Cambodia is in the middle of a property boom. Commercial, residential, and mixed-use developments are sprouting one after the other in the Kingdom’s urban areas like Phnom Penh, Siem Reap, Sihanoukville, and Battambang.
Seeing the boundless opportunities before them, many wealthy Cambodians who previously have no engagement with Cambodia’s real estate industry have started investing heavily in the sector. The Kingdom also becomes a favourite destination for property investors across the globe. Chinese, Japanese, Koreans, Singaporeans, and Thais are among the top real estate investors in Cambodia.
In this article, we offer a practical overview and informative video of the legal guide for those interested in the real estate market.
Areas for investment
The real estate market in Cambodia has a few key segments:
- The market for residential condos is huge. Currently, most of the supply here is in the middle and high-end of the market. Condos are popular with international investors.
- Boreys, or gated residential communities, tend to be the focus for local buyers. These are often landed properties.
Key concerns
Everyone knows that high risk brings a high reward. Fortunately, Cambodia brings a healthy balance between the two. Here are some key concerns about investing:
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Proper Co-Ownership Rules
Enforcing leases is something that is possible in Cambodia, but going to court is still a bit of a problem. It is important to structure your co-ownership rules with very detailed information, including checks and balances, to make sure you are not subject to claims. Otherwise, there is a possibility of being sued. -
No Shortcuts in the Construction Permit Application
Make sure the construction permit application procedures are followed strictly. You also need to have the right support from the start. Otherwise, you will encounter many problems with titling and other matters. For instance, some developers have complained of being unable to title the entire size of their building despite their layout being approved. So-called “gaps” in the process are the most likely culprit. -
Timely Issuance of Titles is Important
If buyers want to have a property purchase refinanced by a bank, it is quite important to have a title in hand. Some banks won’t allow refinancing without a title. For certain developments, it can take two or three weeks to have a title issued. As a developer, you want to make sure that you can issue a title on time so your clients will not be in default on payment. -
Internal regulations Before Sales
You must have clear regulations setting forth the rights of customers before announcing sales. Quite often, the regulations are an essential part of your sales process and give you an edge over your competition, especially if you are prompt in issuing them.
Knowledge about property taxes is critical. This is an important concern for developers. You can make informed decisions only if you have at least a basic knowledge about the different kinds of property taxes, where they apply, or how they are computed.
Get the right help
At the end of the day, it pays off to get the help of legal professionals. It’s better to pay for help upfront than to have major problems later on. There are plenty of legal firms in the country which specialise in real estate law.
Note: This is a general guide and does not constitute definitive legal advice. Always do your own research and invest at your own risk.
As a bonus, we are including a video featuring Guillaume Massin, Partner, Head of Regional Real Estate Practice Group
For more information on real estate in Cambodia, contact us!
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