Guidelines for Licensing a Development Project in Cambodia, for Developers

On the 20th of August 2016, the Cambodian Valuers and Estate Agents Association (CVEA) conducted a public forum regarding "Today’s Real  Estate Industry in Cambodia" at the Sofitel Hotel in Phnom Penh. The discussion-based event was joined by an eclectic group of stakeholders – including property developers, media organizations, real estate agencies, banks, and the general public.

In a panel discussion about the “Opportunities and Challenges of Housing development,” Ms. Chan Socheata, the Head of the Office of Business Management Housing Development at the Department of Industry and Finance, said that “everyone needs to posses their own house. So, why do they need to have a legal license? How is it significant or important for the buyer?”

She mentioned that “generally, before the issuance of the license for any project development, the ministry evaluates through its checklist to find out whether the development has a clear and strong source of income, capital, collateral, land title, and other assets that support their project, especially because project owners need to make a business plan to present to the ministry.”

“The ministry will check whether it’s a good business, and if it can be successful in the future or not. In some cases, there’s a need to research on the sales strategy of the project, because sometimes a project’s owner does not do an in-depth market analysis with the surrounding market. And another reason is to find whether this project causes a bubble market. So, if this case happens, the ministry can take measure immediately,” says Socheata.

Socheata also mentions, “If we find that the sale price of this project is under the market price, we can allow managers to reconsider again about the selling price – comparing start cost and other conditions – in order for them to sell at a good rate.”

How much upfront capital is required for a developer licensing a development project in Cambodia?

“The project development needs to have at least 2% of the total capital deposited in the bank of Cambodia or any commercial bank in Cambodia. Even though this deposit money is a small amount, it shows that the development has its capital. And it also causes the customer to trust the project too,” she added.  

Socheata concludes by saying that “all project developers have to get a license from the Ministry of Economy and Finance. And this is something that any buyer should seriously consider before buying residential properties off plan, whether condo or borey. Keep in mind to ask whether that project has got a license in order to protect your own benefit and not waste money with unnecessary trouble.”

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