How to buy property in Cambodia

Cambodia is an up-and-coming country. It’s still a bit rough around the edges, a little bit loose. It’s sometimes referred to as the wild west of Asia. But it’s for these same reasons that there is so much upside potential as a place to invest.

And over the last decade its economy has seen significant growth.

Many observers say that visiting Cambodia is like visiting Thailand 30 years ago. If the rapid growth of Bangkok is anything to go by, Phnom Penh and Cambodia more broadly, could be on the way to great things. And investing in real estate is one of the easiest ways to get exposure to this growing frontier market.

In this article we cover the main points you need to be aware of before getting started on your Cambodian property journey.

Can foreigners buy property in Cambodia?

Foreigners can own condos and offices in Cambodia if they are strata titled. The Strata title is a relatively new form of ownership in Cambodia. They started being used on condominium projects in 2010. For this reason, foreigners will only have access to condos that were built from 2010 onwards.

There is a foreign quota on strata titled condominiums. Foreigners cannot own more than 70% of the condos in a building. And they can’t own ground floor units.

Strata titles cannot be used on projects that are within 30km of land border. So foreigners won’t be able to buy such condos either.

Is it possible for a foreigner to own land in Cambodia?

Only Cambodian citizens or Cambodian entities can legally own landed property in Cambodia.

So a foreigner can’t own land in their own name but they can buy land by forming a Cambodian company. The company must have at least 51% Cambodian ownership, leaving the foreigner with a maximum ownership stake of 49%.

A foreigner who wishes to form a Cambodian company may seek out a legitimate partnership with a Khmer citizen. Or they may opt to use a nominee arrangement. This is where they will pay someone like a lawyer, to act as a silent shareholder in order to get around the foreign ownership laws. However, this can be a risky strategy. We cover this topic further, later in the article.

Another option for foreigners who want to control land is to buy a leasehold property. This will give between 15 and 50 years access to the property, which can be renewed for a further 50 years.

You won’t own the property as such but you will have the right to develop and construct structures on the land. Ultimately you will own the structures that are on the land, but the state will own the land itself.

A possible back-door entry into legitimate ownership of land would be to apply for the Cambodia My Second Home visa. CM2H visa holders are eligible to apply for Cambodian citizenship after 5 years. And then once you’re a citizen you would have the same property ownership rights as the Khmer people.

What’s the difference between Soft Title and Hard Title?

Condos that are available to foreigners to own outright are usually strata titled. But if you’ve ever done any research into Cambodian real estate you’re bound to come across the concept of soft title and hard titles. So what are they?

Both soft titles and hard titles are forms of freehold ownership. However, properties using this form of ownership are only available to Cambodians or Cambodian companies.

Soft titles are the more common of the two. They account for around 80% of land in Cambodia. A soft title comes with cheaper registration and transfer fees than a hard title. They are registered on a local or district level property register, and are not recognized at a national level.

By nature of only being registered on the district register, they are quicker and easier to transfer at settlement. The process is normally completed within 7-10 business days.

Hard titles are registered at a national level. By being recognized on the national registers it provides the strongest form of property ownership. It takes approximately 12 weeks to complete a property transfer.

Hard titles are recognized by Ministry of Land Management and are generally considered superior to a soft title, should there ever be a dispute over ownership.

There are plans to reconcile soft and hard titles onto a single register in the future, which will provide more clarity and confidence to property buyers.

Cambodia street

What are the risks of owning Cambodian real estate?

Investing in any frontier market comes with risks as well as rewards. In this section we cover some of the things you should be aware of when deciding whether to invest in Cambodian real estate.

If you buy a property using a soft title (most likely via a Cambodian company), you should make sure with the seller that there are no encumbrances on the land.

Verify that the developer of a property has a legitimate hard title with the Ministry of Land Management. And check that they have the eligibility for the property to be divided up into strata titles.

If you form a company for the purpose of buying landed property, make sure that you trust the person or persons who will be given majority ownership of the company.

Some people prefer to use their lawyer or accountant as a nominee shareholder rather than their spouse (if you have a Khmer wife/husband). If a marriage breaks down you could lose control of the property.

That said, using a nominee shareholder to buy property comes with its own risks. Nominee structures are not guaranteed to stand up in court if they were to be challenged. The legalities around it are murky at best. We don’t recommend using this kind of arrangement for these reasons. But you can make your own assessment.

Investing in a foreign market will always carry more risk than if you were to invest in your home country. The market and the processes are unfamiliar. The legal system in unfamiliar. It’s a lot for you to learn and stay on top of so that you don’t get taken advantage of.

There is a lot to navigate when entering any foreign market, let alone a frontier market like Cambodia. We definitely recommend seeing a lawyer before you make any moves. We can help put you in touch with someone if you want.

You will also need a translator as all contractual documents are in written in Khmer.

Which city in Cambodia should you buy property?

Phnom Penh is the capital and where most growth is taking place in Cambodia. Most foreigner investors tend to buy their property here.

But there are several different cities in Cambodia that may be of interest to you. We covered some of the different cities of Cambodia here and the different neighborhoods of Phnom Penh here.

How much does it cost to buy a condo in Cambodia?

It’s possible to buy a condo in Phnom Penh for under US$40,000. And there are many available for around the $50k mark.

You will usually get a better deal per square foot if you can use a company to purchase a shophouse or other kind of apartment that is usually off limits to foreign individuals.

But if your aim is to purchase a low maintenance, lock and leave apartment, then a condo may be the best fit. It is still relatively cheap. The purchase process will be much more straightforward. And you will be able to own 100% of the property yourself without having to set up a Cambodian company that you wouldn’t have controlling interest in.

Condominium Cambodia

What are the ongoing costs of owning property in Cambodia?

Like owning a property in any country, there will be ongoing costs of owning property in Cambodia that you will have to cover.

If you own a condo, you will likely have to pay common area maintenance fees as well. This is similar to HOA fees in the United States. This will be a monthly fee and will usually cover things like gardening, lift maintenance, upkeep of the building exterior and building insurance. It is calculated based on the square meterage of your condo.

You should always find out what the maintenance fees will be before making a purchase, as well as what they cover and what they don’t cover.

If you rent out your apartment you will need to cover accounting costs in preparation for submitting your tax info to the Cambodian tax authority.

If you are using a company to purchase land or some other kind of property that can’t be bought by a foreigner, you will need to pay company registration and renewal fees as well as accounting fees.

Depending on the type of property you may need to take out an insurance policy to cover the building and perhaps liability insurance if you are renting the property out.

We recommend checking with a lawyer before you sign a purchase contract to make sure that you are well aware of any hidden additional costs that may need to be covered.

What are the property taxes for foreigners in Cambodia?

Upon purchase of a Cambodian property, a Public fee and Service fee are to be paid to the General Department of Taxation (GDT) for each strata title. After that you will be issued with an invoice for the transfer tax.

The Transfer Tax is 4% on a Hard title transfer. Soft title transfers can be a lower percentage.

Annual real estate tax or Property Tax is called Tax on Immovable Properties (TOIP) in Cambodia. It is levied at 0.1% of the property’s market value which exceeds 100,000,000 Khmer Riel, or US$25,000.

Rental income is taxed at 10% for Cambodian resident owners and 14% for foreign owners. The tax is levied on the gross rental amount.

Cambodia has a land tax on unused land. This is 2% of the tax base value of the land. The land tax doesn’t apply to condos. Unused land is not taxed under the Tax on Immovable Properties.

Individuals that sell immovable property will pay a Capital Gains Tax at the rate of 20%.

Can a foreigner take out a mortgage to buy Cambodian real estate?

Bank financing options are limited for foreigners who want to take out a Cambodian mortgage. Most buyers will purchase in cash, and this is quite attainable when condo apartments can be purchased for as little as $40,000.

If you have existing property in your home country you may be able to refinance that to fund a Cambodian property. You may also be able to arrange a line of credit with your existing bank.

Can you rent out your condo as an investment property?

Some condominiums can have strict rules around who you rent your condo out to. This will often be security related. If your intention is to rent out your Cambodian property on the open market, it is important that you read the rental policy of the condominium building before making a commitment to buy.

Cambodia investment

Does Cambodia have a real estate investment visa?

Cambodia has recently launched the Cambodia My Second Home Visa, also referred to as CM2H. It is essentially a golden visa program that allows foreigners who invest at least $100,000 in approved real estate to gain a 10 year residency permit in Cambodia. There is also an option to apply for Cambodian citizenship after 5 years.

Is it a good idea to buy Cambodian property?

All real estate investments carry some level of risk. Investing in offshore frontier and developing markets will by its very nature, carry a larger risk. But it is also the act of taking on risk, that brings reward.

You’ll need to make your own assessment if Cambodian real estate is the right choice for you. We can also consult you on this matter if you wish.

All that aside, Cambodia has massive potential. It has good demographic characteristics that often lead to long term growth such as having a young population in a growing economy.

Phnom Penh has grown leaps and bounds in the last 10 years. You only have to look at the difference between Bangkok in 1990 and Bangkok today to see what kind of potential is possible for a city like Phnom Penh.

The fact that the entry point for a condominium can be quite low makes it possible to dip your toes into the Cambodian property market in a way that isn’t possible in most western countries.

But you have to come into this with your eyes wide open. And be prepared to jump on a plane and do some boots on the ground research.

How to research buying Cambodian real estate?

If you’re interested in browsing Khmer real estate online, there are several websites to choose from, one being realestate.com.kh.

The best way to research property in Cambodia is to come here and see things with your own eyes. Spend a good month in the area that interests you and get a feel for the place, its neighborhoods, and where you might like to invest.

Talk to real estate agents and find out what is available, the prices, the terms and any other information that you need to make an informed decision.

When you are close to being ready to make a purchase, talk to a Cambodian lawyer, and preferably someone who speaks the same language as you. If things go wrong in a foreign country, it can be much harder to fix. Talking to a lawyer beforehand could save you a lot of costly mistakes.

If you would like help with sourcing Cambodian real estate, talking to real estate agents, accountants or lawyers – talk to us and we can help put you in touch with the right people to get the deal done.

Thanks for reading.