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The Evolution of the Cambodian Real Estate Industry

(Sources: commercial research by Knight Frank)

With an open door policy on foreign direct investment (FDI), Cambodia also witnessed an influx of foreign developers seeking to take advantage of the relatively low land prices and an increasing demand for international standard real estate products. This led to a property boom and land prices increased significantly between 2003 and 2008.

In an attempt to stimulate the market, the Cambodian Government introduced two key pieces of legislation: in 2009 the Government passed a sub-decree for the Management and Use of Coowned Buildings which paved the way for strata titling, and in 2010 the Law on Foreign Ownership was introduced which enabled foreign purchasers under certain conditions to acquire freehold property (from 1st floor and above).

With the implementation of these policies, the decline in land prices reversed towards the second half of 2010 supported by increasing demand from foreign purchasers of condominiums and rising rents for both office and retail space due to a limited supply.

Cambodia in Brief

Capital City : Phnom Penh

Area : 181,035 km2

Population : Approximately 15 million (2.2 million in Phnom Penh)

GDP : Average 6% – 7% per annum for past decade

Key industries : Tourism, textile & garment, natural gas, agriculture, construction, timber

Currency : Riel (CR), US Dollar (US$)

USD Currency in dominance :US$1 = 4,000 KHR

Membership : UN, IMF, WTO, in-progress AFTA & TPP

Cambodia Property - Economic Overview

One of Cambodia’s key secrets to success in its economic growth has been creating an attractive environment for foreign investment, and this remains a key driver.

In 2015, Cambodia received over $4B in foreign direct investment (FDI) and has a permanent expat population of over 78,000. suggest that Cambodia is becoming a magnet for FDI due to the abundance of low-cost labor, rapid urbanization, an increasing middle-class consumer market, low barriers to entry for foreign businesses, relative proficiency in English language, attractive tax incentives and import/export duty exemptions, continually improving logistics networks, and an economy backed by the US dollar.

Furthermore, with the solidification of ASEAN, Cambodia is well located, surrounded by strong regional economies that are increasingly outsourcing low and mid-level skilled manufacturing operations to the Kingdom. These new industrial opportunities are lessening the economy’s reliance on the garment industry, and offering low-wage workers more opportunities for career and skills growth.

Cambodians are also entering the global community en-masse through technology – namely through dramatic increases in internet penetration throughout the population. In 2015, Cambodia had over 5 million internet users, a third of the population.

Since 2010, foreigners have also been allowed to own apartments and condominium units in Cambodia – but not land, and, accordingly, not the first floor of buildings. While foreign ownership of land in still unconstitutional, land can be easily held by foreigners on long leases that are renewable, and through majority locally-owned companies incorporated in Cambodia. These structures are arguably safer than comparative legal schemes in other Southeast Asian states in which foreign land ownership is formally prohibited.

Why Invest In Cambodia ?

  1. Stable Political Environment

If there’s one thing real estate investors dislike, it’s political instability. Extremism, riots and protests are a no-no for business. African countries were shunned because of civil wars. Asian nations were avoided due to coups and regime changes. Thankfully, Cambodia is past those days. With Hun Sen in power since 1985, it’s safe to say the nation has enjoyed more political stability than it has for the past 30 years.

  1. Fast-Growing Economy

If you step into Cambodia today, you’ll see entrepreneurs setting up shop in Phnom Penh and conglomerates like Starbucks, KFC and Burger King expanding. Adam Smith’s invisible hand is clearly taking over. And the figures show it: Cambodia’s Gross Domestic Product (GDP) reached its all-time high in 2014 at 16.71 billion USD.  If we average out GDP growth rate across the past 15 years, we get 8.5% per annum—making Cambodia the world’s 6th fastest-growing economy today. The best part? Cambodia is still in its early stages of development. So this trend is likely to stay.

  1. Favourable Investment Climate

What you hear is true: you can own 100% of your business and 49% of land there. If that’s not good enough, how about profit tax holidays for up to 9 years? Or, even better, exemptions from import duties for all raw materials? The government is committed to attracting foreign capital. Corporate taxes are low. Licence requirements are simple. For those seeking sizeable investments in Cambodia, these incentives make a good bargain.

  1. Strategic Location

Good location means good trade. Cambodia is neighbour to China and India. It’s also sandwiched between two more developed economies, Vietnam and Thailand – allowing for positive spillover effects of trade and tourism. The government leverages on this by increasing entry points into Cambodia starting with the renovation of railroads and bridges to paths linked to neighbouring countries. There are now 3 international airports. Sihanoukville’s container sea ports and Phnom Penh’s river port have also been enlarged.

  1. Thriving Tourism

Tourism has increased a whopping nine-fold since 2000. Hotel occupancy rates? Fourteen-fold. In 2014 alone, Cambodia had over 4,500,000 tourists. More than 67% of them stayed in hotels. So sure, there may be debate on whether Angkor Wat deserves seventh world wonder status. But one thing’s for sure—people still want to visit.

  1. Highly ‘Dollarized’ Economy

Thanks to the use of the greenback, investors are protected against a whole slew of country risks—from foreign exchange and sovereign risks to economic and political risks. The dollarized economy has also shielded the nation from inflation, which remained below 5% for the past 15 years.

  1. Exponential Technological Growth

Technology has changed the face of business and it’s no different in Cambodia. Internet usage has risen by over 42% in 2014 from 2013. In 2015, the government implemented a National Information and Communication Technology (ICT) Policy, which will allow businesses to work faster, smarter and more productively. From catering to the needs of the digitally-savvy to connecting to customers worldwide, investors can now expect to benefit from a more technologically advanced Cambodia.

      8. Young Population Growth

Exceptionally youthful demographics ensures rising domestic demand (61% of Cambodians are under 25 years old; median age: 21) and increasing literacy rate surpass 75%.

Workforce participation, household formation, and urbanization will all show robust growth over the next decade

Bottom-line: Go where there’s growth.

With rife global competition, it can be hard to find a good place to invest in. But if you’re looking for somewhere that returns a reasonable profit in a relatively safe socio-economic and geo-political environment, then Cambodia may be your answer.

Banking System:

Commercial banks are a primary source of funding. Limited access to capital is one of the constraints of doing business in Cambodia.

In 2011, the key players in Cambodia’s financial sector are 31 Commercial banks, 2 Representative Offices, 7 specialised banks and 32 microfinance institutions, 28 micro-finance NGOs*, and 11 insurance companies.

The ‘top-4’ hold over 70% of total deposits and loans in the banking system.

In the face of inflationary pressures and a sharp increase in credit in 2008, The National Bank of Cambodia (NBC) raised the minimum capital requirement for commercial banks to $37.5 million. All banks were required to conform by no later than the end of 2010.


The local currency, Riel (KHR), was introduced in 1980. However, Cambodia is a heavily dollarized country with 80% of deposits and credits in the banking system in U.S. dollars. Cambodia is classified as partially dollarized, given that in such economies, the U.S. dollar circulates in conjunction with an official national currency as opposed to fully dollarized economies where the dollar is the only legal tender.

Business Sectors:

There are estimated to be in excess of 25,000 businesses in operation of which approximately 15,000 are foreign enterprises**. Small and medium sized enterprises (SMEs) make up the vast majority of business in Cambodia and provide around two-third of the country’s employment.

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Phnom Penh – Capital of Cambodia

With Cambodia’s integration into ASEAN, Phnom Penh is particularly well positioned, surrounded by robust regional economies that are increasingly outsourcing manufacturing operations to the Kingdom. Technology has enabled Cambodians to be more and more connected to the global community via high mobile phone penetration, with Phnom Penh being the epicenter of this evolution. In 2015, Cambodia had over 5 million internet users, which is about one third of the current population.

Since 2010, foreigners have also been allowed to own apartments and condominium units in Cambodia – but not land, and, accordingly, not the ground floor level of buildings. Immediately after the passing of the law, tax revenues from property transactions rose 60% to around $19.5 million in 2010, from just $12.2 million in 2009. Amendment to land titles regulation from the changes on foreign ownership law has aided Phnom Penh’s growth hugely, and a range of properties being built are directly aimed at this foreign ownership market.

Foreigners can now easily hold land on long renewable leases and also through local majority-owned companies incorporated in Cambodia. These structures are more secure compared to other legislation in other neighbouring countries where foreign-owned land is restricted.

Real Estate Development Hot Spot – Phnom Penh

In Phnom Penh, Beoung Keng Kang (BKK), in the Chamkarmon District, boasts the highest land prices reaching up to 6000p/m2.  Most of the villas in Phnom Penh have either been demolished and sold to developers, or transformed into boutique hotels or restaurants. High-end condo developments, serviced apartments and hotels have been changing the skyline significantly, transforming the area into a popular high density living district with growing congestion, insufficinet parking space in and around city center, increaingly creating problems for inner city Phnom Penh residents.

The Phnom Penh Master Plan 2035 seeks to dictate the urban planning for the expansion of the city and construct new infrastructure to accommodate the growing population. 

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Recommended Condo Development : The Peak Residences by Oxley

  • From US$16xK !
  • Earn Nett 12% GRR over 2 years
  • Located at Prime Phnom Penh City Centre
  • Sharing same address as Shangri-La Hotel

Cambodia Commercial Market

Office Sector

Commercial property and office space trends:

In the early years, in a city without a skyline, villas were the preferred type of property for office space. As the economy evolved, businesses are looking for more suitable properties, designed for business. The demand for Grade-A and Grade-B office space throughout Phnom Penh is growing, with a variety of new high-rise projects being available or due to be completed in the next years. These new office complexes are often demolishing vintage villas, flats and other types of classical real estate. Grade B and C are popular choices the locals as Grade A office space is generally too expensive for most local businesses.

The growth of the Phnom Penh commercial property market are only set to continue in the future, especially since Cambodia has joined the AEC, and many developers are aware of this emerging business class.

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      Recommended Office Development

  1. The Bridge SOHO Office by Oxley Holdings – 100% SOLD!
    • Freehold
    • From USD 117K! Up to 39% GRR over 3+3 years
    • Located at Phnom Penh City Centre
    • Flexible Design, configaurable for more office space and /or home use
  2. The Peak Luxurious Business Tower by Oxley Holdings – 100% SOLD!
    • From USD 126K! Earn up to 36% over 2+2 years
    • Grade-A Office Directly below Shangri-La Hotel
    • Freehold
    • An business address that speak well of your company status

Cambodia Retail Sector

Cambodia’s retail scene is making big leaps and bounds as many new mall entrants ready to open their doors in 2018. The Phnom Penh retail property market is undergoing vast changes, altering the face of the city. International brands entrance to the burgeoning Cambodian market faster than ever. Some of these new brands are specifically chasing the increasingly available aspirational middle class dollar; others are focusing on the Khmer and expat high-end retail market. Meanwhile, local retailers continue to grow and expand their operations dramtically.

Further study shown more than 30 retail precincts are already operating across Phnom Penh. Entertainment, food and beverage outlets are still leading the trend in Phnom Penh. While new retail developments are emerging, old shopping centres are undergoing makeovers to keep up with the newer and more modern shops.

A recently completed study and survey on the capitals retail market for the first half of 2017 found that the city has 31 shopping precincts of varying scale and grade. Phnom Penh, Capital of Cambodia, a city alone attracted 24 New International Retail Brands, predominantly targeting the Food & Beverage and Fashion Sectors.

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“The number of shopping malls in Phnom Penh is rising due to strong domestic spending, growth of the middle class, GDP growth and foreign direct investment”_ (and growing tourism). “The population is growing at a healthy rate as is consumer spending. The middle class is growing, which is pushing developers to build more and more retail space”.

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Recommended Retail Development : The Peak Shoppes from USD 80K!

  • Located in Phnom Penh City Centre – Commercial, Tourism and Shopping Belt
  • Freehold Retaill Shops and Restaurants integrated with 5-Star Shangri-la Hotel, Grade-A Offices and 2  Residential Towers
  • Managed by Asia’s Leading Mall Operator – CapitaLand Retail
  • Enjoy 55% Nett Guaranteed Rental Return over 10 Years 
  • Most Sought-after Hassle-free Commercial Investment Asset

The Bridge Retail Mall – 100% SOLD!

  • Located at Prime Phnom Penh Commercail Hub, Tourism and Shopping Belt !
  • Freehold Retail Units From US$91K !
  • Enjoy Nett 70% GRR over 10 years !
  • Managed by Professional Retail Operator !

High Quality Medical Center To Be Inside The Bridge Cambodia

A Boost To The Bridge Cambodia – a mixed development of Residential (SOLD OUT), SOHO Office (SOLD OUT) and  Retail Mall (Limited Units for Sales)

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Foreign Investment

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