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What will happen in Phnom Penh’s real estate market? Will prices go up or down? Is Phnom Penh still a hotspot for foreign investors? How is Cambodia’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with developers, real estate agents, and clients who buy properties in Phnom Penh, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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1) Interest in mixed-use developments will grow as foreign investors seek residential and commercial spaces
Foreign investors are increasingly drawn to mixed-use developments that blend residential and commercial spaces.
In bustling Phnom Penh, the demand for spaces that combine living and working is on the rise. This is largely due to the growing urban population and a rising middle class seeking modern conveniences. People want places where they can live, work, and play without the hassle of long commutes.
Investment in Cambodia's real estate is booming, with foreign direct investment jumping from $1.5 billion to $3.4 billion in 2021. This upward trend is expected to continue, projected to hit $4.6 billion in 2023, showing strong interest from international investors.
The Cambodian government is sweetening the deal with incentives like income tax exemptions and customs duties breaks for mixed-use projects. These perks make it even more appealing for foreign investors to dive into the market.
Look at successful projects like Rose Apple Square in Siem Reap, which boasts high occupancy rates and profitability. These examples highlight the potential for lucrative returns in mixed-use developments, making them a hot ticket for investors.
Globally, there's a shift towards mixed-use spaces that offer a complete living experience. This trend is catching on in Cambodia, boosting the allure of these developments for foreign investors looking for the next big opportunity.
Sources: Straits Times, IPS Cambodia, Statista, Cambodia Investment Review
2) Demand for eco-friendly properties will rise as foreign buyers become more environmentally conscious
In Phnom Penh, eco-friendly properties are gaining popularity as environmental awareness grows.
Thanks to the Phnom Penh Green City Strategic Plan, the city is on a path to sustainable development with 48 green projects in the works. This plan is a testament to the city's commitment to becoming more eco-friendly, making it an attractive option for those looking to invest in green real estate.
Companies like Ecotrend are at the forefront, offering eco-friendly building materials such as energy-efficient concrete blocks. These materials are not just a trend; they reflect a strong market demand for sustainable construction, which is becoming increasingly popular in Cambodia.
The Global Tech Exchange project in Phnom Penh City Center is a prime example of how eco-friendly features are being integrated into new developments. This project is drawing in residents and businesses who prioritize sustainability, showing a clear shift in what people value in real estate.
Media coverage on environmental issues is also playing a crucial role. By highlighting the benefits of eco-friendly properties, such as reduced carbon emissions and improved health, the media is making these properties more appealing to foreign buyers.
Government incentives, like the Green Building Certification Program, are encouraging developers to adopt sustainable practices. These incentives are not just about building green; they're about creating a market where eco-friendly designs are the norm.
Sources: Phnom Penh Green City Strategic Plan, Ecotrend Materials, Smart City Development in Phnom Penh, Sustainable Materials in Cambodia
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) Rental yields in central Phnom Penh will rise as more people seek urban living
Rental yields in central Phnom Penh are on the rise as more people seek urban living.
In 2024, high-end condominium sales prices remained strong, showing a steady demand for prime properties. These condos offer attractive rental yields, hovering around 6% in mid-2024. This trend is fueled by the increasing allure of city life, where convenience and modern amenities are at your doorstep.
Phnom Penh's population is growing, with the metropolitan area housing over 2.13 million people as of 2019. This urbanization trend is clear as more people flock to the city, boosting the need for housing and commercial spaces. The city's vibrant culture and economic opportunities make it a magnet for new residents.
The expatriate community, largely working in NGOs and international organizations, is also expanding. Their presence drives the demand for urban living spaces, as they seek comfortable and accessible accommodations. This influx of expatriates adds a cosmopolitan flair to the city, enhancing its appeal.
Government infrastructure projects are another key factor, improving city connectivity and making Phnom Penh even more attractive. These developments not only ease transportation but also increase the city's overall livability, drawing more people to settle in the urban core.
With these dynamics at play, the demand for urban living in Phnom Penh is set to grow, pushing rental yields higher as the city continues to evolve. The combination of a growing population, a thriving expatriate community, and improved infrastructure creates a perfect storm for property investors.
Sources: Cambodia Investment Review, Open Development Cambodia, ACS AMI
4) Demand for sustainable homes will rise due to new tax incentives for green buildings
New tax incentives in Cambodia are set to boost the demand for sustainable residential properties in Phnom Penh.
The Cambodian government is offering up to nine years of income tax exemptions for green investments, making eco-friendly homes more financially appealing. This strong policy support is a game-changer for those considering green building certifications, as it makes sustainable properties a smart financial choice.
With energy consumption in the building sector expected to more than double by 2040, the need for sustainable practices is clear. Cambodia's introduction of green building guidelines and certification processes is paving the way for this transition. The Phnom Penh Green City Strategic Plan 2017-2026 outlines prioritized green investment projects, including residential ones, making eco-friendly homes more attractive to buyers.
Green buildings in Cambodia are designed to cut down on energy use, greenhouse gas emissions, and air pollution, which means lower utility bills for residents. This financial perk, along with growing awareness about climate change, is driving a shift towards eco-friendly homes. The National Strategic Development Plan 2019-2023 also highlights sustainable practices, further encouraging this trend.
As more people become educated about sustainability, the preference for green homes is rising. The combination of financial benefits and environmental consciousness is making eco-friendly properties a popular choice. The government's support through tax incentives is a significant factor in this shift.
Sources: Phnom Penh Green Strategic Plan, Stocktaking and Analytical Options for Green Building in Cambodia, UN PAGE Cambodia Scoping Study Brief
5) Demand for accessible, senior-friendly housing will grow as the population ages
In Cambodia, the elderly population is set to grow significantly in the coming decades.
Currently, about 1.3 million people, or 8% of Cambodia's population, are aged 65 and over. By 2030, this is expected to rise to 11%, and by 2050, it could reach 21%. This shift means more folks will need homes with features that cater to their needs, like ramps, wider doorways, and easy-to-reach amenities.
People in Cambodia are living longer, with life expectancy hitting 69.4 years in 2022. As people age, they often look for homes that can support them comfortably over the years, which means a growing market for senior-friendly housing.
Looking at our neighbors, like Thailand, there's a clear trend: senior housing with convenient services is in demand. This trend is likely to spill over into Cambodia, especially in urban areas like Phnom Penh, where modern amenities are more accessible.
The senior housing market is booming globally, with a 40% increase in absorption rates in early 2024 compared to the previous year. This shows a strong and growing demand for homes that cater to older adults, a trend that's expected to continue.
Sources: Oxfam Cambodia, LanguageXS, Bangkok Post, NIC MAP Vision
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6) Affordable housing prices will stay steady due to government support
In 2023 and 2024, Phnom Penh experienced a boom in affordable housing projects, stabilizing housing prices in the city.
The Arakawa condominium project, Cambodia's first large-scale social housing initiative, completed its first phase with nearly 2,000 units. Alongside this, the Grand Park Housing Project added 200 more units, bringing the total to over 3,000 affordable housing units in Phnom Penh. These projects are priced around $30,000 per unit, which fits well within Cambodia's housing affordability norms, indicating a steady pricing trend.
The government is actively supporting affordable housing, even though specific plans for social housing are not yet in place. There are talks about creating social housing funds, similar to those in neighboring countries, which could further help in stabilizing the market. This supportive environment is crucial for maintaining stable prices.
Demand for affordable housing is strong, with about 25% of Phnom Penh's population unable to access secure housing. The city sees around 200,000 newcomers each year, many of whom are young, highlighting the urgent need for affordable housing solutions. This demand, combined with ongoing projects, helps keep housing prices stable.
Sources: Urbanet, Equitable Cambodia, Phnom Penh Post
7) Underdeveloped areas will become more attractive due to government efforts in urban planning
Government initiatives are transforming underdeveloped areas in Phnom Penh into attractive spots for potential property buyers.
With projects like the $1.5 billion new airport and a $4 billion high-speed rail plan, the government is making these areas more accessible. This means easier commutes and better connectivity, which naturally draws in both residents and investors looking for new opportunities.
Property values in these once-overlooked areas are on the rise, signaling a shift in investor interest. It's not just traditional Chinese investors anymore; now, there's a mix of buyers from places like Japan, the UK, and Australia. This diverse interest is a clear sign that these regions are becoming more appealing.
Phnom Penh's Green City Strategic Plan is another game-changer. It focuses on green investment projects that aim to make urban development more sustainable. This plan, along with initiatives like "Cities for All," shows the government's dedication to creating smart and inclusive urban spaces.
These efforts are not just about building infrastructure; they're about creating environments where people want to live and invest. The government's focus on sustainability and inclusivity is making these areas more attractive to a broader range of investors.
As these projects unfold, the appeal of underdeveloped areas in Phnom Penh is set to grow even more, offering exciting opportunities for those looking to invest in property.
Sources: The Diplomat, Khmer Times, Phnom Penh Green Strategic Plan
9) Interest in homes with office spaces will grow as remote work becomes more popular
In recent years, remote work has transformed how we live and work.
Back in 2023, Cambodia was already embracing digital life, thanks to its young and tech-savvy population. By 2024, 14% of full-time employees were fully remote, and 29% were in hybrid roles. This shift naturally sparked interest in homes with dedicated office spaces.
In September 2023, surveys showed that 98% of Cambodian employees wanted to work remotely at least part-time. This strong preference highlights the growing demand for home office spaces. As more people work from home, having a dedicated workspace becomes essential, making such properties more desirable.
Phnom Penh's improved internet and tech infrastructure has made remote work more practical. With reliable and affordable internet, working from home is now a viable option for many, fueling interest in homes that can accommodate a functional office space.
Real estate listings in Phnom Penh are now emphasizing home office features, appealing to buyers who value this aspect. Media coverage on remote work benefits, like better work-life balance and less commuting, makes properties with home office spaces even more attractive.
Sources: Remote People, MISTI Cambodia, Rivermate
10) Mid-range property prices will keep rising steadily as they meet the needs of the growing middle class
Mid-range property prices in Phnom Penh are on the rise, thanks to the expanding middle class.
With income levels climbing, more people can afford to buy homes. This is largely due to Cambodia's economy, which grew by 5.5% in 2023 and 6% in 2024. As a result, the middle class has more purchasing power, fueling demand for mid-range properties.
Phnom Penh is also seeing rapid urbanization, which is pushing up housing demand. The city's property market experienced a 5% price increase in 2023, driven by this urban shift and economic growth. As more people flock to urban areas, the need for mid-range housing projects continues to grow.
Government policies are making a difference too. By encouraging foreign investment in property, the Cambodian government is making home ownership more accessible. This has led to a boost in demand for mid-range properties, especially as central area prices soar.
There's a noticeable trend towards mid-range housing projects on the city's outskirts. As central prices rise, more buyers are looking to the suburbs for affordable options. This shift is creating new opportunities for developers and buyers alike.
Overall, the combination of economic growth, urbanization, and supportive government policies is setting the stage for a steady rise in mid-range property prices. These factors are catering to the needs of the growing middle class, ensuring a vibrant property market in Phnom Penh.
Sources: Dabest Properties, Khmer Times, RFA
11) Interest in properties in historic areas will grow as cultural preservation efforts increase
Government funding for cultural preservation projects has surged in 2023 and 2024, showing a strong commitment to maintaining historical sites.
When the government invests in preserving history, it often leads to increased property values as more people want to live or invest in these culturally rich areas. This trend is particularly noticeable in places with historical significance, where cultural preservation efforts are intensifying.
Tourism is booming, with over 3.5 million international visitors in 2023, a massive increase from the previous year. Tourists are flocking to sites like the Royal Palace and Killing Field museum, highlighting a growing interest in cultural tourism. As more tourists visit, the demand for property nearby can increase, making these locations more attractive for property investment.
In Phnom Penh, property prices were predicted to rise by 5% in 2023, driven by economic growth and urbanization. Areas like Daun Penh and Tonle Bassac, known for their historical significance, are expected to see even higher price appreciation. Their cultural importance and proximity to amenities make them desirable places to live and invest in.
Media coverage has played a role in highlighting cultural preservation efforts, bringing more attention to the city's rich history. This increased visibility can attract investors and tourists, further driving up property values. Additionally, partnerships between local governments and international cultural organizations have brought in more funding and expertise, enhancing the economic value of these sites.
Sources: DaBest Properties, Phnom Penh Post, Research Publish, B2B Cambodia
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12) Demand for international-standard housing will rise as the expat community grows
The growing expatriate community in Phnom Penh is set to boost demand for international-standard housing.
In 2024, Phnom Penh's metro area population hit 2,353,000, showing a steady rise in expatriates. This influx is partly due to the increasing number of international schools, like the International School of Phnom Penh, which cater to families seeking quality education. These schools are a big draw for expatriates, making the city more attractive for those moving with children.
Foreign direct investment (FDI) into Cambodia reached $8.1 billion between September 2023 and 2024, mainly from China, South Korea, and Singapore. This investment is expected to drive economic growth and attract more expatriates. The presence of multinational companies and international franchises like Starbucks and 7-Eleven highlights Phnom Penh's growing appeal, as these brands often follow expatriate communities.
The construction of luxury and serviced apartments in Phnom Penh is on the rise, indicating a growing demand for high-quality housing options. These developments are designed to meet the needs of expatriates who seek comfort and convenience. Government policies encouraging foreign investment in real estate, such as allowing 100% foreign ownership in most sectors, are crucial in supporting this demand.
Phnom Penh's real estate market is evolving to accommodate the needs of its international residents. The city is seeing a transformation with new housing projects that offer modern amenities and international standards. This shift is driven by the growing expatriate community, which is looking for homes that match their lifestyle and expectations.
Sources: Macrotrends, Fibre2Fashion, B2B Cambodia, Phnom Penh Post
14) Affordable housing projects in the western suburbs will attract first-time homebuyers
The western suburbs of Phnom Penh are quickly becoming a prime spot for affordable housing projects.
There's a strong demand for budget-friendly homes, especially condos priced under $70,000. For instance, JS Land is offering units for just $39,000, with easy monthly payments, making it a popular choice for many.
The Cambodian government is also playing a big role by offering incentives like tax breaks and reduced infrastructure costs to developers. This makes it financially appealing for them to build homes priced between $15,000 and $30,000.
Infrastructure in the western suburbs is getting a major boost with new roads and the upcoming Techo Takhmao International Airport. These improvements are making the area more accessible and attractive for new residents.
Real estate reports highlight that as infrastructure grows, suburban areas offer high growth opportunities. This is further fueling the trend towards affordable housing in these regions.
For first-time homebuyers, these western suburbs are becoming a go-to destination, thanks to the rise in affordable housing projects and the area's growing appeal.
Sources: Cambodia Investment Review, People in Need Cambodia, Realestate.com.kh
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) Blockchain will make property transactions faster and clearer by improving transparency and efficiency
Blockchain is revolutionizing the real estate market by making property transactions more transparent and efficient.
In places like Dubai, the use of blockchain has transformed how property titles are managed. The Dubai Land Department's blockchain system has cut property deal processing times from weeks to just a few days. This is because blockchain eliminates manual paperwork and allows for real-time verification, significantly reducing errors and fraud.
Cost savings are another major advantage. By using smart contracts, blockchain reduces the need for intermediaries, which can save up to $30,000 in fees for properties with a median value of $429,000. This efficiency is why 86% of decision-makers in commercial real estate believe blockchain will have a transformative impact on the sector.
Blockchain is also paving the way for decentralized real estate platforms. These platforms allow buyers, sellers, and investors to interact directly, creating a peer-to-peer environment that lowers entry barriers and increases transparency. In Southeast Asia, projects like Propy have already handled $4 billion in transactions, proving blockchain's potential for secure and transparent dealings.
With blockchain, the real estate industry is moving towards a future where transactions are faster, cheaper, and more secure. This technology is not just a trend; it's a game-changer that is reshaping how we buy and sell property.
Sources: Homecubes, BSV Blockchain, Axis Technical
16) Residential development in southern Phnom Penh will surge as infrastructure projects enhance connectivity
The southern districts of Phnom Penh are buzzing with new residential developments thanks to major infrastructure upgrades.
It all started with the Hun Sen Boulevard Project and the opening of a new international airport, which caught the eye of real estate developers. These projects have made the area a hot spot for those looking to invest in property.
Backing these developments is a hefty investment, like the $36.7 million overpass designed to ease traffic jams. Plus, there are plans for several bridges, including three over rivers, which will make getting around much easier and the area more appealing.
Key projects like the 4-kilometer asphalt road connecting National Highway 2 and Road 271 have already boosted connectivity. And by 2025, the twin flyovers along Phnom Penh’s 60-meter boulevard will further improve transportation links.
These improvements are not just about roads; they’re about making the southern districts more accessible and attractive for living and investment. The area is becoming a prime location for those seeking new opportunities in Phnom Penh.
Sources: Realestate.com.kh, Phnompenh.com, Construction-property.com
17) Residential investment will grow in areas made accessible by expanding public transport networks
In 2023 and 2024, Phnom Penh's public transport networks saw major upgrades, making once hard-to-reach areas more appealing for homebuyers.
Take the Chroy Changvar Bridge, for example. It has boosted connectivity between the city center and suburbs, causing land prices in the Chroy Changvar district to climb. This pattern is also seen along Monivong Boulevard, where expansion efforts have led to a rise in property values. These changes show that better transport links can increase property values, making these areas more attractive to investors.
Looking ahead, the Comprehensive Master Plan on the Cambodian Transit and Logistics System 2023-33 is a game-changer. With 174 projects in the pipeline, this plan aims to connect different modes of transportation. The government's commitment is clear, with an estimated investment of $36.68 billion, which is expected to draw in residential investment.
Phnom Penh's public transport system is also getting a modern makeover, thanks to initiatives like MobiliseYourCity. These efforts are all about creating integrated transport systems that make previously hard-to-reach areas more attractive.
Sources: IPS Cambodia, Phnom Penh Post, MobiliseYourCity
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18) Property interest in eastern Phnom Penh will drop because of flood risks
In Phnom Penh, flood risks are increasingly affecting the eastern parts of the city.
Areas like the Royal Palace and Beoung Trabeck market are seeing more frequent and severe floods. This trend is making these neighborhoods more prone to flooding, which is a growing concern for potential property buyers. The government has noted that while floods are currently manageable, flash floods are becoming more common, hinting at a worsening situation.
Recent media reports from September 2024 highlight the ongoing flood risks, emphasizing their impact on local communities. This has further deterred interest in properties in these areas. The drainage systems in eastern Phnom Penh are inadequate, which only makes the flood risks worse. This lack of proper infrastructure is a significant concern for anyone considering buying property there.
Real estate market analyses suggest that property values tend to decline in flood-prone areas. Given the historical flooding issues, this could very well be the case here. The infrastructure assessments reveal that without improvements, the situation is unlikely to change, making these areas less attractive to buyers.
Sources: Flo-2D Model Study, Humanitarian Response Forum Report, JICA Report
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.