- Condominiums are perfect investment opportunities for foreigners because it allows for freehold ownership
- Residential and Commercial land value had tripled from 2000 to 2019 due to the growing local market and foreign direct investment.
- The price of properties in Cambodia from 2014 – 2016 increased by as much as 50%. This increase is attributed to the positive laws created by the Cambodian Government with regards to foreign investments
- The upward trend of property rates eventually flat lined towards the end of 2018, to its current market value. This is attributed to the market saturation of the targeted market.
Cambodia has been experiencing an economic boom since the early ‘20s. Property prices nearly tripled in the last 10 years following an upsurge of investors entering the country with foreign money to spend. There is a significant increase in Cambodia property rates in both land and rental properties. That increase led to a relatively high margin for property owners and high capital gains for investors.
Cambodia Property Market
There are many properties in Cambodia that are available as real estate investment opportunities for both local and international buyers. Popular investments are properties that can be rented like apartments and condominium units that can generate income quickly. Other options are commercial and residential land that are ripe for development. Whatever the type of investment, the value had increased by a long shot.
Residential and Commercial Land
Residential and Commercial land value had tripled from 2000 to 2019. Cambodia’s economy surged after the chaos of the 80’s, with the help of international aid. They had opened their doors to foreign investments, and this led to the increase in sales of land properties.
Farm lots are converted into industrial use. Factories and warehouses are built on unused land to store raw materials and finished products. Land in urban areas became commercial spaces and residential buildings. These residential properties are then divided and sold per unit to investors with a limited budget.
Residential and Commercial Land can be bought with a soft of hard title by locals. However, foreigners can only buy this type of property using a nominee or LMAP ownership structure, and other types of property ownership.
Nowadays, land is priced at $5,000 per sq.m. and above in Chamkarmon district, with the other districts in the city priced at ~20-30% lower. A great decrease in property rate is seen for land in the provinces and outskirts of the city. Here you can buy land at approximately $100-$300.
Property Rates Over the Years
|Property Rates Inside the City||Current||Last Year||5 Years||10 Years|
|Residential Land per sq.m.||$2,500||$2,000||$1,500||$500|
|Commercial Land per sq.m.||$5,000||$4,500||$3,000||$1,000|
|Single Unit Apartment 1 Bedroom||$150,000||$130,000||$80,000||$20,000|
|Single Unit Apartment 3 Bedroom||$350,000||$300,000||$200,000||$50,000|
|Villa For Sale 3 Bedrooms||$600,000||$500,000||$350,000||$80,000|
|Property Rates Outside the City||Current||Last Year||5 Years||10 Years|
|Residential Land per sq.m.||$100||$80||$50||$10|
|Commercial Land per sq.m.||$300||$250||$150||$30|
|Single Unit Apartment 1 Bedroom||$60,000||$50,000||$30,000||$8,000|
|Single Unit Apartment 3 Bedroom||$120,000||$100,000||$70,000||$15,000|
|Villa For Sale 3 Bedrooms||$150,000||$130,000||$80,000||$20,000|
Apartments and Condominiums
Residential properties like condominiums are perfect investment opportunities for foreigners because it allows for freehold ownership. Any foreigner can buy a unit/s with a strata title as long as it follows the guidelines below:
- Only applies to properties from 2010 onwards
- Foreign Ownership of the building should not be more than 70%
- The property is not within 30km of any international land border
- The unit cannot be on the underground or ground floor
Property rates for apartments depend on size in sq.m. number of rooms, furnishings, and conditions of the sale. Just like land properties, strata title is not available for apartments. However, foreigners who wish to buy these kinds of properties will have the option to buy it using a nominee structure of ownership.
Currently, studio apartment units are priced at ~$120,000 and above in the city center, and $40,000 in the outskirts and provinces. Condominium units starts from $150,000 and above.
Villas and Townhouses
Small to medium-sized businesses easily acquire available Villas. They use it as commercial space. Schools sometimes use big villas with many rooms. They have the option of leasing it for a long period of time (50 years or more) or buy it using the nominee ownership structure.
Townhouses are located in urban areas, close to offices and commercial areas. Unlike apartment units, townhouse provides owners with more rooms to move around. Villas and townhouses are currently priced at $500,000 and above in the city center, and $10,000 for those near the outskirts of the city and province.
Factors Affecting Property Rates
According to IPS-Cambodia Country Manager Grant Fitzgerald, there are two things that affect the increase in the property prices in the country. It’s the growing Cambodian Middle Class, and Direct Foreign Investments.
“First, there’s always been an extremely strong demand from the local market. This is only growing as the Cambodian middle class has grown and have more disposable income. A lot of that income has been going into land investments. This is especially prevalent in boreys. Since these boreys started popping out, there’s a lot of Cambodian middle class buying it.”
“Foreign investment and a stable government is the second reason for the increase in property rates. A stable government creates a stable business environment which has allowed for Foreign Direct Investment to come on. Previously it was from Japan, Korea, Singapore, and Malaysia. Now it has expanded into the Chinese Market,” Fitzgerald added.
Economic Surge of 2014 – 2016
There is an upward trend in the price of properties from 2014 – 2016. Real estate prices increased by as much as 50%. The positive laws created by the Cambodian Government with regards to foreign investors is the main factor for this trend.
Fitzgerald noted that “Part of the 2014 – 2016 surge is due to the new laws created with regards to the condominiums. There’s a lot of foreign buyers that have taken advantage of the apparently low price points. Instead of buying a condominium in Singapore, they can buy one here for as low as $150,000 and it’s a lovely low price point right there.”
Stabilization of Property Rates from 2016 – 2019
Fitzgerald observed that from 2016 onwards, prices of condominiums and apartment units have stabilized. This upward trend eventually flat lined towards the end of 2018, to its current market value. The flat line is attributed to the market saturation of the targeted demographics for these types of real estate properties.
“The high-end condominium buying market is a relatively small population of rich Khmers that can afford a 2 bedroom condo unit for $300k. When the first condo hit the market, that exciting concept led to most rich locals to buy their own units. After that initial surge, there are very few who have an interest in buying more. However, more affordable condo units in the $50k – $100k price range still sell quite well among locals.”
Location, Locale, and Infrastructure Developments
According to Fitzgerald, it is hard to pin down the average growth rate of property rates for the whole country. Growth largely depends on the type of real estate property, and the developments in a particular area.
“Land has an extremely strong demand in the local market, which has been a main draw ever for the last ten years. It’s difficult to say for sure what the growth rate is. We have seen a 500% increase in Sihanoukville in 2 years. There’s also a similar sudden jump in pricing when there is a new road or bridge being constructed in a particular area. If an investor has the habit of checking the government plans and buying right away, they will benefit greatly from the sudden increase of the land’s value”
Property Rates Forecast for 2020
Everything has been in an upward trend, whether land, condominium or apartment, both rental and selling prices. One good example is the Russian Market (Toul Tumpoung). When the Chinese came, they drove the selling and rental prices up because they created the demand.
Fitzgerald forecasts that even with the price stabilizing, demand will still be high, which will drive the property rates higher as well. “Local demand will continuously be strong, as well as the Chinese demand. The whole property market will continue to be strong.” Fitzgerald forecasts.
It is true that prices have stabilized for most real estate properties, but the market value of every type of property will continue to grow as the demand continues.