Unfolding Cambodia’s changing property investor profile

For long, the Chinese and Southeast Asians impacted the Cambodian property sector. Now that space appears to accommodate a few more from less traditional markets. They are entering the Kingdom to buy high-rise properties at affordable prices. Western and European buyers have become more aware of the Cambodian market in recent years and are beginning to view condominiums as having the potential for more profits than property investments in their own countries, or even nearby regional hotspots

A change in the wind in the real estate sector is hard to remain unaffected. After the Chinese and Southeast Asians dominated the Cambodian property sector for a long period, now a broader array of foreign investors from less traditional overseas markets are entering the Kingdom to buy high-rise investment properties at increasingly affordable prices.

Without a doubt, diversification is apparently occurring, reflecting both changes in geopolitical circumstances for overseas property investors in their own and comparable regional markets, along with increased awareness of the unique conditions for both investment and migration to Cambodia driven by the local private and public sectors in recent years.

Non-traditional buyers
Peter Guboglo, CEO of Phnom Penh-based real estate agency, Investor In Property Co., Ltd., explained that in 2019 and preceding years the majority of foreign investors in Cambodian real estate broadly were Chinese.

As of 2024, this Chinese investment has now slowed down considerably due to external factors, and it has left a big hole to fill in the local condominium market, he said.

However, this trend has forced Cambodian property developers and agencies to expand their focus on new property investors outside of traditional channels and audiences, and it appears to be working.

As of 2024, Guboglo believes awareness from non-traditional buyers have increased dramatically, as his agency is now predominantly servicing buyers from the USA, Europe, including Hungary, Luxembourg, Spain and Russia.

Western buyers are now outweighing Chinese and other Asian national inquiries, he explained something that was not experienced in previous periods.

According to Guboglo, Western and European buyers are becoming more aware of the Cambodian market in recent years due to increased international awareness of the market as a whole, and are beginning to view Cambodian condominiums as having the potential for more profits than property investments in their own countries, or even nearby regional hotspots.

“European investors say that Europe isn’t growing anymore, and real estate investment in Europe is not making any profits,” Guboglo said.

“Compared to their own countries and traditional overseas investment hotspots, Guboglo compared, Cambodia now has more dynamic gross domestic product (GDP) growth trends, better prices for property, full ownership mechanisms for foreigners, and better chances for their property investments to profit,” he said.

Cambodia, in contrast to more developed real estate markets, represents a real estate investment opportunity in an early growth cycle which appears better in both the short, medium and long term for rental returns and overall appreciation growth.

Malay Nop, Executive Director of long-running Phnom Penh and Siem Reap-based real estate agency, Independent Property Services Cambodia (IPS Cambodia), agreed that as of 2024 demographic trends of foreign property buyers in the Kingdom are shifting away from previous assumptions.

“This year our agency has primarily received investment interest from first-time investors from countries other than China, foremost Japan, the UK, Australia, Italy, and Hong Kong,” she said.

These investors have an average budget of $100,000 to spend on foreign ownership properties, predominantly targeting residential condominiums with strata titles in place,” said Nop.

In contrast, investors from China who are active this year are mainly individuals residing in Phnom Penh, purchasing properties for personal use, she explained.

Nop noted that these expatriate Chinese buyers are no longer pure investors, as was the majority of pre-covid Chinese condo buyers.

Rather, Chinese buyers that remain active in the Cambodian condo market now predominantly work in the local Phnom Penh banking sector and are both living and working in the country, she said.

In contrast, first-time buyers from the UK, Japan, Australia, Italy and Hong Kong are predominantly purchasing properties from outside of the country, as pure investments, Nop explained.

They are generally younger investors, and seeking investments for rental returns, appreciation and potential future personal use.

Demand from these types of overseas-based buyers now outweighs locally based purchases, she said.

Nop’s agency has also observed a decrease in buyers from ASEAN countries in recent periods, particularly from Singapore and Malaysia, who were particularly active in the market in previous years.

“We’ve noticed a rising trend in first-time investors from European countries entering Cambodia this year, whereas, in the past, we primarily saw investors from ASEAN countries,” summarized Nop.

It is a positive change that Cambodia is becoming more and more metropolitan these days as investors continue to diversify, she added.

Regional expat movements
The Cambodian condo market is also benefiting from increased regional movements of Southeast Asian-based expatriates.

“Many thousands of Europeans, Americans, Russians and other nationals who have lived as full-time expatriates in destinations including Indonesia, Thailand, Vietnam and other nearby destinations within ASEAN are now looking for greener pastures to move themselves and their capital to,” explained Guboglo.

This is because they are facing price inflation in cities such as Bali, Phuket, Bangkok, Ho Chi Minh and other regional investment destinations, which is curbing new investments from incoming western buyers who fear the market is peaking.

“Buyers who have invested in other parts of South East Asia already, such as Bangkok, Pattaya and Bali, now believe these markets to be overpriced and not suitable for new investments,” he said.

“With lower starting prices, and stronger rental prospects, Phnom Penh increasingly offers a greenfield investment opportunity that has plenty of room for upward appreciation when directly compared to places like Bali or Pattaya,” he said.

Ease of Visa
Furthermore, visa complications and other impediments to personal freedoms in their chosen second home countries have raised concerns for some expat buyers within other ASEAN countries, especially during the turbulent post-Covid period, leading them to look for new starts in nearby nations such as Cambodia.

Guboglo noted the example of Vietnam-based expats unable to renew their stay visas during this post-Covid period, leading to many expat residents packing their bags and leaving for good.

In contrast, throughout the Covid period, the Cambodian government demonstrated its commitment to supporting long-term expats, and investor residents, said Guboglo.

Due to an insecure visa landscape, expats facing visa issues or insecurity in regional countries, began to shift to Cambodia during the past two years, and this trend is clearly continuing in 2024 with an influx of regional expatriates both relocating to Phnom Penh, and looking for property investments in country for long term immigration, he explained.

“The improved immigration policy of the government is clearly working well, as it’s standing above neighbours and providing a genuinely friendly destination for immigration,” he said.

Visa options in Cambodia now are affordable, easy to access and allow long-term stays for property owners, workers and travellers.

This cross-border expatriate trend is a testament to Cambodia visa reforms, said Guboglo, and is a strong attraction for international investors seeking emigration properties in the Kingdom.

The advent of Cambodia’s first specialized retirement visa in 2022, the ER Visa, has also proven highly successful in attracting a new generation of western retirees into the country, easing visa costs and updating procedures for long-term, elderly investors, noted Guboglo.

Cambodia is also now ranked as one of the world’s best retirement destinations due to its low cost of living, high quality of life and ability to both easily access the country and buy or rent property.

The Retirement Visa, for instance, costs $290 a year, with the ability to open a bank account, marry, purchase and rent property or vehicles, and open a company jointly or solely.

As with other Cambodian visa options, there are no rules on how long the resident needs to spend in the country to retain residency, allowing easy travel.

Conducive legislation around the property sector has also meant retirees can retire their wealth in the country with ease and safety.

Foremost, said Guboglo, condominium investment is also possible, thanks to the Strata Law.

Strata-ready condominiums offer freehold ownership rights, and the ability to leverage the title for mortgages and other loans.

The property can be left to a foreign successor also.

Cambodian property 2024
Despite a changing investor profile in 2024 in terms of demographics, commentators agree that generally investors are becoming more savvy regarding the Cambodian property markets, and make more cautious decisions than in previous periods.

“Investors typically conduct research about Cambodia before making the decision to invest; they believe this is the optimal time to purchase property as they possess substantial negotiating power,” said IPS’s Nop.

She confirmed that, presently, it’s a buyer’s market, with lower bottom prices than ever before seen.

Guboglo stated that across the board, condominium total prices had decreased an average of 20 percent compared to 2019 costs, due to a large supply increase and slowing demand in the post covid era.

Outside of price, incoming investors in the Cambodian condo market are attracted to several factors, Nop explained.

Investors broadly are attracted by Cambodia’s young population with room for growth in key economic trends such as gross domestic product (GDP), which aids both the prospects of doing business here and growth in property demand and prices into the future.

USD being used as the core currency for property investments is also a factor encouraging foreign investors to the market, which grants investors the ability to use USD income from Cambodia worldwide through their Visa card, Nop said.

Importantly, Cambodia offers freehold property ownership, tax benefits and a very easy online visa application process, explained Nop, in agreement with Guboglo’s precis.

There are some differences in buyer demands for properties compared to previous periods, however, said Nop.

Incoming investors in 2024 require proof of hard title or strata title for the property, property management checklists and expect a return on investment (ROI) from the asset from at minimum 6 percent net.

These requirements were less stringent for buyers in previous years, and suggest the awareness of Cambodia’s investment climate is rising along with expectations of incoming investors for increased security and quality.

Nonetheless, all of these requirements can be easily satisfied in the current market, noted Nop.

Beyond Chinese capital
A more metropolitan, professional market is emerging in 2024.

Guboglo believes that Chinese investors lessening their impact on the condo market has led to the promotion of new types of immigration, global marketing initiatives and new types of investors entering the Cambodian condominium market, which he said is a great thing.

The diversification which is now occurring is a positive result of lessened Chinese FDI flows.

This is because Cambodia has had to look outside of Chinese investment, advertising and promotion to new countries, and new strategies, he said.

“During the peak Chinese investment period in the lead up to covid, we witnessed a largely trapped market, whereby often the project developer was Chinese, the agency soliciting the purchase Chinese, and therefore a lot of the capital invested in this period did not offer much benefit to the local Cambodian market and business people within it,” he said.

Money was circulating in the market, however few local businesses saw the benefits.

Post-Covid, in contrast, Cambodia is becoming more multinational, and creating more experience and professionals for the real estate market and business in general which will only propagate this cycle of growth, he said.

Developers and agencies have effectively attracted new types of buyers from countries previously unseen in the Cambodian investment landscape.

Meanwhile, the government has forced diversification of investment, tourism and immigration through progressive, pro-investment reforms, which as of 2024 are showing strong momentum.

Through this experience, Guboglo believes that Cambodian agencies, developers and investment firms are effectively learning to work with the whole world, which encourages more skills and professionalism.

This means that Cambodia is becoming an investment destination for the whole world, as opposed to relying on China only, he commented.

This is also creating a more diverse and metropolitan marketplace, especially in the capital city, Phnom Penh.