Returns on buying residential property in Cambodia have been falling.  Gross rental yields on apartments in Phnom Penh now average 3.63%, similar to yields on villas, which are around 3.73%. 

Prices appear to have risen to US$3,416 per sq. m in May 2009, from an average of US$3,136 per square metre (sq. m.) in May 2008. This is a little surprising, given the negative news coming from Cambodia, and the fact that there has been around a 5% depreciation in the Cambodian Riel against the US$.

Rents are unchanged at around US$9.35 per sq. m. per month, though rents on smaller apartments seem to have risen a little, as have rents on villas. 

However, rents on smaller apartments have risen less than their price, leading to yields of only 3% on apartments in the 85 sq. m. category.

Given that Cambodia is a developing country, Phnom Penh’s buying prices are expensive, at an average of US$3,077 per sq m.  Despite Cambodia’s high GDP growth rate, which is positive for its real estate market, we would be cautious on the outlook for residential property.