AsiaViews, Edition: 51/IV/Jan/2008
Cambodia:
Lawmakers consider letting foreigners buy real estate


Foreign investors may not need to wait for the stock market in 2009 if they want a piece of Cambodia's economy.

The government is on the verge of changing the property ownership laws so that foreigners will be able to buy real estate in the country and own it outright.

Although current law prohibits foreigners from actually holding title to land in Cambodia, the National Assembly is considering an amendment to the law that could be approved soon, said Nuth Narang, Secretary of State at the Ministry of Land Management, Urban Planning and Construction.

"Local developers have a massive interest in seeing the law change. Cambodia is open for business now. There is huge demand, foreigners would buy property," said Matthew Rendall, a lawyer with the investment advisors Sciaroni and Associates.

Although it was not clear what restrictions Cambodia might put on foreign property investment, Rendall said there is no downside to changing the law. Cambodia has "nothing to lose," he said.

Developers contacted by the Post said a change in the law would change the marketing environment for developers in Cambodia.

Marketing director Nhem Sothea at Grand Phnom Penh International City said changing the law would make it "much easier to sell property here."

"There is a large Korean market -they want to come here and retire and we could access that market better with a change to the law."

Backed by Indonesia's Ciputra, through a local partner RCAF Gen. Ke Kim Yan, the International City is developing 260 hectares 20 minutes northwest of the city center into a gated community.

Nick Chandler, sales and marketing director for Brocon, which buys colonial buildings in Cambodia and rehabilitates the apartments for sale to foreign investors, said a change in the law would create huge demand.

"There is a real buzz regarding Cambodia," he said. "They have had three years of double digit growth-9 percent this year. A lot of people see that and those people see property as the best and most stable way to get into this market."

Narang said the ministry is discussing whether changing the law "will be beneficial to the economy." "We need to assess how best to go about this," said Narang. He added that the ministry is seen as favoring the amendment because in August it passed a sub decree allowing foreigners to use property they own via a leasehold as collateral with the banks.

Some of Cambodia's neighbors already permit some type of foreign property ownership. Thailand, Singapore and Malaysia all allow foreign investment in "immovable property" with various restrictions. Immovable property includes not only land but buildings and leases.

In Thailand, the rules are that at least 51 percent of high end apartment block developments must be Thai-owned. In Singapore, foreign nationals can own property above the seventh floor.

"It would be a natural progression for Cambodia to introduce something similar," said Rendall. "It will bring a massive injection of investment into the economy. There will be a huge reaction."

Other options could be prohibiting foreign ownership of ground floor units, but allowing sale of above ground apartments. Or the government might change the title deeds so that anything defined as a "building" but not as "land" could be bought. A change in the law would clearly benefit developers such as the South Korean developers of the Camko City project, which includes many high end apartments.

Camko City officials could not be reached for comment. According to the company's marketing information, the first planned development includes 18 houses and 100 townhouses, but many more large blocks of apartments.

At the moment, property developers get around the land buying restriction by selling leaseholds to foreign investors, said Chandler at Brocon,

He said foreign buyers obtain a 99-year lease with an option to renew. The leases all include a clause saying if the land law changes, the leaseholds will be converted to "free hold." Owners would have to pay certain taxes and transfer fees to convert. He said Brocon has sold more than 20 properties under the lease agreement.

"A change of law allowing foreigners to buy would mean all leases revert to freehold and that would give us an even easier product to sell," said Chandler.

Brocon's target market is sophisticated foreign investors who already have property portfolios in the region. "The current legal framework is not an impediment to us. We are not selling to mum and dad investors."

"Capital growth on land over the last two years has been ridiculous-something that sold for $500 two years ago is now $2,000 plus," said Chandler.


By Cat Barton

Phnom Penh Post, Issue 17 / 01, January 11 - 23, 2008
Source

There's bad and good side to this. As to most matters.

If Korean and Chinese come in and bought up all of our land, what happen to the local? The price will go up, new generation will have no place to stay. Foreigner will take advantage of the lawlessness such as no proper building code/rules etc. Cambodia lacking of law and order will bring in more hard ache. Even there is law, corruption will make a joke out of it.

If this law is to be passed, it only benefit those who have stolen lands from the poor, and selling them to rich foreigner and who will only benefit? The elite will. The poor will be left landless and defendless.

I think they should do a 55:45 joint owned deal Native:Foreigner on land.

I believe that in one neighboruing country the have allowed foreigners to buy apartments above the fourth storey of a locally owned building, although there are many ways to register a local company to overcome this obstacle.

I neve rknew the Cambodian legislation before reading this thread. I am afraid of foreign money and influence invading and destroying Cambodian culture.

To this end, would it be wise to establish a questionnaire, written in Khymer, on aspects of Cambodian culture, traditiojn and history, before any foreigner might invest in real-estate at any level, or land in Cambodia. I believe that would help to work out who really just loves the place enough to stay over the long term, and who is just in it for the cheap costs of different things in terms of labour. Cambodia must protect its people from being taken advantage of rich foreigners at all costs. I believe that those, of which I am not yet one, who know and love the culture and language enough to answer that test in Khymer of who is the national hero, what are the national animals and birds, the national flag colours, latitude and longitude, and of course, to sing the National Anthem, and those sorts of simple questions, written in Khymer, might be a safer investment that ignorant retirees looking for an easy way out at the expense of Cambodian citizens.

Just a quick opinion from an Australian who sees the same sort of levels required for Thailand, but much is based on my own predicament. I am biased towards that which I have, and agains tthat which i have not. Very personal and ignorant.

foreigners should never be allowed to buy angkor wat or angkor thom.

As far as I know they can't owned land but only house from the second floor...