Is Buying Cambodia Property a Good Investment?

Cambodia is perhaps one of the greatest countries in Asia for real estate buyers and international investors looking to launch a business out of all the quickly rising frontier markets. Since the Khmer Rouge collapsed more than 20 years ago, this relatively small country in Southeast Asia has exploded in terms of economic growth. Property in Cambodia is the best option to profit from the country's unprecedented rise. There is no such thing as a recession-proof country, but Cambodia comes quite close. Because Cambodia, like many other frontier markets, is less connected with the global economy, this is the case.

1. Foreigners Can Own Strata Titles

Foreigners can purchase strata titles for condominium units directly in their own name as real estate buyers. Land and shophouse apartments, however, do not have strata titles. New condominium developments are widely considered to be pricey.

Older shophouse apartments left over from colonial times sometimes have the finest deals. For active investors, land plots with development possibilities are especially appealing.

However, since foreigners cannot directly own anything other than a condominium unit, things become more complicated for these two types of properties.

Either construct a Cambodia land holding business or set up a nominee arrangement with a Cambodian person, which is enforced by numerous different types of contracts.

A land holding company is more legally secure, but it must pay annual licensing costs and file monthly taxes. If you're buying Cambodia property on a larger scale, the extra labor and expenditures can be worth it.

2. Property Taxes In Cambodia

Property taxes are 0.1 percent of the property's market value over 100,000,000 Khmer riel (about $25,000) per year. Annual taxes in Cambodia are, without a doubt, extremely low, and are frequently non-existent.

Residents pay a ten percent rental income tax. Rental income is taxed at a higher rate of 14 percent for non-residents. Various deductions may be available, lowering rates significantly.

Every year, undeveloped land is taxed at a rate of 2% of its market value. As a result, it is impossible to “landbank” in Cambodia without paying exorbitant taxes.

Land purchases should be developed as soon as possible and used to create revenue.

Locals, on the other hand, will tell you that the majority of them are not even registered with the tax system. As a result, none of these taxes are strictly enforced in Cambodia.

That isn't to say that you shouldn't pay them. It's nothing more than a statement of fact and some insight into local customs.

3. Buying Real Estate In Cambodia Safe

If done correctly, foreigners have freehold ownership and complete authority over their properties.

However, it's crucial to consult with neighbors and check the land office's public records, especially for soft title homes. Check to see if the property you're buying has any other claims.

Although uncommon, it is not unheard of for persons to sell mortgaged or otherwise challenged homes. With adequate due diligence, this can be readily prevented.

It's also worth noting that foreigners can't legally hold soft or hard title properties in their own names; they can only own strata titles.

If you don't want to incorporate and construct a real estate holding business, your only alternative is to select a local nominee to keep the property for you and bind him or her to multiple contracts. That would necessitate the assistance of a lawyer.

Source: investasian