Real Estate Market in Cambodia

1. BWFE 3013 REAL ESTATE MANAGEMENT
INDIVIDUAL ASSIGNMENT
“REAL ESTATE MARKET IN CAMBODIA”
PREPARED BY: SMAN TAIROS
230698
LECTURER: DR. ZAEMAH BT. ZAINUDDIN
DEADLNE ON 02/MARCH/2017

2. Real Estate Market in Cambodia
Background of real estate market in Cambodia
Located in Southeast Asia, Cambodia is a small country with a population of over 18
million people and 80% of the overall citizen are depending on agriculture. Beside of agriculture,
there are several sectors that boost economic growth such as tourism, textile industries as well as
infrastructure and manufacturing industries.
Real estate market in Cambodia was moving slow back to several decades ago because of
global financial crisis which hit most of the countries in the world. Cambodia was one of the
victims that suffered from financial distress since most of investments were foreign investment.
Hence, many projects were abandoned and a vast loss of foreign investors. Infrastructure and
manufacturing industry was seen to be very weak and investors lost confidents in investing in real
property.
The recovery of real estate market in Cambodia moving upward as there was government
intervention and legal law that imposed lately which allows foreigner to own property in Cambodia
so called foreign ownership law and foreign direct investment (FDI). The new foreign ownership
law allows foreigners to own apartments and condominium units but not land and therefore they
are not allowed to own the first floor of the building. This new law triggers a higher demand for
investment on property In fact, foreign direct investment also attract more capital flow into
Cambodia which bring more projects being built and create more job opportunities to the society.
Cambodia, being a member of ASEAN has gone through wide scale of development and
growth of its economic sectors such as agriculture, textile, tourism, and construction. The key
contribution to the growth of real estate sector is attributed by the rise of projects in Phnom Penh,
the Capital of Cambodia, and several factors affecting and driving the infrastructure requirement
are including population increase, continued migration from rural to urban areas, increase of
multinational and national companies which demand for more offices. Therefore, due to high
demand of house, office and retails property in the capital city and urban areas lead to higher
supply of real estate.
Real Estate Investment
The growth of real estate market in Cambodia for over 10 years is because of an influx of
foreign and repatriated money invested in Phnom Penh, some other places such as tourist places
which demand higher for houses and hotel. The real estate business in Cambodia can be
categorized into four main categories which are: (1) housing and residential market, (2) office
market, (3) retail market and (4) Industrial market. Among these four types of market, housing and
residential market and office are the most invested market since there is a huge demand for it as
population increase as well as the expansion of multinational companies in the capital city and
urban areas.
The flow of capital from foreign countries is large into Cambodia through foreign direct
investment funds (FDI). The major market players the members of ASEAN including Malaysia,
Vietnam, Thailand, Singapore. In addition, China, Japan and South Korea are also the major real
estate dominant in Cambodia. Thus, it can be said that real estate market in Cambodia is largely
depends of foreign investments.

3. Location and Investment Opportunity
It is true that location is the most important for investment in real property. The rise of real
estate market cause to rise higher cost of land in Cambodia especially the land that located near
the main road, which is suitable for offices, shopping complex and apartment.
Phnom Penh, known as the most real estate investment place due to it is the capital city of
Cambodia and many business centre are gathered. Real estate is booming and there are many
projects are built such as houses, residential, condominium, offices, shopping complexes and
industrial. The reasons seem to be found that increase in migrant from rural to urban areas of
students from several provinces across Cambodia to continue their studies and so the need for
household will be double each year. Furthermore, nowadays large multinational companies mostly
choose to operate its main office in the central city which also one of the reasons that trigger to
rise in demand of commercial property in city. Consequently, the prices have been increased
significantly over recent year. Land prices in most of central areas of Phnom Penh have doubled
since 2010. The increase in prices appears to have encouraged significant new supply and so there
will be more competition in real estate market.
Further notice of recent development, the real estate construction is fast growing to tourist
places both environmental tourism and recreational tourism which are now demanding for hotels
and resorts. Hotels and resorts are being built more and more at tourist places due to the number
of tourist increasing rapidly. Many places like Sihanuk Vile province, Kampot and Koh Kong
which are located at the seaside are the suitable place for hotels and resorts. Moreover, the
historical places located at the north also seeing as the target place to invest in real estate property.
Accordingly, tourism and real estate are closely improving at the same level. In order to attract
more tourist travelers, there must provide a comfortable place to rest while enjoying the beautiful
environment and nature. Therefore, the role of real estate plays significantly to enhance the
economic growth in Cambodia.
However, the development in rural areas seem to be not improving because of location
factor that affect the real estate investment activities. Currently, Kampong Thom is my hometown
and it is located along side of Mekong River. Surprisingly that there are only few resorts and
constructions are built in my hometown because of margination from rural areas to capital city for
a higher education, works and so on. Therefore, the real estate development in rural areas is not
really good as in Capital city, Phnom Penh and other provinces which has many tourist places.
In a nutshell, real estate market in Cambodia is booming in some locations where there are
large population increase. Household and residential market and commercial market are the most
investing market from investors because there is great demand for it in the Capital city Phnom
Penh. Thus, the land prices keep increasing every year. Besides of the price of the land increases,
yet the real estate markets are emerging largely in Cambodia for instance the market for residential,
apartment and condominium. There is tough competition in real estate market although the land’s
prices is expensive some places.

4. Political and Government Development
Politics and government is also factors affecting the demand of real estate. In Cambodia
political system is quite stable which can ensure a trust to investors both local and foreign
investors.
Besides of private investment, government currently building apartment for people who
are less privilege. This projects plans to help the lower level income families to have a proper
home and houses to stay. This is a great project that government could ever offer to help the
citizens. However, the house size and location will be the subject matter regarding to this project.
For the reasons that the location is quite far from capital centre and shopping complex. Though,
the price for this apartment is not high compared to the one in capital centre but it is an affordable
price for lower level of income families to own a house.
Government of Cambodia is working closely with the construction industries in order to
provide a better lifestyle for the citizens and at the same time boost economic growth. With legal
law of foreign ownership and FDI, Cambodia can attract more foreign investment to invest in real
estate market including the other member of ASEAN countries as well as other countries in
Europe, Middle East and so on. Thus, Cambodia can be sustained for long term perspective
economic growth.