Private landownership was reinstated in Cambodia in 1992 under the Land Law. This Land Law was revised in 2001 establishing land and property rights throughout Cambodia. The 2001 Land Law created the land registry system issuing land titles that remains in place today.
Land titles are represented in two forms soft and hard titles. Soft titles are provided by the local Sangkat or District office and are not registered at a national level but are still considered a possessory status. Hard titles are an ownership certificate provided by the Land Management and Planning office, therefore recognised at a national level. The majority of transaction still occur with soft titles to avoid ownership transfer fees. However, CBRE are now seeing most major projects being transacted with hard titles.
Foreign nationals are unable to buy land freehold within Cambodia unless a landholding company is set up with the majority of shares being held by a Cambodian citizen or citizens.
Foreign nationals are able to acquire land in long-term leases. These long-term leases for a foreign owner have a maximum lease term of 50 years as determined by the civil code established in December 2011. These leases can be registered at a national level.
Pre-global economic crisis there were a large number of transactions for land in Cambodia. Post-global economic crisis CBRE saw a sharp decline in investment with land prices falling on average by 30%. Land prices are still marginally below those of 2006/2007 levels but transaction numbers have improved with a number of major transactions occurring in the last year.
Major Land & Investment Transactions
A Chinese mining company acquired a plot close to Cambodiana Hotel, this transaction was reported at $3,000 per square metre in Q1 2012
Hongkong Land one of Asia’s leading property investment and development groups entered the market in Q4 2011 when CBRE helped them acquire an established serviced apartment building and two land plots within Phnom Penh.
A Singaporean based company disposed of a prime land plot within Phnom Penh in Q1 2012. The plot in downtown Phnom Penh is reported to have achieved $1,750 per square metre.
Phnom Penh still has a number of prime land plots that have not been developed with speculators remaining patient for strong demand for land increasing prices. As the city expands central Phnom Penh plots will become scarce forcing speculators to develop on these plots, this is already being seen by the increase in construction.
For the first quarter of 2012 the total value of construction projects being approved in Phnom Penh increased Q-o-Q by 117%, this equates to a Y-o-Y increase of 637%. Residential construction projects accounted for 39% of approvals. With the property market still in its infancy there are only a small number of income producing buildings being disposed of on the market. Developers are still focusing on the long term investment within residential sector of the market in central Phnom Penh.
Economic growth is still strong with GDP growth estimated at 7% Y-o-Y, land prices within Phnom Penh are likely to continue to increase in line with the economy. Expansion of the city is restricted due to Phnom Penh’s location on the convergence of the Mekong, Tonle Sap and Tonle Bassac, prime vacant land plots will decrease in supply while demand increases. As the population grows within Phnom Penh traffic will also increase. The demand for being located close to mass transit routes that will be under supply will see land with close to key boulevards increase.
It is still relatively cheap to buy land in Phnom Penh and Cambodia. In Bangkok, the highest achieved land price was along Wireless Road and it was reported at USD $12,500 per square metre. Phnom Penh is yet to see a transaction over $5,000 per square metre.
For more information regarding Land And Investment, please contact Owen Williams, +855 12 930 709, [email protected]