A country emerging from a turbulent and traumatic past, Cambodia has one of the world’s youngest economies and one that has sustained double-digit growth for much of the past decade. Property prices are very low for the region and offer a potential for high returns, yet, with any emerging and youthful market, investors should exercise due diligence.)
Cambodia as a destination has a lot to offer. The stunning temples of Angkor are justifiably regarded as one of the wonders of the ancient world, the bustling capital of Phenom Penh is a dynamic, free-wheeling Asian city, and the southern coastline is home to some amazingly pristine beaches and islands.
Advice for Investors
The economy is relatively open and free, with the recent oil and gas discovery off the southern coast near the city of Sihanoukville promising further investment and increased demand for residential housing.
(French colonial mansion in Phenom Penh)
The legal framework is also young and corruption remains a problem but, through close work with United Nation bodies, Cambodia’s laws and practices follow international standards with the rule of law enforced. “It’s a particularly friendly country for investors”, believes Daniel Parkes, country manager for Cambodia at multinational commercial real estate corporation CB Richard Ellis. “The Council of Development of Cambodia (CDC) is headed by the prime minister and features representatives from the major government departments; it’s the one-stop shop for investors.”
Under Cambodian law foreigners cannot own land, but, says Parkes, purchasing a building as a freehold is allowed. However, as with any property purchase, do your research and do not buy sight unseen and in particular “check the land title with a lawyer.”
Where to Purchase Property
Phenom Penh is the obvious choice with the property market buoyed by a recent influx of telecoms and banks, and the predominantly low-rise skyline of tenements and French colonial villas set to be dominated by Southeast Asia’s tallest skyscraper. The southern coast offers a scenic environment, white sand and some very high quality developments, particularly on the islands. Government-owned islands, such as Koh Rong, are reminiscent of Thailand forty years ago, and hopefully their status as protected sites will ensure their development is not at the expense of their natural beauty.
The relative absence of prior real estate development and a young ‘frontier’ economy experiencing rapid growth means there is the potential for high capital gains for the long-term investor. What’s more, Parkes argues, since the de facto currency of the country is US dollars you can “take a depreciating asset: the dollar, and use it to purchase a long-term growth asset in Cambodia property.”
While the country is remarkably politically stable given its recent history, potential investors should exercise caution given that infrastructure and financial institutions are still weak, and the absence of a relative price index mean it is hard to accurately gauge a property’s worth.
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Tags: Cambodia, overseas investors