Cambodia Property

ASEAN is currently one of the fastest growing economies in the world, with Cambodia performing well with a rapidly rising Gross Domestic Product (GDP) that has grown at an average rate of 7% over the past decade. According to the National Bank of Cambodia's economic performance report for the first half of 2020 and economic outlook for the second half of the year, total banking assets grew by over 17.4% in the first half of the year, indicating that the Cambodian economy remains strong. This makes Phnom Penh an attractive investment option for buyers looking to diversify their investments. At present, the annual supply of new properties in Phnom Penh is not able to keep up with market demand, so whenever a new project is launched, it becomes an instant hit. Another reason why Phnom Penh property projects are highly sought after is because of the height restrictions on buildings in the area, which exacerbate the shortage of supply. In addition, there has been a significant increase in the number of Mainland visitors to Phnom Penh, which has led to a boom in home ownership and tourism.

In recent years, an increasing number of expatriates have chosen to invest in Cambodian property, particularly in Phnom Penh, because the property market is traded in US dollars, which reduces the associated exchange rate risk. Rental rates in Phnom Penh are very high, with current rental returns of 6.92% for houses or flats and up to 10% per annum in the core areas of Phnom Penh, representing an investment return of 29.4%. In terms of national infrastructure, Phnom Penh is currently building a new airport in anticipation of the 2023 East Asian Games, which will be one of the top three airports in Southeast Asia and will provide good economic momentum. The Japanese railway company is investing US$800 million in the construction of the Sky Train in Cambodia, the first light rail line in Phnom Penh, which will provide a more convenient transportation network for the local property market, thus attracting international investors to Phnom Penh.

Cambodia currently has 27 Special Economic Zones (SEZs), three of which are already in operation, including the Phnom Penh Special Economic Zone (PPEZ), about 18 kilometres from Phnom Penh, and the Manhattan Special Economic Zone (MSEZ) and Sihanoukville Special Economic Zone (SEZ).

One of the main focuses of investor interest in Cambodia is Phnom Penh's rare mix of high-end mixed-use developments and luxury residential towers. The rapid development of various developments, including the state-of-the-art five-star hotel Shangri-La and shopping malls, as well as world-class entertainment and leisure complexes, and a number of other projects under construction, are expected to further stimulate the growth of the residential and rental market in Phnom Penh, thanks to the country's open-door policy for foreign investment.

The current price of residential properties in Phnom Penh ranges from HK$8,000 to HK$20,000 per square metre. Cambodia has passed the Foreigner Ownership Act, which allows Hong Kong people to purchase Cambodian properties with permanent property rights upon presentation of their passports. Foreign investors who purchase Cambodian properties are required to pay a higher mortgage rate and make a lump sum payment to buy a unit.