After being depressed for several years, Cambodia’s property market is now recovering slowly, fuelled by strong economic growth and the new foreign ownership law.
Despite the absence of official property price statistics, land prices in the country were estimated to have been rising recently. In Phnom Penh, Cambodia’s capital, land prices rose by an average of 15% during the first half of 2013 from the same period a year earlier, to US$2,350 per square meter (sq. m.), according to local real estate experts.
In the Boeung Keng Kang 1 (BKK1) area, land prices stood between US$3,500 and US$4,000 per square meter (sq. m.) in mid-2013, up from the pre-crisis levels of between US$3,000 and US$3,500 in 2008, according to Kuy Vat CEO of VTrust Group. The increase in land prices can be attributed to the increasing number of business and integrated services in the area.
In Takamau, the capital of Kandal Province, land values also increased by about 10% to 15% during the first half of 2013 from the same period last year, mainly due to the plan to build a new road, the Tumpun National Highway 2, according to some local property experts.
Sihanoukville, Cambodia'spremier island and beach resort, also saw modest increase in land prices, estimated at about 5%, during the first half of 2013 from a year ago, mainly fuelled by the construction of several hotels in the area.
Housing loans are up. During the first nine months of 2013, housing loans rose by about 11% y-o-y to US$103.6 million, according to Mrs. Phan, Executive Vice President of a local bank. Their average interest rate ranges between 9% and 11%, according to Canadia Bank.
There is also a noticeable increase in residential construction activity, including Casa Meridian 2, a 30-storey building, which began in late 2013 and expected to be completed in 2016. Prices for condominium units range from US$8,000 to US$60,000. There is also the ongoing Snake Island (Koh Puos) development project with villas, hotels and offices.
The ground-breaking of a 45-storey twin tower in Phnom Penh's Bassac Mon District, south of the Australian Embassy, is expected early this year.
The number of licensed real estate companies in Cambodia increased in 2013 to 59, up from 40 in the previous year, according to the Association of Evaluation and Real Estate Agents. More foreign companies came in, reflecting property market growth and increased investor confidence.
New foreign ownership law boosts demand
Foreigners are now allowed to own apartments and condominium units, but not land, and therefore not the first floor of buildings, under the new foreign ownership law approved by King Norodom Sihamoni in May 2010. Just after the passing of the law, tax revenues from property-related transactions soared 60% to KHR76.21 billion (US$19.5 million) in 2010, from KHR47.7 billion (US$12.2 million) in 2009.
In 2005, the Cambodian government amended its investment law to allow foreign ownership of buildings. However, the law not then implemented and the idea floundered, since the country was then experiencing one of the biggest property booms in Asia.
Land ownership is against the Constitution and is still out of the question. Land can however be held by foreigners on long (renewable) leases and through majority locally-owned companies incorporated in Cambodia. These structures are argued by lawyers in Cambodia to be safer than legal schemes in any other South East Asian country in which foreign land ownership is formally prohibited.
Despite the absence of official property price statistics, land prices in the country were estimated to have been rising recently. In Phnom Penh, Cambodia’s capital, land prices rose by an average of 15% during the first half of 2013 from the same period a year earlier, to US$2,350 per square meter (sq. m.), according to local real estate experts.
In the Boeung Keng Kang 1 (BKK1) area, land prices stood between US$3,500 and US$4,000 per square meter (sq. m.) in mid-2013, up from the pre-crisis levels of between US$3,000 and US$3,500 in 2008, according to Kuy Vat CEO of VTrust Group. The increase in land prices can be attributed to the increasing number of business and integrated services in the area.
In Takamau, the capital of Kandal Province, land values also increased by about 10% to 15% during the first half of 2013 from the same period last year, mainly due to the plan to build a new road, the Tumpun National Highway 2, according to some local property experts.
Sihanoukville, Cambodia'spremier island and beach resort, also saw modest increase in land prices, estimated at about 5%, during the first half of 2013 from a year ago, mainly fuelled by the construction of several hotels in the area.
Housing loans are up. During the first nine months of 2013, housing loans rose by about 11% y-o-y to US$103.6 million, according to Mrs. Phan, Executive Vice President of a local bank. Their average interest rate ranges between 9% and 11%, according to Canadia Bank.
There is also a noticeable increase in residential construction activity, including Casa Meridian 2, a 30-storey building, which began in late 2013 and expected to be completed in 2016. Prices for condominium units range from US$8,000 to US$60,000. There is also the ongoing Snake Island (Koh Puos) development project with villas, hotels and offices.
The ground-breaking of a 45-storey twin tower in Phnom Penh's Bassac Mon District, south of the Australian Embassy, is expected early this year.
The number of licensed real estate companies in Cambodia increased in 2013 to 59, up from 40 in the previous year, according to the Association of Evaluation and Real Estate Agents. More foreign companies came in, reflecting property market growth and increased investor confidence.
New foreign ownership law boosts demand
Foreigners are now allowed to own apartments and condominium units, but not land, and therefore not the first floor of buildings, under the new foreign ownership law approved by King Norodom Sihamoni in May 2010. Just after the passing of the law, tax revenues from property-related transactions soared 60% to KHR76.21 billion (US$19.5 million) in 2010, from KHR47.7 billion (US$12.2 million) in 2009.
In 2005, the Cambodian government amended its investment law to allow foreign ownership of buildings. However, the law not then implemented and the idea floundered, since the country was then experiencing one of the biggest property booms in Asia.
Land ownership is against the Constitution and is still out of the question. Land can however be held by foreigners on long (renewable) leases and through majority locally-owned companies incorporated in Cambodia. These structures are argued by lawyers in Cambodia to be safer than legal schemes in any other South East Asian country in which foreign land ownership is formally prohibited.
Analysis of Cambodia Residential Property Market »
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