the tourism industry is booming. The Ministry of Tourism aims to attract 7 million international tourists annually by 2025, positioning the area as a leading destination in Southeast Asia. This influx of tourists is a major driver for the real estate market.
Both cities are benefiting from government investments in infrastructure, which is expected to boost property values even further. The combination of tourism, urbanization, and infrastructure development makes these areas attractive for property investment.
Sources: Phnom Penh Property Market 2023, Cambodia’s Tourism Industry, Cambodia’s Economy and Real Estate
Don't buy the wrong property, in the wrong area of Cambodia
Buying real estate is a significant investment. Don't rely solely on your intuition. Gather the right information to make the best decision.
12) Consider investing in green-certified properties, as eco-friendly developments are gaining popularity among expats
In Cambodia, there's a noticeable rise in eco-friendly property developments.
Phnom Penh is at the heart of this green movement, with a growing number of green-certified buildings popping up. This makes the city a hot spot for expats who are keen on sustainable living. The buzz around eco-conscious living is not just a trend; it's a shift in lifestyle, with many people showing interest in sustainability. This change is partly fueled by the media, which is increasingly highlighting environmental issues in Cambodia.
Government support is a big driver of this green wave. The Ministry of Land Management, Urban Planning, and Construction has rolled out a Green Building Certification Program. This initiative, along with partnerships with organizations like the Global Green Growth Institute, is pushing for more sustainable construction practices. These efforts make green-certified properties a smart investment choice for expats.
Notable projects like the Vattanac Capital Tower and AEON Mall Mean Chey in Phnom Penh are leading the way. They incorporate advanced energy-efficient technologies and have earned green certifications. These buildings are not just structures; they're symbols of a new, sustainable era in Cambodian real estate.
For those looking to invest, the trend towards eco-friendly developments is a golden opportunity. Green-certified properties are gaining popularity among expats, who are increasingly drawn to the benefits of sustainable living. This shift is not just about being eco-friendly; it's about being part of a community that values the environment.
Sources: Constructive Voices, The Edge Malaysia, National Association of REALTORS, Constructive Voices
13) Consider prime locations in Cambodia for high rental yields, often exceeding 8%
Rental yields in Cambodia can be surprisingly high, often exceeding 8% in prime locations.
While you might expect such returns in bustling cities like New York or London, Phnom Penh is making waves with its impressive rental yields. Reports from R&F City and CBRE highlight that Phnom Penh offers yields of 8% and 5.3%, respectively, which is quite competitive compared to other major Asian cities.
In Cambodia, the average rental yields range from 3.5% to 6.2%, with smaller apartments often yielding more. This is particularly noteworthy when you consider that places like Singapore and Kuala Lumpur offer much lower yields, around 2% and just above 3%.
Investors are starting to notice that Cambodia's real estate market is more than just potential; it's becoming a hotspot for high rental returns. The market dynamics in Phnom Penh are shifting, making it an attractive option for those looking to invest in Asia.
For those considering property investment, the Cambodian market offers a unique opportunity with its competitive yields and growing appeal. The landscape is changing, and savvy investors are taking note of the potential returns.
As the market continues to evolve, Phnom Penh stands out as a city with promising rental prospects, challenging the traditional expectations of a developing country.
Sources: InvestAsian, CBRE Cambodia, IPS Cambodia
14) Conduct thorough due diligence in Cambodia’s unregulated property market to avoid scams
Buying property in Cambodia can be tricky because the market is largely unregulated.
Without a centralized property registry system, it's tough to confirm who really owns a piece of land. This can lead to multiple ownership claims, often due to fraudulent titles. The Torrens system, which is supposed to help, is criticized for being easily manipulated through bribery.
If you get caught in a property scam, the legal system struggles to resolve disputes efficiently. This makes it hard to get justice or recover your investment. Informal land deals, which often lack proper paperwork, add to the risk of fraud.
In Cambodia, informal land transactions are common, and they often come without the necessary documentation. This makes it easier for scams to happen, leaving buyers vulnerable.
It's crucial to do your homework and understand the local market to avoid these pitfalls. Due diligence is key to navigating the unregulated landscape and protecting your investment.
Sources: Global Anticorruption Blog, B2B Cambodia, B2B Cambodia
We made this infographic to show you how property prices in Cambodia compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
15) Be wary of overvalued properties in tourist areas, as they can be risky if tourism drops
Buying property in tourist hotspots can be a gamble, especially if the prices are inflated.
Take Phnom Penh, Cambodia, for example, where in 2023 and 2024, property prices were all over the place. Even with a lot of new condos popping up, average sales prices actually went down compared to the previous year. This shows that just because there's a lot of interest doesn't mean prices will stay steady.
In places like Australia and Spain, tourism can really drive up property prices. When tourists flock in, prices tend to rise. But if tourism takes a hit, those prices can fall just as quickly, making these investments a bit of a rollercoaster.
The COVID-19 pandemic was a wake-up call for many investors. During that time, property values in tourist-heavy areas dropped significantly because tourism came to a screeching halt. This kind of market sensitivity means you need to be ready for ups and downs if you're buying in these spots.
It's crucial to be cautious about overvalued properties in tourist-heavy areas. If tourism declines, these investments can become quite risky. The market can be unpredictable, and what seems like a good deal today might not be tomorrow.
So, if you're thinking about investing in a tourist hotspot, keep an eye on the tourism trends. Understanding the local market dynamics can help you make smarter decisions and avoid potential pitfalls.
Sources: Asia Property Awards, Taylor & Francis Online, DiGonzini Blog
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility.