Investor Confidence Boosted in the Cambodia Market as Middle Class Grows
Feb. 16, 2017, 11:46 a.m.
It is easy to talk about the many ongoing and successfully completed projects in Cambodia right now because there is an abundance of them. But what is rarely talked about are the factors that contribute to the increasing opportunities in the country for both local citizens and foreign nationals that will support the sustainable development of the real estate industry as a whole, and create a strong secondary resale and rentals market into the future.
Two of those factors are the country’s gross national income and the income status of its citizens. The growth of these two factors has a significant influence on the growth of the real estate industry.
These two factors have been a recurring indicator in research and reports lately, such as the World Bank’s statement that Cambodia has now moved to a lower-middle income status, contributing to a gross national income per capita higher than $1,026 per year. The World Bank classes lower-middle-income countries as those with average yearly incomes between $1,026 and $4,035. Cambodia has just entered this bracket.
The Implications of Higher Income Status:
There is great trust placed by investors on a country with a growing economy. And part of that growth in trust will always include lower unemployment rates and a higher income status for the entire country. This ultimately leads to a higher sustainable GDP, which is also good for businesses.
But what does this specifically mean for the real estate market?
Simply put, this means that people inside the country are now able to afford a wider range of properties that have been previously hard to purchase due to low incomes.
Local buyers are also more like to be applicable for home loans and finance for their next property purchase.
So, for investors, your potential rental returns and resales prices are strengthened. In fact, land prices in Phnom Penh alone increased by 15 percent in the year 2013. And has only continued to rise since then.
Also, with higher amounts of income tax being collected, the government will have more scope for policies to assist in the country’s progress, such as infrastructure and affordable housing projects.
Income in Emerging Markets:
Emerging markets like Cambodia are one of the best places to invest in because the GNI and GDP are just beginning to rise. This means that there is much more progress to be made and much more opportunities yet to come for those who commit to the market early.
Placing your money in a country with a promising future will potentially give you much higher returns than you are likely to get in more developed economies.
Yes - emerging markets do come with higher risk, but in countries like Cambodia, the political stability is a standout case in the region, and so it the economic growth rates. This helps to give investors the assurance they need to put money down.
For investors, now is the time to seriously consider Cambodia as a destination for a property investment with the potential to sky rocket returns. If you wait too long, the opportunity may be lost.
Learn more about the charm of Cambodia for property investors.