Property sales and ongoing foreign direct investment (FDI) remain strong as the end of 2022 approaches in Cambodia. FDI is key, as is the ease at which investors from overseas can make calculated transactions in the Kingdom - although trends suggest the domestic property market matured during the pandemic - foreigners are still the main force of real estate investment in Cambodia.
The construction sector has significantly contributed to economic development and is also a key employment driver, so as a sturdy pillar of economic growth in Cambodia, the sector’s success is pivotal.
According to the Financial Stability Report 2021 of the National Bank of Cambodia (NBC), FDI inflow in 2021 was valued at $3.5 billion, while the total FDI inflow between mid-1994 and end-2021 amounted to 168.8 trillion riel ($41 billion) coming from a number of nations.
The NBC added that the increase in FDI to investment mainly was sourced from China, South Korea, Vietnam, Singapore, Japan and Malaysia.
FDI in construction rose from $260 million in 2020 to $334 million in 2021 in the Kingdom.
The construction sector in Cambodia is projected to expand at an average of 6.3 per cent in 2022 and will grow 9.4 per cent between 2023 and 2026, reported Bussineswire’s Cambodia Construction Industry Report 2022.
Property Sales In Cambodia
Ms Vatey, General Manager of DCG Cambodia (FazWaz Cambodia & Realestate.com.kh) said the property sales growth curve in the past six months of 2022 has almost shown a straight upward trajectory. She adds that the firm's sales in the past three months reached USD $5.4 million.
"Recently, there has been a surge in platform searches and customer inquiries. It is obvious that the market is picking up. Most of the customers come from high-net-worth individuals brought by channels and databases" said Vatey.
Who Is Buying Real Estate In Cambodia Right Now?
One-fifth of property buyers in Cambodia come from the United States, 10% are from Singapore, 11% are from France, 10% are from Japan, and 10% are from the United Kingdom and Italy, while 4% are from other European countries such as Germany, Belgium, Hungary, Sweden, Spain.
The major investor market remains China which accounts for 15% of property buyers, despite the ongoing zero-COVID policy that has restricted travel. The remaining 20% are local Cambodian buyers.
Vatey believes that the reason why foreign investors are choosing to invest and buy a property at this time is mainly due to:
- Continued inflation in Europe prompted more people to move and live in Asia;
- Housing prices in Cambodia are still affordable compared to other countries in the region;
- Public life in Cambodia has returned to mostly a pre-COVID normal;
- The unique investment opportunities in Cambodian real estate and ease of foreign ownership;
- More developers are offering affordable and flexible payment options for buying a home.
What Types Of Properties Are Investors Buying?
In terms of property sale types in Cambodia in 2022, 65% of investors purchased condominiums - this makes sense as foreign real estate buyers can legally own strata condominiums.
Most buyers have been opting for spacious one and two-bedroom condo units, which is indicative of the trend of large units being most popular, especially among high-net-worth individuals who are considered the core investment group.
Some buyers are even buying two adjacent apartments, and following planning permission, are merging the space into a large apartment following their desired renovations.
Apart from condominiums, land-linked homes such as townhouses, shophouses, and villas are the most popular property investment type and account for 20% of sales (these include off-plan and resale properties.)
Ten per cent of all buyers have indicated they are optimistic about the investment prospects of office buildings, especially projects that provide guaranteed rental returns (GRR) and guaranteed buybacks (GBB), which are safer investments, especially for those based overseas.
Vatey believes that the current market can still be classified as a "buyer's market" and that the current market is still "small" - developers need to provide more attractive conditions to grab a larger slice of the market share.
An increasing number of developers have focussed on the improvement of their projects in terms of design, greenspace, convenience, amenities etc and hope to offer a unique property in the market. By diversifying Cambodia's real estate products - it will make the country more attractive and solidify the Kingdom as an emerging economic hub in Southeast Asia.
Edward Lee, CEO of Prince Real Estate (Cambodia) Group Co., Ltd. commented “As post-pandemic lifestyles are shifting to a new dynamic, demands have changed, and developers need to build products that uplift the community through value creation from the consumers’ perspectives.”
New Comprehensive Air Transport Agreement
It was also announced this month that the Comprehensive Air Transport Agreement (CATA) between the ASEAN and European Union (EU) is expected to boost travel between the two regions.
The CATA allows airlines to operate as many flights as possible between the regions and in effect replaces the 140 different bilateral air transport pacts signed in the past by the countries in the two regions with a single set of rules.
Since Q1 2022 more multinationals have moved into the local market (post-COVID) and this moves further adds to the attractiveness of the Kingdom to investment as the year draws to a close.
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