Cambodia: Price History

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Foreigners can buy apartments and control landed property in Cambodia

Over the past two years, Cambodia has become the biggest real estate boom market in Asia.

The reasons are obvious, as soon as you visit Cambodia. Phnom Penh is an attractive colonial city, with broad avenues, charming housing, a hip and young atmosphere, and a riverfront view. Siem Riep, which houses Angkhor Wat, is even more charming, and has a cooler, more agreeable climate. There are beachfronts at Sihanoukville.

Cambodia is in a strategic position in the centre of IndoChina. Prices are laughably inexpensive (from a foreign perspective) and economic growth is exploding.

The combination is hard to argue with.

Land prices are jumping. The capital’s most sought after locations fetched US$500 per square meter in 2000 - but today they selling for US$4,000 or more per square metre along Norodom Boulevard, and US$2,500 per square metre in the central residential neighborhood of Boeung Keng Kang (BKK).

Rentals are far higher than in days when Phnom Penh was a sleepy outpost where the only foreigners worked for aid organizations. In BKK I, according to a report in the Bangkok Post dated March 2008, a spacious, four-bedroom apartment with gym, swimming pool, parking and 24-hour security is on the market for US$3,000 a month. Nearby, the owners of a two-story, four-bedroom villa are looking for US$5,000 per month.

Phnom Penh is, as a result, experiencing a construction boom. The government is aggressively pro-development, and squatters and other eyesores are simply cleared away, by a government which is in league with wealthy developers.

Part of the charm may be about to be lost as Phnom Penh succumbs to development. A 42-story US$250 million twin condominium, twice as high as Phnom Penh’s current tallest building, is being built in the most conspicuous position possible - at a busy corner leading to the city's Independence Monument. Residential units in the ‘Gold Tower 42’ project, which will not be completed till 2011, range from US$459,000 to US$1,500,000, according to developer Yon Woo Cambodia Co. Around 70% of the buyers are Cambodian. Around 40% of the sales have gone to speculative investors.

World City Co. Ltd., a South Korean company, is investing US$2 billion to build a satellite city called Camko City on a 120-hectare (300-acre) in northwest Phnom Penh. The single biggest foreign direct investment in to date, Camko City will include residential units, villas, condominiums, commercial and public facilities, trade and financial centres, office buildings, shopping centres, hotels, schools and hospitals. The project will include about 500 apartments with price tags ranging from US$112,000 to US$1.8 million a unit. Construction will take 3 1/2 years to complete. Nearly half of the units have already been sold.

The hottest land on the market is found in Phnom Penh’s riverside precinct, near the Royal palace and streets such as Norodom Boulevard.

Land price increases were at first confined to Phnom Penh, Siem Reap and Sihanoukville, but now the boom has spread right across Cambodia. Other hot spots are the border areas with Vietnam and Thailand and, to a lesser extent, Laos.

Land values in Siem Reap have risen 25% to 30% every year for the last four years at least. The average price of land per square metre is now around the US$500 - US$600 mark. But premium land in downtown tourism districts is around US$1,600 per square metre.

The major driver for the increase in land prices has been the ever-increasing influx of foreign money. The Cambodian government has done a good job of reassuring the world that it is reliably in control. South Koreans are pouring in. The Chinese are the second largest group of investors, followed by Malaysians and Australians.

Local investors, too, are now sure that no untoward political disturbances will happen.

How far can the boom go? There are voices saying that the market is a bubble. But the comparison with Vietnam’s Ho Chi Minh City seems in order. For years, pundits have warned that Ho Chi Minh City would crash. But today, land prices of US$15,000 a square metre are common in Ho Chi Minh City, compared to only US$3,000 to US$4,000 in Phnom Penh.

Mortgage finance is now available in Cambodia. Acleda Bank entered the home lending market in January 2007; by March 1 2008 Acleda’s home loan portfolio was worth about $40 million. To get around foreclosure risk, given that the corrupt legal system, Acleda keeps the title to the property until the loan is repaid.

ANZ also offers 15-year installment loans, allowing customers to borrow up to 60% of the home purchase price at variable interest rates, lending against registered titles.

Cambodia - more data and information

• Cambodia house prices, rents, and letting income - real data!
• How expensive are houses in Cambodia, compared to the rest of Asia?
• How much rent can be earned from Cambodia property, compared to the rest of Asia?

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