Buying real estate in Cambodia

Buying real estate in Cambodia is a very attractive investment given the country's unique characteristics. Located in southeast Asia, Cambodia has a diverse natural heritage including ancient temples, fertile rice paddies and picturesque beaches.
Given the steady market growth and attractive opportunities, it is worth investing in real estate in Cambodia. Whether you're looking for commercial real estate to run a business or considering options for private residence, Cambodia offers many options, from traditional homes to modern condominiums.
Investing in real estate in this country offers the opportunity to not only own an attractive home, but also to participate in an economy that is growing rapidly and attracting the attention of the global economy.

There are currently four main types of title:
1. soft titles: these titles grant limited property rights, often based on traditional customs and uses of the land. Soft titles are recognized locally and are therefore more susceptible to changes in the law.
2. hard titles: Titles of this type have a higher degree of formality and offer strong ownership rights. They are nationally registered, which provides additional legal stability.
3. strata title: This type of title is used for condominiums where each unit has an individual title. Owners share common areas such as gyms and swimming pools, allowing for shared ownership and management.
4. LMAP: The LMAP system is an electronic land title registration system designed to increase transparency in land administration. This system provides accurate data on land ownership and rights, thus reducing the risk of unlawful expropriation.

• Soft headers: Advantages - quick and easy transfer process; no 4% land transfer tax. Disadvantages - inability to obtain a mortgage; limited information on previous owner.
• Hard title: Advantages - better protection of property rights; more information on previous owner. Disadvantages - longer transfer process; higher tax liabilities.
• LMAP: This system provides security and transparency of land ownership and reduces the risk of eviction and land grabbing problems.
  Understanding these differences will help you make informed decisions when investing in real estate in Cambodia and ensure that your interests are legally protected.

• Invest in a land company with a Cambodian citizen: This method is the least risky and most popular with foreigners. The company is given legal entity status, which allows a foreigner to own up to 49% of the shares, provided that 51% is owned by a Khmer national. Despite the potential difficulties and fees associated with setting up such a company, it does offer the opportunity to acquire real estate.
• Use of a lease: Foreigners can lease land for 15-50 years, with the option to extend the lease for another 50 years. A long-term lease ensures that the rights to the property are retained, including the right to build on and develop it.
• Obtaining Cambodian citizenship: This option is the least feasible as it requires a lot of time and effort. However, by obtaining Cambodian citizenship, a foreigner can own any type of property, including land.
• Buying land through a nominee structure: This method is popular but not secure. The foreigner enters into a trust agreement with the Khmer national, which gives him or her full rights to manage the land purchased. Despite its relative simplicity and cheapness, the use of a nominee structure violates the Cambodian constitution and is illegal.

Some investors have been able to acquire and control land through local companies or nominee structures. However, for foreigners, the most convenient and secure option is to purchase condominiums or commercial properties with condominium ownership.
Condominiums grant full ownership of the property.
Condominiums are initially managed by specialized property management companies. They can be on the other side of the world and know that rentals and renovations are running smoothly. In addition, condominiums offer 24-hour security and a wide range of amenities that are attractive to many foreigners.

Important points:

• High rental yield.
• Possibility of using US dollars in real estate transactions.
• Significant savings on housing costs compared to Western countries.
• Full ownership of the unit without the need to enter into risky contracts.

Some foreigners sometimes consider buying commercial buildings (stores and houses) in Cambodia. Although these properties promise slightly higher returns than apartments, most foreign buyers prefer condominiums.
This choice is due to the fact that many of them are used to living in apartments in more developed countries and prefer these modern forms of real estate as they find them more convenient and meet their requirements.

1. search by title: Once you have found the right property through an estate agent, it is important to carry out a title search. Make sure there are no encumbrances and check previous ownership.
2. contact your local council: In addition to checking the title, also contact your local council for more information about the property. Make sure you have a copy of the identity card of the person representing the selling company.
3. make a down payment: When selecting a suitable property, make a down payment of 10% of the purchase price. Then visit the land registry office to obtain the necessary documentation.
4. prepare the tax transfer: After you have received the documents from the land registry, go to the main tax office to pay the property transfer tax. The seller concludes a purchase contract with you.
5. wait for the final documents: After signing the contract, the Land Registry has about 5 working days to send the final documents to the Municipal Land Registry. Here you will receive a certificate of ownership.
Please note that the whole process can take up to 3 weeks until you receive your final documents. It is important to follow all steps carefully and diligently to ensure the legality and successful completion of the transaction.

In order to purchase a property in Cambodia, a
1. passport: You must provide a copy of your passport as proof of your identity.
2. visa: A valid visa is also an essential requirement. Check which visa suits your intention to purchase a property and foreigners must provide the following documents:
• To purchase real estate in Cambodia, you need a valid business visa. This type of visa entitles you to reside and do business in Cambodia, including the ability to purchase real estate. It is important to check the visa requirements and regulations for Cambodia as these are subject to change. It is recommended that you seek advice from the Cambodian consulate or embassy in your country.
3. These documents are provided to complete the formalities and procedures related to the purchase of real estate in Cambodia. Make sure that your documents are in order and comply with local regulatory and legal requirements.

1. value-added tax: Value-added tax of 10% is charged on the purchase of apartments from the developer. In some cases, developers include VAT in the final sale price.
2. transfer tax: The transfer tax is 4% and is payable on the purchase of a property.
3. property tax: The annual property tax is 0.1 %.
• Amounts up to 25,000 US dollars are tax-free, so this amount can be deducted first.
• In addition, the state multiplies the tax base by 80%, which reduces the tax burden.
4. Tax on rental income: Income tax on rental income is 10% and is paid annually.
5. Capital gains tax: Capital gains tax of 20% is paid by companies and levied on the sale of real estate. Private individuals are not obliged to pay this tax.
Please note that renting out property in Cambodia is usually straightforward and local agents can help you find and manage tenants. This is often the responsibility of the agent who assisted you with the purchase of the property and takes care of the entire process of interacting with tenants.

Advantages:
- Affordable prices: Real estate in Cambodia is usually available at lower prices compared to more developed countries.
- Low taxes: Property taxes in Cambodia are relatively low, which can make owning real estate more profitable.
- Emerging market: The country's economy and real estate market are booming, which could open up prospects for future growth in operating costs.
- Attractive tourist attractions: Some regions such as Sihanoukville are popular with tourists, which could create potential for real estate rentals.
- No restrictions on foreigners: Cambodian laws do not prohibit foreigners from buying property, opening up this market to international investors.

Disadvantages:
- Legal complexities: Real estate acquisition processes can involve certain legal complexities, and it is important to carefully review the laws and regulations.
- Infrastructure constraints: In some areas, infrastructure may be limited, which can affect living comfort.
- Currency risks: The Cambodian riel is subject to currency fluctuations, which may affect the value of properties in local currency.
- Market instability: Due to the rapid development of the real estate market, there is a certain degree of instability that can affect investments.
- Cultural differences: Foreigners, especially those new to Cambodia, may need to adapt to the local culture and customs.
It is important to do thorough research and obtain proper legal advice before deciding to buy a property in Cambodia.