Parts of Cambodia’s southern coast, such as Sihanoukville, are lucrative for foreign property investors.
When it comes to real estate investment in Southeast Asia, Cambodia is hard to beat. The oversupply situation in Phnom Penh might cast doubt over that notion, but in other areas of the country, foreign property investors are seeing more opportunities.
This is especially true in parts of the country’s southern coast, such as Sihanoukville. Cambodia is also particularly lucrative for American investors, since the US dollar is widely circulated there.
The most straightforward way in which foreign investors can gain access to property and land ownership in Cambodia is to become citizens, after which they have the same rights as native Cambodians.
A foreign investor can do so by donating a minimum of KHR1 billion (S$349,565) to the Royal Government of Cambodia’s national budget, or investing at least KHR1.25 billion (S$435,962) in a project or business venture authorised by the Cambodian Development Council.
Investors who prefer to be more prudent with their expenditure can become naturalised citizens, a lengthier process than the aforementioned routes to citizenship. They must live and work in Cambodia for at least seven years, learn Khmer and sit for a Khmer proficiency exam. Alternatively, a foreign investor can marry a local and live with his / her spouse in Cambodia for a minimum of three years.
A foreign investor who does not want to obtain Cambodian citizenship (such as a Singaporean investor, as Singapore does not recognise dual citizenship) can become eligible to buy and own land and property in the country via a landholding company.
Although 100 percent foreign ownership is legal in Cambodia, this does not apply to land. Setting up a landholding company allows a foreigner to own land, but only partially: at least 51 percent of equity must be in a Cambodian citizen’s name, and a foreign investor’s share in any plot of land cannot exceed 49 percent.
Furthermore, local and foreign shareholders have different rights of control over a landholding company, so a foreign investor can boost his control of the plot by registering a mortgage on it via the company. This is to ensure land ownership cannot be transferred without authorisation from the foreign investor.
Another method of land ownership for a foreign investor who does not want Cambodian citizenship is to own land via a local nominee. The local nominee is prevented from selling or transferring the property without the investor’s permission through a series of legally binding documents signed by both parties, and the land is leased or mortgaged to the foreigner.
However, such a partnership is risky, as a high level of trust is needed between both parties. With enough money and the right connections, the local nominee could cause the land to be expropriated or the state to force its sale, and the foreign investor would lose ownership.
Whichever route a foreign investor chooses, the most indispensable aspect is legal assistance. Investors would do well to hire a lawyer with expert knowledge of Cambodian property and land laws, especially due to the lack of transparency surrounding the country’s land ownership schemes.
An earlier version of this article was first published on Property Report.
Cheryl Marie Tay, Senior Journalist at PropertyGuru, wrote this story. To contact her about this or other stories, email cheryl@propertyguru.com.sg
