Cambodia is a hot market for foreign investors and business owners in the Southeast Asian market. Keeping up with its reputation, the Cambodian market hasn’t been a victim of any recession in the past 20 years. Not only did it survive the tech bubble of the early 2000s, but it also successfully overcame the 2009 financial crisis.
Cambodia may be a great choice if you are looking for a perfect destination for real estate investment. However, you just can’t go around the place for investment. For this reason, you need the help of professionals from IPS Cambodia who know the entire market.
Factors that Affect Real Estate Investments in Cambodia
Cambodia is under the radar of various foreign investors. Business owners from Japan, Canada, France and more invest in this region, considering cheap labour and prices. The capital city of Cambodia is the home to various multinational companies such as Nike, Toyota and more.
The economic forecast of Cambodia for 2023 currently stands at 6.5%. As the economy grows, the real estate market will likely overcome economic burnout. Businesses will flourish, and more and more international companies will find their place in Cambodia. However, several factors will affect your real estate investment in Cambodia.
Some of the significant factors affecting the investment procedure are discussed below.
1. Economic Conditions
The IMF predicts that the real GDP of Cambodia will expand up to 7 per cent for the current year. They dedicate this growth to activities in the real estate and construction sectors.
Cambodia saw massive economic growth between 2010 to 2019 when the average GDP was 7.7%. The Cambodian economy strongly depends on tourism, garment manufacturing and agriculture. In 2019, the Cambodian economy saw a rise in tourism.
Apart from these, the real estate market of Cambodia also contributes to the flourishing of the economic conditions of Cambodia. Economic growth will also increase demand for real estate in urban areas. The government is including regulations and policies for promoting foreign investments in the real estate sector.
The government regulations are also focusing on diversifying the economy of the country. They are implementing policies for fiscal and monetary recovery. The Cambodian government also welcomes various industries such as technology, manufacturing and construction. All these efforts aim at boosting economic growth.
2. Seasonal Trends
Besides economic growth, seasonal trends significantly impact the Cambodian real estate market. The dry season is the peak property buying season in Cambodia which ranges from November to April. If you want to purchase a property in Cambodia during this period, you can book a viewing with IPS Cambodia.
The period between December to February is said to be the peak season for real estate transactions in Cambodia. This is so because it is when foreign tourists and investors are interested in the market. Many foreign investors and tourists purchase property around Sihanoukville and Siem Reap.
Nonetheless, it is important to note that the seasonal trends for purchasing property in Cambodia will vary from place to place. If the real estate transactions are high in one area, it may be low for over and so on. Moreover, the seasons and weather may also impact the real estate purchase.
The seasonal trends for property purchase in Cambodia may also be drawn by changing economic and political scenarios.
3. Real Estate Market Cycle
The real estate market cycle is a recurring pattern of fluctuation in property prices and their demands in a specific period. It can be influenced by social, economic and political factors, usually affecting the supply and demand sector.
The Cambodian real estate market has grown significantly in the past few years. Factors like urbanisation, middle-class growth and huge foreign investments contributed to this. Owing to all these, the real estate market cycle was influenced by correction, rapid growth and stabilisation. During the COVID-19 pandemic, the real estate market showed a downtrend.
The real estate market cycle is hugely affected by economic factors like foreign investment, inflation, interest rates and more. At the same time, political stability impacts investment decisions and investor confidence. The more stable the political market is, the demand for real estate properties is quite high. The growing population of Cambodia will also have an impact on real estate property. The demand for real estate properties is also growing with the expanding population.
4. Government Policies
Government policies affect the real estate market and influence demand, supply and investment decisions. Land ownership and use regulations have undergone some changes in recent years. With proper law regarding land ownership, the confidence of investors is strengthened. As a result, most of them are ready to invest in the market.
There were some strict laws regarding foreign ownership of land. However, the government has now relaxed those laws, encouraging foreign investments. Owing to increased demand, the government has also introduced some laws regarding infrastructure development projects. Under these projects, they may build public transport systems, bridges and roads. As a result, accessibility and connectivity will improve, pushing the demand for real estate development across certain areas.
These changes in government policies are having a positive impact on the real estate market of Cambodia. The improved market and rapid growth in Phnom Penh and more will get better foreign ownership with higher prices.
5. Construction and Development Trends
When it comes to real estate investment in Cambodia, it is important to take into consideration the construction and development trends. These trends usually influence the supply and demand for the real estate market. The availability of newer properties will affect the real estate market. This may further bring some fluctuations in prices and investor returns.
Cambodia’s high-end and luxury properties hugely influence the construction and development trends. Furthermore, Cambodia’s combination of retail, commercial and residential space in Cambodia has a huge impact on the market. Various developers are also introducing sustainable and green building practices.
The builders are focusing on including energy-efficient features and products in their buildings. This is to ensure that the real estate market in Cambodia is at par with the Western countries. Moreover, sustainable development will also contribute to significant real estate market growth. The more these features are included, the more they can attract foreign investments.
The Cambodian market has always proven to withstand the test of time. Despite COVID-19 hitting the market, the real estate space here is growing. The businesses can overcome economic burnout and perform well. The affordability across the real estate market has contributed significantly towards the popularity of the space.
The use of development and affordable residential and commercial properties are at an all-time rise. If you plan to invest in the Cambodian real estate market, you must work with reliable and experienced professionals. They should be the ones who are aware of the market and can bring a wide range of benefits. Well, IPS Cambodia is always there at the step to help individuals get the property of their choice. So, whether you’re looking for residential or commercial, you can contact IPS Cambodia and get the property of your dreams.