A Guide to Property Investment Cambodia

While a property investment in Cambodia would not necessarily be top of the list for many property investors, there have been a number of major changes over the last few years with regard to internal difficulties within the country, and it looks as though Cambodia could become one of the new property investment boom areas for 2008 and beyond.

We hereby list a number of reasons as to why you should be monitoring the situation in Cambodia and why it may well be an interesting area for property investment for the future.

1. Political Stability Is Attracting Property Investor Interest in Cambodia

For many years Cambodia has seen brutal internal fighting between the government and factions looking to over throw the current regime.  We have seen the likes of China supporting the rebels as well as Vietnam flexing it muscles in the region, seeing both parties at loggerheads and unwilling to step down.  However, there have been a number of around the table discussions by the parties involved and it looks as though China is intent on a peaceful settlement, with signs that the current Cambodian government are finally willing to give up some of their powers.

2. A Growing Economy in Cambodia Bodes Well For the Future

While there have been internal problems in Cambodia on and off for many years, the economy has remained surprisingly resilient with GDP growing by some 10.8% in 2006 and expected to show a rise of around  8.5% for 2007.

While these figures are unsustainable in the longer term, there is every chance that we should see significant increases in the short to medium term with the economy starting from a very low base.  Inflation was around the 2.6% level in 2007, and while the level has crept up to 6% of late there are no real causes for concern.  A little inflation is often a great way to kick start a property market.

3. Overseas Investors Are Starting To Notice the Long Term Potential of Cambodia

Even though the building blocks for a long term success story have been evident in Cambodia for some time, the internal fighting between the warring factions has held back many overseas investors from entering the market.  As the chances of peace in the country increase, so the risk reward ratio is now more in favour of the investor, with many overseas companies looking to enter what is being seen as one of the rising so called “Tiger Economies”.

4. Prospects for the Cambodian Tourist Market Have Never Been Better

The Cambodian tourist industry has always been central to the growth of the economy, and from being virtually dead just 10 years ago we are now seeing over 2 million people a year visiting the country.  This influx of foreign interest has increased the demand for property (with prices starting at a very low base) and local services.  While confined to a number of tourist hot spots, it is inevitable that interest will spread throughout the country and offer a number of interesting property investment opportunities.

5. The History and Culture of Cambodia Is Proving a Great Attraction

For any years Cambodia has been off the tourist map which is a great shame when you consider the culture and history of this great country. Historic records show the emergence of what is now Cambodia as far back as the 1st millennium, with the control of the country changing hands on many occasions over the years.  This changing control ensured a constant flow of new and different cultures, a large span of religious beliefs with the French connection apparent since the mid 1800s, when the country sought the protection of France.  Beautiful countryside, a mass of architectural influences as well as a climate which is attracting many tourists are just some of the factors assisting the growth in the country’s economy.

6. Favourable Government Policies Towards Overseas Investors in Cambodia

While the Cambodian government have signed up to a raft of trade and economic agreements with many of their neighbours in the region, they have also instigated a wide ranging tax regime which is attractive to many overseas investors.  In affect we are seeing a trade off between taxation in the country and overseas investment, with both parties very happy with the current situation which is encouraging further investment.

7. The Cambodian Government Have Instigated Massive Investment into the Infrastructure

After many years of internal conflict the infrastructure of Cambodia has for some time been a major problem for investment in some areas of the country.  However, as investment grows in the hot spots of places like the capital Phnom Penh we are seeing significant investment in improving the infrastructure of the whole country.  While this will take some time to complete and be fairly expensive, it will ensure a regular drip feed of investment opportunities into the Cambodian property market.

8. "New Thailand"

Dubbed the ‘New Thailand’, Cambodia offers the opportunity to experience virgin beaches and undiscovered landscapes to date as yet untainted by tourism development. General tourism numbers in Cambodia are also on the up with a 20% increase reported in 2007 alone. The main hub of the Cambodian tourist sector seems to be Sihanoukville where the natural terrain and beautiful beaches such as Serendipity Bay are attracting large numbers of foreign visitors eager to be one of the first to experience South East Asia’s newest hotspot. While the Cambodian authorities are desperate to develop the country’s tourism economy, they are also acutely aware that there is a need to consider the environment and the long term implications making an investment in a tourist based property development in Cambodia something of a long term venture.

Whilst the development of Cambodia’s tourism sector will move at a slower pace than many investors would hope, the wider impact upon the country’s economy should be rapid. As local economies around the country continue to benefit from the growing numbers of tourists visiting, there will be more money for the population to spend and many are expecting a steady rise in property prices. The policies of the government and controlled growth of the economy are vital not only to the country as a whole, but the property sector in particular.

Property prices at the moment are relatively low, the norm for emerging markets but when compared to other similar regions of the world and there is the potential for long term capital gains and substantial rental income in the medium to longer term. A new national carrier is the first step for Cambodia along the road to tourism success. 

Source: Nubricks