If you’re in need of a guide on how to buy property in Cambodia, look no further. This informative article will thoroughly advise you on everything you need to know.
Why should you buy property in Cambodia?
As a previously under-developed country, Cambodia has demonstrated great strides in their economy in recent years. The Kingdom of Wonder has urbanized considerably and has improved in various sectors. Its development has intrigued both foreign and domestic investment, and the real estate sector is no exception. From the commercial market to the residential housing market, real estate has proved to be a profitable investment opportunity in this ever-growing economy.
Can foreigners buy land in Cambodia?
Foreigners can buy property in Cambodia, depending on what it is. According to the law, foreigners cannot buy land in Cambodia. This is following Article 44 of the Cambodian Constitution which states that: “Only Khmer legal entities and citizens of Khmer nationality shall have the right to own land.” But there are a few methods in which expats can purchase land. These methods can be complicated, especially those new to the real estate market; it is recommended to contact our expert agents at Knight Frank Cambodia if you wish to engage in the market.
The methods in which expats can purchase land include:
1) Investing in a land holding company with a Cambodian citizen
This method is the most risk-free and popular among foreigners. A company will be recognised as a legal entity where a foreigner can own up to 49% of a company’s shares, as long as the majority 51% of shares is owned by a Khmer citizen. This is in accordance to the Law on The Investment of The Kingdom of Cambodia (Chapter VI, Article 16) which states: “51% of the equity capital are directly owned by natural persons or legal entities holding Cambodian citizenship.”
In setting this company up, a foreigner can purchase property using this company. The main concern with this method is a lack of trust in your Khmer counterpart. In using this method, it’s crucial you choose a partner you trust. In doing so, the foreigner can still purchase property despite being a minority shareholder. However, there are many difficulties and fees involved in investing in a company which might not make this a feasible option.
2) Using a leasehold agreement
Foreigners can lease land for 15-50 years, and the lease can be renewed after that for another 50 years. Long term leases allow the foreigner to still have necessary rights over the property, including its development and construction.
3) Acquiring a Cambodian citizenship
This is the least feasible of all options as the method is time-consuming and tedious. But in acquiring aa Cambodian citizenship, this allows said foreigner to have ownership over any type of property, including land. There are two options in which citizenship applications from foreigners are considered:
- Live in Cambodia for a minimum of 7 years and demonstrate full proficiency of the Khmer language.
- Make a significant investment/donation which helps develop Cambodia as a country.
4) Purchasing land using the nominee structure
This has been a popular option amongst foreigners, but not a safe one. The nominee structure is where a foreigner signs a trust agreement with a Khmer citizen, where the Khmer citizen grants the foreigner complete rights to control the purchased land. The documents drafted will demonstrate that the foreigner has control over the land. Despite it being relatively easy and inexpensive to use the nominee structure, it is highly discouraged as it directly goes against the Khmer constitution that prohibits direct foreign ownership, making it illegal.
Can foreigners buy other properties in Cambodia?
Aside from land, foreigners are allowed to purchase properties under the strata land title.
What is required for a foreigner to buy property in Cambodia?
Only your passport and visa are needed.
What are the land title classifications in Cambodia?
There are a total of four titles used to classify land in Cambodia, including:
1) Hard titles:
Hard titles are the strongest, most secure land title and form of ownership available in Cambodia. The Ministry of Land Management, Urban Planning and Construction issues hard titles and are recognised at a national level. The certificate for a hard title is provided by the National Land Management and Planning Office. If a property is registered under both a hard and soft title, the hard title would take authoritative ownership. Hard titles are a time-consuming process and has a transfer tax of 4%.
2) Soft titles:
Soft titles are the most commonly issued Cambodian land title amongst the four. It has a possessory right, which is recognised by the local government, local commune or district. It is not recognised on a national level. As soft titles are managed by the local government, its transference is rapid and decently inexpensive. But it isn’t as durable as hard titles as it can still be contested by third parties. This disadvantage has led a majority of new development to be registered under hard titles.
3) Strata titles (co-ownership):
Strata titles are possession rights used for condominiums that has been granted approval for co-ownership of a property by Khmer citizens as well as foreigners. This title is recognised at a national level by the Ministry of Land Management, Urban Planning and Construction.
Strata titles are a fairly new concept, being only applicable to new buildings (built in 2010 onwards). Despite this, foreign ownership of the entire co-owned building is still limited to a maximum of 70%. Foreigners are also not allowed to own properties located on the ground floor of a building as this goes against the ‘owning land’ law previously mentioned. Similarly, to hard titles, strata titles are a long process that has a transfer cost of 4%.
4) LMAP:
Another land title is the LMAP, or Land Management and Administration Project. In 2002, The World Bank started the LMAP, with its goal being to land security using a system that registers land titles. A LMAP is recognised at a national level by the Ministry of Land Management, Urban Planning and Construction. A LMAP title also has a decently long transference process, and has a transfer cost of 4%. A LMAP is different from a hard title as it has GPS coordinates which accurately identifies the boundaries of a property.
Contact us for more real estate advice
Entering the real-estate market in Cambodia can be an intricate and tedious process. Knight Frank Cambodia is dedicated to helping you buy property in Cambodia that is risk-free and convenient. Our expert real estate agents will guide you along the way as you seek out the perfect investment, whether it be for yourself and your family, or for business!
For more information on buying property in Cambodia just contact our experienced real estate agents at +855 23 966 878 or by email via enquiry@kh.knightfrank.com.