On the 20th of August 2016, the Cambodian Valuers and Estate Agents Association (CVEA) conducted a public forum regarding "Today’s Real Estate Industry in Cambodia" at the Sofitel Hotel in Phnom Penh. The discussion-based event was joined by an eclectic group of stakeholders – including property developers, media organizations, real estate agencies, banks, and the general public.
In a panel discussion about the “Opportunities and Challenges of Housing development,” Ms. Chan Socheata, the Head of the Office of Business Management Housing Development at the Department of Industry and Finance, said that “everyone needs to posses their own house. So, why do they need to have a legal license? How is it significant or important for the buyer?”
What does a condo or borey buyer or investor need to consider regarding the Licensing a development project in Cambodia?
Ms. Socheata said that “buyers should ask for more information before deciding to buy a condo and seriously consider whether this project has gotten a legal license from the ministry.”
She added that “if the condo and borey project is licensed, it is a really good condition for buyers because licensed projects are guaranteed to be safe for buyers. And if there is conflict, the ministry is also easy to reach for a suitable solution for both parties.”
For instance, Socheata notes, there are some buyers who don’t want to pay money to the Borey 999. Even if this is the issue of the individual, it will affect this licensed project as a whole. So, the committee of the ministry is allowed to help by going to the root cause of the problem and negotiate with the company to get the project owner negotiating with the buyer.Condo and Borey Buyers need to be aware that buying from a licensed project guarantees that:
- The Ministry has checked whether the condo or borey development has a clear and strong source of income, capital, collateral, land title, and other assets that support their project, especially because project owners need to make a business plan to present to the ministry.
- The ministry will check whether it’s a good business, and if it can be successful in the future or not.
- The ministry also often researches the sales strategy of the project, because sometimes a project’s owner does not do an in-depth market analysis with the surrounding market.
- To obtain the license, the project development company must to have 2% of the total capital deposited in the bank of Cambodia or any commercial bank in Cambodia. Even though this deposit money is a small amount, it shows that the development has its capital. “And it also causes the customer to trust the project too,” Socheata added.
Socheata concludes by saying that “all project developers have to get a license from the Ministry of Economy and Finance. And this is something that any buyer should seriously consider before buying residential properties off plan, whether condo or borey. Keep in mind to ask whether that project has got a license in order to protect your own benefit and not waste money with unnecessary trouble.”