After suffering a huge drop of 40% in property prices in 2009 to 2010, Cambodia’s property market started to recover in 2011 and is fuelled by strong economic growth, as well as the introduction of a new foreign ownership law. From 2011 to 2015, Cambodia’s economy rose to an average of 7% per annum and the same growth is expected this year.
Caveat emptor! Some experts say that while condominium developments are booming, they are high-risk investment. There is a lot of interest from investors to buy and let the units. If this happens, the rental market will become overheated and will there be enough tenants to rent these units?
In Phnom Penh, house prices rose by 7.44% in 2016. Apartments cost US$153 per square foot (sq. ft.) with rental yields ranging from 3.27% to 5.33%.
Cambodia’s premier island and beach destination, Sihanoukville, continues to see a growing demand from non-Cambodians. There are more direct flights to the province and the government is planning more transport links. Condominium units in the island cost around US$149 per sq. ft. with pretty uncompelling rental yields from 2.57% to 3.24%.
Meanwhile, Siem Reap offers the lowest house prices — at US$74.32 per sq. ft. but has the highest rental yields, ranging from 7.96% to 8.88%. Siem Reap has successfully reinvented itself as the center of Cambodia and draws hundreds of thousands of tourists each year to see the Angkor Wat.
Non-Cambodians are not allowed to own land or the first floor of a building, but they can own apartments or non-landed housing units. Non-Cambodians may also lease land, but they need to set up a landholding company or a leasing structure. This may end up being more expensive than the purchase cost due to legal fees.