Foreigners coming to Cambodia to invest in property are being warned to make sure it has the correct strata title in place.
Misconception and miscommunication surrounding foreigners purchasing property in the country have led to a number of investors discovering they do not own the building they bought.
David Murphy, of Independent Property Service, says many people believe they can own an apartment in their name as long as it is not on the ground floor. This belief has led to numerous foreigners snapping up properties from the first floor up despite the developer not having obtained the necessary strata title from the Government.
Murphy says, “By law to actually own a property, it must have a strata title regardless of whether it’s on the first floor or not. A lot of realtors fail to inform people of this and if the Cambodian government decides to enforce it one day, there will be a lot of people out of pocket.
“It doesn’t matter if it has a soft title or a hard title, if it doesn’t have a strata title, then it can’t be 100% owned by a foreigner.”
A non-Cambodian is able to purchase property, for example an apartment, provided it is not on the ground floor of the building and has the required strata title, which is obtained by the developer or owners of the construction. Requirement for obtaining the title is that only 70% of the apartments in one block can be acquired by foreigners, and the building must not have been constructed prior to 2006.
The law was introduced in a bid to boost the capital’s condominium market following the global economic crisis. However, many estate agents have failed to pass on correct information and if a strata title does not exist on a property, a foreigner can only have up to 49% ownership. The remainder must be under a Cambodian national’s name.
Murphy says this can be done by, for example, using a landholding company, but he advises seeking professional help from a reputable legal firm, such as Sciaroni & Associates or DFDL. “This is the only way you can be sure,” he adds.
Phnom Penh’s condo market is currently booming, with developments such as De Castle Royale and Central Mansions reporting successful sales. Also helping to drive the market is the potential 21% annual return on investment the market offers. “There’s not many other markets in countries across the world that can offer this today,” Murphy says.
For more information, visit www.independentpropertyservices.com.
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