Common Hazards for Cambodia Condo Investors in 2025

While many investors have achieved high success in Cambodian condo investments in previous periods in terms of appreciation on resales and yearly rental returns, others have faced various issues having chosen to work and invest with disreputable agencies and developers.  

Ultimately, while Cambodia is leaping ahead in terms of improvements to core infrastructure, construction standards, the rule of law, and overall economic growth, it remains a frontier market for international property investors in many respects. Above global average returns are achievable to property investors in the Cambodian market – yet their remains higher risk for those investments compared to more developed real estate markets internationally.

The most common market hazards for Cambodia condo investors in 2025 include developer liquidity issues, overpromised rental returns, lateness and quality of construction, ongoing property management issues and legal compliance issues.

However, if incoming investors conduct proper due diligence, keep their eyes open to common pitfalls in the market, and work with reputable and supportive agency and development partners in the market to undertake investments, the risks of investing in Cambodia property becomes very manageable.

Here are some red-flags that condo investors in Cambodia must be aware of before entering the market: 

• Developer Liquidity Issues 

In Cambodia, some property developers are not in a liquidity position to complete their project if presales targets are not met. This means that the construction costs are only being covered by incoming pre-sale buyers’ deposits. In the case that presales of the project slow down, the developer likewise slows down the project’s construction or halts project’s construction entirely due to a lack of funds.  

This phenomenon became particularly clear during the covid-19 pandemic period, where sales dropped significantly for many new developments in Cambodia. During this period, several projects, particularly in Phnom Penh and Sihanoukville, slowed construction considerably or stopped completely. In this case, early buyers of those projects faced significantly delayed handovers of their units; and in the worst cases, the projects were stalled indefinitely. 

To avoid such a situation, it’s extremely important for buyers to be certain of the financial health of the developer prior to making any commitments to buy units within their developments.  

At IPS Cambodia we refuse to represent any development demonstrating liquidity issues and only promote and sell projects with a clear track record in the market, and a sound financial position enabling them to complete the project with or without significant presales. 

• Overpromised Returns 

Many developments in Cambodia have promoted projected net returns upwards of 10% per annum, without any supportive rental data from the area in which the project is being constructed. While the Cambodian condo and apartment rental market is healthy and more profitable than many more-developed markets worldwide, such high rental returns are not possible or likely for the majority projects.  

While prime districts (tier 1) and unique and high-quality units can fetch annual returns of up to 9% and even slightly more once the development’s brand and reputation for management is confirmed by the market, in tier 2 and tier 3 locations, units are generally limited to net returns of between 6%-7% per annum. The average return in the market across all grades is around 6.5% per annum.  

A possible exception to this rule is related to projects which include a hotel or hospitality element, as short-term stays in hotels can fetch higher returns than regular rentals and leases. However, the reputation of the integrated hotel and long-term management of the property will be very important to achieving such returns, as well as global and domestic tourism trends.

Unique offerings such as penthouses and larger, luxury units can also command stronger than average returns. 

Guaranteed Rental Returns (GRR) are also touted by some developers in Cambodia, meaning that buyers are offered a guaranteed return on their investment property of anywhere from 6%-12% per annum for the first 1-10 years of ownership once the project is completed, totally managed and paid to the owner by the developer.  

While some of these GRRs are supported by well managed leasing or hospitality-based operations, for other projects the GRR is essentially built into the asking price. This means that investors who favor a unit offering GRR end up paying more on the initial unit price to allow the developer to afford to pay back the promised GRR to the buyer during the initial few years after the completion of the project.  

What this means for the buyer is that for the first few years they may get a rental return under the GRR, however in fact the property is not being rented at all or being rented at a far lesser return – and the offer is superficial.  

When the GRR period ends, the owner may find it difficult to garner such a yearly rental return themselves. Meanwhile, they bought the unit at an inflated price to cover the cost of the promised GRR, and they may struggle to achieve any price appreciation if they try to sell the unit at a profit once the GRR period ends.  

At IPS Cambodia we don’t offer projects with clearly superficial GRR offers, rather we focus on representing projects which are priced correctly from the outset as per the location and quality offered, and give potential buyers a realistic projected rental income based on our understanding of the current rental price and demand trends in the area in which the development is being built.

We also index the developers’ previous project’s rental returns, as well understood by our property leasing and management departments, to give incoming investors a reasonable expectation of rental yields on upcoming projects.

If we do endorse a project with a GRR, we ensure that the promised return is in-fact achievable based on the rental operations being proposed by the development. Furthermore, we ensure that any GRR is reasonable versus the unit’s standalone per square meter value, based on current market rates.  

• Lateness and Quality  

Despite representations in project showrooms and terms and conditions within Sales and Purchase Agreements (SPAs), many projects in Cambodia have handed over units to buyers with substantial delays and/or with defects in the unit and common areas. Often legal recourse in such cases is problematic for individual buyers in Cambodia, leaving the investors with no choice but to accept such irregularities. 

To avoid this situation, only invest with tried and trusted developers who have proven that they truly deliver what they promise. The way to do this is to understand their track record in the market, and work with a reputable and trusted real estate agency such as IPS to guide you through the purchasing and handover process.  

• Ongoing Management Issues 

Many developers in Cambodia opt to take on their own property management operations once the project is completed, despite having little or no experience in the property management industry. This leads to poor maintenance of the project, unmoderated leasing practices and general headaches for end unit owners. Poor property management also leads to depreciated rental and resale prices for owners.  

To avoid this situation, investors must investigate the plans for post completion management of the project, understand what yearly property management fees will in fact cover, and avoid projects that cannot demonstrate a clear track record in successful property management in Cambodia.  

• Legal Compliance Issues   

While Cambodia’s legal system has developed considerably in recent years and the Government is highly proactive in matters related to supporting foreign investment, in recent years some condo buyers in Cambodia have experienced issues with contract enforcement in cases related to condominium purchases. 

While contracts may have clearly defined terms related to penalties for lateness of unit handover, quality assurances and ongoing management conditions, enforcing such terms in the case on noncompliance can be highly burdensome for investors, and issues may remain unresolved.  

To avoid this situation, only invest with tried and trusted developers who have proven that they truly deliver what they promise, as well as demonstrating respect to the rule of law. The way to do this is to understand their track record in the market, and work with a reputable and trusted real estate agency to guide you through the process.

Ready to start your Cambodian investment journey with IPS Cambodia? 

Check out a selection of foreign ownership ready investments from trusted developers in Phnom Penh today:

Time Square 8, with units starting at $70,000

J Tower 3, with units starting at $330,000.

Or Get in touch directly and let us know how we can help.