Cambodia, with its rapidly developing economy and growing real estate market has become an attractive destination for foreign investors. The country’s GDP is on the rise and is expected to grow by 5.8%-6% in 2024 and 2025. Similarly, the local real estate market has been growing consistently over the years and offers rental yields of 4-8% depending on the type of property.
However, navigating the Cambodian real estate market as a foreigner is complex due to several restrictions in place.
In this article, we will take a look at these restrictions and walk you through the process of buying property in Cambodia as a foreigner.
Can Foreigners Buy Property in Cambodia?
The short answer is yes, foreigners can buy property in Cambodia, but with significant restrictions. Cambodia’s property ownership laws for foreigners are quite specific and differ from those for Cambodian citizens.
Here’s what you need to know:
- Land Ownership: According to Article 44 of the Cambodian Constitution and the 2001 Land Law, foreigners are prohibited from owning land in Cambodia. This applies to both foreign individuals and foreign-owned companies.
- Ground Floor Restriction: Foreigners are not permitted to own property on the ground floor of a building. This is based on the principle that the ground floor is in direct contact with the land.
- Percentage Limitations: The 2010 Foreign Ownership Property Law allows foreigners to own up to 70% of a co-owned building, such as a condominium complex. This means that at least 30% of the units in any given building must be owned by Cambodian citizens.
In other words, foreigners planning to buy property in Cambodia can own apartments and condominiums that are not on the ground floor.
However, that is not the only option. Despite these restrictions, there are some other ways for foreigners to own land and property in Cambodia while staying compliant with the local laws.
Ways for Foreigners to Buy Property in Cambodia
1. Condominium Ownership Through the Strata Title
As mentioned earlier, purchasing condominiums is the most straightforward option for foreigners looking to own property in Cambodia. This approach allows direct ownership of apartments or condos in co-owned buildings, provided they are above the ground floor.
Ownership of these condos is typically through a “strata title,” which grants full ownership rights to your unit. This option is particularly popular in urban areas, offering a straightforward path to property ownership for foreigners in Cambodia.
However, it’s important to remember that there’s a 70% foreign ownership cap per building. That means, if there are 50 units in the building, foreigners can own up to 35 units. The rest of the owners must be Cambodian nationals.
Emerhub’s experts will help you in this regard from finding the appropriate options to drafting the sale and purchase agreement and ensuring a smooth transaction.
2. Long-term Leases
For those interested in landed properties or commercial real estate, a suitable option is long-term leases. Foreigners can enter into lease agreements for land, houses, or commercial properties, typically for periods of 50 to 99 years, with the possibility of renewal.
For instance, if you plan on setting up a manufacturing unit in Cambodia, you can lease the property for 50 years or more with the possibility of renewal. These leases are often structured to provide many benefits of ownership, including the ability to inherit or transfer the lease.
This option offers flexibility and is popular among those seeking a broader range of property types beyond condominiums. To evaluate the most suitable option based on your needs, you can book a free consultation with Emerhub’s experts by filling out the form below.
3. Nominee Structure
In addition to long-term leases, another option that is often used by foreigners in Cambodia is to use a trusted Cambodian citizen as a nominee to purchase property on their behalf. However, this approach carries significant risks as you are not the legal owner of the property and you have to rely heavily on trust.
Due to potential legal complications and the lack of formal protections, this method is generally not recommended by Emerhub’s experts. If you plan on pursuing this option, It’s crucial to consider the long-term implications and potential risks.
4. Forming a Cambodian Land Holding Company
Another route to property ownership for foreigners is by establishing a company in Cambodia. By setting up a company with 51% Cambodian ownership, foreigners can indirectly own land and a wider range of properties. These companies are referred to as land-holding companies in Cambodia.
While this option requires more initial setup and ongoing management, it also offers significant flexibility in terms of the types of properties that you can acquire. Therefore, it is a more suitable approach for foreign investors looking to make substantial investments or develop commercial properties.
Steps to Buying Property in Cambodia as a Foreigner
The process of buying property in Cambodia as a foreigner often starts with property and title searches. Once you have identified a suitable property, you can register a land holding company (if needed) and sign a sale and purchase agreement to transfer the property.
Let’s walk you through all the steps in detail.
1. Property and Title Search
To buy any property in Cambodia, the first and obvious step is to conduct a property search to identify potential options in your preferred areas. Some of the best regions for buying property in Cambodia include Phnom Penh, Siem Reap, Kep, and Sihanoukville.
Once you have some options in mind, it’s important to conduct a title search for every option. A title search helps you ensure that there are no outstanding disputes regarding the property.
2. Company Registration
If you plan on buying an apartment on the first floor and above, company registration is not mandatory. However, for those looking to acquire other property types, it is advisable to set up a land-holding company in Cambodia.
Emerhub’s business advisors handle the company registration process on your behalf and help you obtain the necessary licenses and permits to stay compliant with local laws.
For more details, refer to company registration in Cambodia.
3. Sale and Purchase Agreement
After shortlisting the properties, the next step is to negotiate with potential sellers and sign the sale and purchase agreement. This agreement covers the terms of sale including the final price and any other conditions.
It is also possible for foreigners to get a mortgage in Cambodia. With that being said, the terms are often strict and you are also required to have a residence permit or a valid visa in addition to proof of income and several other requirements.
4. Transfer of Property
Once you sign the agreement, the final step in the process is to transfer the property under your name. By doing so, you will become the legal owner of the property. However, keep in mind that you also need to pay a 4% property transfer tax to the authorities for the Hard Title or the Strata Title depending on the property. Both of these titles are recognized at the national level.
There are also relatively inexpensive Soft Titles as well that are issued by the government. While these titles can be obtained at a relatively low cost, they can be contested by third parties and cause disputes.
If you plan on buying property in Cambodia, it is advisable to consult local experts who understand the market and Cambodian regulations. Emerhub’s experienced consultants will help you throughout the process from handling the business registration on your behalf to drafting necessary agreements. Fill out the form below to discuss your needs and goals with our experts.
