Top Common Questions Foreign Homebuyers ask about Cambodia Real Estate

For the past 14 years, Cambodia has been among the Top 10 Fastest-Growing Countries in the World, with an average annual growth rate of 7%. Cambodia real estate continues to grow, with new commercial buildings and residential complexes springing up in all of the country's major cities.

So, how tough is it to buy real estate in Cambodia?

Foreigners are not permitted to acquire land in Cambodia, according to common knowledge in the real estate market. "Only natural people or legal entities of Khmer nationality shall have the right to land ownership," according to Article 44 of the Cambodian Constitution.

Is it possible for foreigners to own or have rights to land in Cambodia?

Yes, there are.

1. Leasing property on a simple lease contract

2. Leasing property using a perpetual lease

3. Establishing a land holding company or acquiring a minority stake in a company.

4. Through a Cambodian Nominee

5. Marring a Cambodian

6. Acquiring Cambodian Citizenship

What does it mean to lease a property under a simple lease contract?

Through a lease arrangement, foreigners or foreign companies can gain control over Cambodian-owned property. Foreign individuals and entities will have rights to the property if they sign long-term leases.

Property leasing agreements in the nation can last any number, from one to seventy years. A provision in the lease contract might state that the land will not be sold to anybody else without the lessee's permission. This is the simplest way and gives some protection by establishing a foreigner's legal rights to the land.

The disadvantage of this type of contract is that, because the lease is not recorded at the Land Office, the owner can sell the property without the lessee's permission.

What is leasing a property using a perpetual lease?

Perpetual leases enable foreigners to 'acquire' real estate to use and develop it. These give the lessee immovable property rights that may be sold for a profit or passed down through the generations. A perpetual lease is signed for a minimum of 15 years and up to 50 years. Because the lease term may be automatically extended for up to 50 years in a row, it is referred to as a "perpetual lease."

A perpetual lease can be recorded against the title of the leased property. The registration of a long-term lease with the appropriate Land Office is not a requirement for lease validity, and it is not a legal necessity.

Perpetual leases should be recorded against the title of the land with the relevant Land Office to assist in guaranteeing foreigners' land tenure and enforceability against third parties. The lessee will get a perpetual lease certificate from the appropriate Land Office after the lease has been registered.

Notes: The lease gives the lessee all the necessary rights to develop the land. It can also be freely assigned, sold, or transferred.  

How many types of Cambodia Land Title classifications?

There are 4 main types of property titles in Cambodia: Hard Title, Soft Title, LMAP Title stands for Land Management and Administration Project, and Strata Title.

What exactly is a Hard Title land title?

The strongest type of property ownership in Cambodia is a hard title, which is the favored land title in Cambodia. The National Land Management and Planning Office issues hard titles, which are ownership certificates.

The Hard Title contains specific information that has been officially acknowledged and approved at the national level by the Ministry of Land Management, Urban Planning, and Construction.

Notes: When a hard title transaction occurs, a 4% transfer tax is applied.

What exactly is a Soft Title land title?

The most common type of ownership in Cambodia is a soft title, which is also the most usually awarded land title. It is a recognized property title at the local government level. Soft titles are granted by the local commune or district and are not registered at the national level, but they nevertheless have possessory validity. To avoid ownership, transfer taxes, and fees, the majority of property purchases still use soft titles. Soft title ownership, on the other hand, can be challenged by third parties and is subject to litigation.

What is LMAP Title stands for Land Management and Administration Project?

The LMAP Title stands for Land Management and Administration Project is a hard title that includes geo-tagged points — GPS Coordinates. The processing and transfer of ownership takes 12 weeks, and there is a transfer fee of 4% of the property's value.

What is a Strata Title?

Foreigners have possession rights under the Strata Title, since it allows for co-ownership by Khmer nationals and foreigners. The processing and transfer of ownership takes 12 weeks, and there is a transfer fee of 4% of the property's value.

What is Incorporating a land holding company be like in Cambodia?

Creating a legally recognized corporation in which a Cambodian citizen owns 51 percent of the shares. For international investors, this provides the least risk, though because of the costs required for establishing the business, it is typically best saved for high-value properties. It's also worth noting that any LHC (land holding company) will have to pay profit tax.

What is the nominee structure?

Buying land in the name of a Cambodian citizen is simple and affordable. However, you will be disobeying the Constitution's restriction on foreigners directly owning property. As a result, it is unlawful in Cambodia, and legal assistance strongly discourages it.

Some businesses provide a professional service that allows foreigners to buy land in Cambodia, but the title is kept in the name of a Cambodian person. These businesses provide a service to reduce the more obvious risks of utilizing a friend or spouse's name to own the land. Due to the lack of regulations, a high level of due diligence is recommended before picking this choice.

What is the average down payment in Cambodia?

For off-plan developments, a progressive payment method is generally used to pay between 10% and 30% of the entire sum. For finished projects, full cash or bank funding may also be accepted.

Source: IPS Cambodia, Knight Frank