Reach for the sky

A street of new housing in Phnom Penh
The city’s Canadia Tower

May 21 2010
By Elaine Moore
Financial Times (UK)

Above the tumultuous streets of northern Phnom Penh, the new Canadia Tower reaches 30 storeys into the sky, dwarfing the palaces and temples that grace the rest of the city’s skyline. The glass-fronted tower is now the highest building in Cambodia and marks the start of an ambitious plan to attract increased foreign investment to this small Asian market.

Known as the “pearl of Asia” in the early 20th century, Phnom Penh has suffered years of civil war and a repressive communist regime, but its architecture of golden-tipped temples, red-roofed houses and French colonial mansions is still distinctive. The Canadia Tower, also known as the OCIC Tower, is instead designed to imitate and rival the sort of modern office space available in bigger neighbouring countries such as Vietnam and Thailand.

The soaring structure will soon be joined by other high-rises across the city, offering homes as well as offices. Some are being funded locally, others by foreign investors (mostly Korean) but all the financial backers hope they will attract wealthy foreigners and persuade locals to forgo their traditional two-storey Khmer villas for an apartment (or an office) with a view.

A new law permitting foreigners to buy condominiums in these skyscrapers will for the first time, the government hopes, encourage a wave of overseas interest.

But the new style of living might take some adjustment, according to local property experts. “Living in a condo is a new concept for Cambodian people,” says Bun Phearith, sales agent at Bonna Realty Group, one of the largest estate agencies in Cambodia. “But it’s an idea that is gaining popularity. Among our younger clients the first properties they ask about are apartments in multi-storey buildings.”

The Canadia Tower stands on Monivong Boulevard, down which Khmer Rouge soldiers marched in April 1975 when they took over Phnom Penh and began to systematically destroy all traces of urban modernity in Cambodia. In just three years, eight months and 20 days, the terrifying success of their vision caused the deaths of millions. By the time the Khmer Rouge were driven out, Phnom Penh was a ghost town.

Senaka Fernando, chairman of the British Business Association in Cambodia, arrived in the capital in 1994 as peace was finally taking hold. “Back then, when planes landed in Phnom Penh at night there was nothing to see – no lights, no large buildings,” he recalls. “The changes that have taken place here over the past 16 years are remarkable.”

Between 2000 and 2009 economic growth in Cambodia averaged 8 per cent. To reflect its success, gleaming high-rises were planned at the height of Cambodia’s property boom. The real estate sector was suddenly awash with money, and prices rose accordingly. Between 2005 and 2008 the cost of property in some areas of Phnom Penh rose from $550 per square metre to $5,000 (Cambodia’s property prices are routinely quoted in US dollars).

Developers planned a series of huge towers and a ring of satellite towns on the outskirts of Phnom Penh. Speculators bought up land for better roads, more shopping malls and larger office blocks. The tallest building planned was the International Finance Centre (IFC). This $1bn complex, backed by South Korean company GS E&C, was to have housed a shopping mall, 1,064 apartments, 275 serviced apartments and a school within its 52 storeys.

Then the bubble burst. As the global recession hit south-east Asia, building works ground to a halt and land cleared for work remained empty. Investors took their money away and, according to the International Monetary Fund, the Cambodian economy contracted by 2.5 per cent in 2009. Buildings such as the IFC tower were put on hold or scaled back and property prices in the city centre fell by up to a third.

Not even the Canadia Tower has escaped the downturn. Overseas Cambodian Investment Corporation (OCIC), owner of Canadia Bank, had hoped to persuade the country’s biggest organisations to set up shop inside. But much of the building remains empty and prospective tenants are now being offered a 50 per cent discount if they agree to lease space for a year or more.

Yet there are signs that the Phnom Penh property market is finding its feet again. Those who held on to properties as investments are now looking to sell, real estate agents say. Acleda Bank, a Cambodian commercial bank, has also reported an increase in the number of mortgages issued for residential property at the end of 2009.

Although the number of property transactions is nowhere near the heady levels of 2008, there is a feeling that the market is settling down. Thomas Sterling, country director of Cambodian property managers Sterling Project Management, believes the price crash was in some ways a good thing. “There was so much speculation that it became questionable whether there was any real market for property in Phnom Penh,” he says. “The recession has acted as a natural correction to cap prices.”

Properties in the most desirable areas, such as the riverfront, now fetch around $2,500 per sq metre, according to Bonna Realty. In the north of the city, along the wide streets of what used to be the French quarter, buyers can expect to pay around $1,250 per sq metre.

Rather than new and large-scale projects, the renewed interest is in select projects that are already under way, such as Gold Tower 42. Twenty storeys of the $300m South Korean project, financed by DaeHan Real Estate Investment and built by Yon Woo, are already up and the tower should be complete by late 2011. All of the office space, and half of the residential space has already been sold.

Across town, developers of the Diamond Island project are hoping to finish ahead of schedule. About half of the 168 homes built in the first phase of the project, on sale for $200,000-$1m, have been sold according to managers for developers OCIC. The rest was slated for completion in 2016 but the developers hope to bring this forward by two years. Other satellite towns include the Grand Phnom Penh International City, which will contain 4,000 residential units, and the $2bn Camko City project.

Interested overseas buyers have been given a helping hand by new government regulations. Previously, foreigners who wanted a stake in land had to establish a joint venture with a Cambodian national. But Cambodia still has a way to go before it attracts large numbers of overseas investors. Electricity prices are high and blackouts are not uncommon; phone networks can be unreliable and corruption is still a problem.

Foreign investors might also have qualms about buying into developments that have had a negative impact on the country’s poorest people. The losers in the evolution of Phnom Penh from backwater to international city are the citizens evicted from property that was sold to developers with minimal compensation.

But with the IMF now predicting growth of 4.8 per cent in 2010 and Cambodia’s links to the rest of the region strengthening, investors who choose carefully could find themselves first into a country attracting more international attention each year.

Elaine Moore is a personal finance reporter for the FT

Cambodia seeks to attract foreign buyers

April 5, 2010
The Associated Press
PHNOM PENH, Cambodia

Foreigners will be able to buy real estate in Cambodia -- as long as it's above the ground floor -- under a proposed law that cleared the lower house of parliament Monday.

Cambodia's National Assembly approved the long-awaited Foreign Ownership Property Law after a three-day debate by a vote of 85 to 11. It needs to pass the Senate and King Norodom Sihanouk before becoming law, both of which are considered technicalities.

Until now, foreigners could not own land or property in the impoverished Southeast Asian country, though many skirted the law by teaming up with Cambodian buyers.

The proposed law gives foreigners the right to buy real estate at least one floor above the land, in keeping with the ban on foreign land ownership.

The law also states that foreigners would not be able to buy property within 20 miles (30 kilometers) of Cambodian borders, a constraint intended to protect national sovereignty.

Im Chhun Lim, Minister of Land Management, told lawmakers that the adoption of the law would help attract foreign buyers and strengthen Cambodia's economy.

"This law will promote the investment sector by encouraging the construction of luxury, high-rises," he said.

Cambodia's economy relies mainly on the agriculture and tourism sectors, but foreign investors have helped the economy's rapid growth.

China is a leading foreign investor in Cambodia, with some 349 Chinese companies invested in Cambodia mainly in agriculture projects, construction and dams, according to the Chinese Embassy.

Foreigners allowed to buy Cambodian property as parliament OK's law

Mon, 05 Apr 2010
DPA

Phnom Penh - Cambodia's depressed property market received a boost Monday after parliament passed a much-anticipated law permitting foreigners to buy property.

The law, which developers had long pushed for, allows foreign nationals to buy property above the ground floor, but not the land on which the property stands.

Sok Chenda, the secretary-general of the Council for the Development of Cambodia, the government's investment body, said the law ought to help the struggling real estate market.

"Gradually other countries have opened up the possibility of ownership, and Cambodia is no exception," he told the German Press Agency dpa. "We were very strict, and now we still have some restrictions, but we try to open it up."

Asked whether the country might one day permit foreigners to own land as well, Sok Chenda said the government needed first to assess the effect of Monday's law on the local market.

"Everything has to be done gradually - we have made the first move so now let's see how the market reacts," he said.

In recent years Phnom Penh's skyline and surroundings have been transformed by developers erecting apartment blocks and high-end developments.

However, the global slump and lack of a substantial Cambodian middle-class meant many projects stalled or were pared back.

Under existing rules, foreign nationals who wanted to own property needed to find a trustworthy local partner to co-own the asset, adding to the investment risk.

The law will enter into force after it is passed by the Senate and signed by the king.

Cambodian law to let foreigners buy real estate

April 5, 2010
The Associated Press

PHNOM PENH, Cambodia - Foreigners will be able to buy real estate in Cambodia -- as long as it's above the ground floor -- under a proposed law that cleared the lower house of parliament Monday.

Cambodia's National Assembly approved the long-awaited Foreign Ownership Property Law after a three-day debate by a vote of 85 to 11. It needs to pass the Senate and King Norodom Sihamoni before becoming law, both of which are considered technicalities.

Until now, foreigners could not own land or property in the impoverished Southeast Asian country, though many skirted the law by teaming up with Cambodian buyers.

The proposed law gives foreigners the right to buy real estate at least one floor above the land, in keeping with the ban on foreign land ownership.

The law also states that foreigners would not be able to buy property within 20 miles (30 kilometers) of Cambodian borders, a constraint intended to protect national sovereignty.

Im Chhun Lim, Minister of Land Management, told lawmakers that the adoption of the law would help attract foreign buyers and strengthen Cambodia's economy.

"This law will promote the investment sector by encouraging the construction of luxury, high-rises," he said.

Cambodia's economy relies mainly on the agriculture and tourism sectors, but foreign investors have helped the economy's rapid growth.

China is a leading foreign investor in Cambodia, with some 349 Chinese companies invested in Cambodia mainly in agriculture projects, construction and dams, according to the Chinese Embassy.

Cambodia debates foreign property ownership

April 2 2010
By Elaine Moore in Phnom Penh
Financial Times

Cambodia is hoping to court international investment by relaxing laws on property ownership by foreigners in a bid to counter property prices that have fallen as much as 40 per cent in the wake of the global recession.

Cambodia’s draft law – which echoes an Indonesian move this week to review foreign ownership rules to draw investors to its property market – is currently under discussion at the National Assembly and would allow non-nationals to fully own residential apartments on the first floor and above for the first time.

The first-floor rule, which is also likely to be part of the Indonesian review, skirts sensitive political and legal issues.

The topic of land and property ownership is particularly sensitive in Cambodia where all land deeds were destroyed by the communist Khmer Rouge regime in the 1970s. Proprietary disputes are frequent as a result.

While resorts such as Phuket and Bali remain the most popular destinations for foreigners looking to purchase a holiday home in south-east Asia, Cambodia’s lawmakers hope that deregulation will lead to increased foreign investment in the country and help to pick the Cambodian property market out of the doldrums.

Unrestricted ownership of property by foreigners is uncommon in south-east Asia. In Thailand foreigners are permitted to own a condominium as long as the total foreign ownership of the building does not exceed 49 per cent.

However, investors interested in property in countries such as Laos and Vietnam can only purchase leases. In Cambodia, foreigners can either lease property or they can choose to set up a purchasing landholding company with a national citizen in which they have a minority shareholding.

But with property prices under pressure across Asia, a number of countries have begun to consider liberalising property laws to encourage greater overseas interest.

In November 2009, Vietnam clarified its foreign investment laws, which allow non-residents to lease apartments for up to 50 years.

Edwin Vanderbruggen, director of tax advisory group DFDL Mekong, said the changes to Cambodia’s property law would make it an attractive prospect in the region.

Daniel Parkes, Cambodian manager of property advisors CB Richard Ellis, which recently opened its first Cambodian office, said that new developments along the pristine beaches of Cambodia’s so-called Indochina Riviera, including islands such as Koh Rong, could be among the beneficiaries of the law change.

The country experienced a real estate boom between 2006 and 2008, when prices in some areas of the capital city, Phnom Penh, rose tenfold. The subsequent recession pushed prices down by up to 40 per cent and the situation has now stabilised, according to Mr Sung Bonna, chief executive of Bonna Realty Group, the largest estate agent in Cambodia.

Residential property in Phnom Penh’s French colonial centre costs on average $1,600 per square metre, while prime locations fetch around $2,700 per square metre.

Foreigner Property Law Debated

(Photo: Cambodge Soir Hebdo)

By Chun Sakada, VOA Khmer
Original report from Phnom Penh
01 April 2010

The National Assembly Thursday began discussing a new law that allows foreigners for the first time to own apartments and other residential property—above the ground floor.

Officials say they hope the law will draw more foreign investment, but opposition lawmakers Thursday said the law needed clarifying.

“We are very worried on some points in the draft law affecting our national sovereignty and interest,” Sam Rainsy Party parliamentarian Son Chhay said.

One section in the law seems to allow foreigners property rights within 30 kilometers of the national border, he said, but the same article allows for buildings in special economic zones and other areas while giving the government the opportunity to grant foreign rights.

“This is a point that stirs up doubt and worry,” he said.

The Council of Ministers drafted the law in December, in a move to improve private ownership right, increase investment and make doing business in Cambodia easier. It allows for the ownership of apartments from the second story and a larger stake in residential property for foreigners.

“Our real estate market will have more progress after the law comes out,” Cambodian People’s Party lawmaker Cheam Yiep said. “This law is very important to encourage foreigners to invest and to fulfill their duties as investors.”

Land Minister Im Chhun Lim told lawmakers Thursday the law would “boost economic growth” and provide employment in construction. With a better property market, Cambodians will learn more technical skills, he said.

Sung Bonna, head of the National Valuers Association and owner of his own real estate group, said realtors had been waiting for the law “for a long time.”

“In this law there are mostly no negative points,” he said.

The law could invigorate the real estate market, which has languished in recent years, he said.

“This law cannot make higher prices for real estate or land,” he said. “It will just recover the activities of buying and selling, because it provides confidence to investors.”

Cambodia Warming to Idea of Foreign Ownership

Canadia Tower in Phnom Penh is Cambodia’s tallest building. (Simon Marks)

November 26, 2009
By SIMON MARKS
The New York Times

Just three decades after the downfall of the Khmer Rouge, a deadly regime that left behind little notion of private property, a law that would allow foreigners to buy some kinds of real estate here appears to be nearing approval.

And while the proposed law is focused on the property market, experts agree it also would be a general boost for the country, which has been struggling through its own version of the global economic downturn.

“The law, in essence, will not help the whole economy recover. But it’s part of a wider picture,” said Daniel Parkes, country manager for the CB Richard Ellis real estate company. “What it is doing is making investment in Cambodia more transparent and easier.”

The law, which is expected to go to the National Assembly for a vote in the coming months, would allow foreigners to own apartments and condominiums on buildings’ upper floors. Now they are limited to 99-year leaseholds on any property.

Ground-level residences, which include ownership of the land that the units stand on, would continue to be reserved for Cambodians.

There are some controversial details in the draft. But over all, Mr. Parkes said, the proposed law would improve confidence in the market — especially in comparison with neighboring countries like Thailand, where foreigners are limited to 30-year leases on homes or land, and Singapore, where they are barred from owning property below the sixth floor.

Mr. Parkes’s own presence in Cambodia is due to great expectations for its real estate sector. The 27-year-old arrived here four months ago from Britain; his assignment was to open the first office of CB Richard Ellis in the capital to meet a growing demand for professional real estate services.

“Working in the U.K., it has become obvious over the last two years or so that it is a mature market,” Mr. Parkes said. “Where the future is, is in Asia.”

He says he considers the assignment to be a long-term one, and he spends weekends riding around the city on his 1967 Vespa, keeping his eyes peeled for a property that he might like to buy himself.

Over all, the country’s financial forecasts and Phnom Penh’s growth seem to support his optimism.

Economists here generally agree that Cambodia will emerge from its year-long recession in 2010. And the International Monetary Fund said in September that, while the country’s G.D.P. would contract 2.75 percent this year, it would climb about 4 percent in 2010.

The capital’s 1.3 million inhabitants mostly live in low-grade concrete apartment blocks that form the city’s low skyline. But Cambodia’s tallest building, the 30-story Canadia Tower, opened Nov. 5. And the structure, which includes apartments for some Canadia Bank employees, is the first of several such projects planned for the city center.

Like many housing markets across the world, speculative buying and inflated land values produced a lot of phantom growth in Cambodia in recent years.

From 2005 to mid-2008, prices for some houses in Phnom Penh rose tenfold. Increasing foreign investment and large-scale residential projects like Gold Tower 42, a South Korean-funded 42-story skyscraper that is still being built, were just some of the factors that led industry observers to have faith in the country’s market.

But as the effects of the global economic crisis spilled over into Cambodia in late 2008, demand dried up, and housing prices tumbled dramatically — 40 percent compared with the same period last year, according to real estate agents.

“Before there was so much investment from developers in China and South Korea,” said Soush Saroeun, executive director of Asia Real Property, a Cambodian real estate agency. He said prices in Phnom Penh’s most affluent neighborhoods had fallen to about $3,000 per square meter, or $280 a square foot, from around $4,500 per square meter in July 2008. (High-end real estate in Cambodia is generally valued in U.S. dollars.)

Some observers here say that confidence in the market actually was boosted when the long-awaited proposal to allow foreign ownership was introduced by the Ministry of Land Management in April.

Some investors and analysts say, however, that the draft contains stipulations that would cause unnecessary complications, like the rule that no more than 49 percent of a condominium building’s units may be owned by foreigners.

The rule would cause “big problems for developers in the region in their initial business plans,” forcing them to sell to two distinct markets, said Matthew Rendall, a managing partner with the legal consultancy Sciaroni & Associates, based in Phnom Penh.

Sek Sitha, an under secretary of state for the land management ministry, said the restriction was included because the government wants “Cambodians to have priority over foreigners.” But he said the Council of Ministers, which is now reviewing the draft law, and the assembly would consider the concerns.

In Channy, chief executive of Acleda Bank, one of the country’s largest banks, said that expecting Cambodians to buy 51 percent of the units in a building created to appeal to foreigners was unlikely because few would be interested in such a costly investment. “Demand is very low,” he said. “Most of our loans go to local Cambodians, but it depends on the cash flow of the individual borrower.”

The proposal also says foreigners cannot be co-owners in land purchases, nor can they buy any properties within 30 kilometers, or 18.5 miles, of the borders, except in special economic zones.

Rory Hunter, chief executive of the local property developer Brocon Group, said developers could bypass the proportional ownership issue by offering long-term leases, rather than sales, on the balance of the units in a building meant for the foreign market.

And while the current 99-year lease is not, practically, very different from an outright purchase, “psychologically, people want to own freehold, not leasehold,” Mr. Hunter said. “It will give foreign investors more confidence regarding the security of their investment.”

Draft law could allow foreign ownership of Cambodian property [-Another one of Hun Sen's broken promises?]

Mon, 27 Apr 2009
ABC Radio Australia

The Cambodian government has drafted a law that could pave the way for foreign ownership of property in Cambodia.

Existing rules prohibit foreigners from owning land, which supporters say prevents speculation and price volatility.

The proposed changes would allow for foreign ownership of houses, apartments and condominiums from the second floor up for resale.

Foreigners would also be able to inherit property.

The Minister of Land Management, Urban Planning and Construction, Im Chhun Lim has told the Phnom Penh Post the proposed law has been submitted to the private sector for feedback.

Buying a private piece of paradise

December 25, 2008
By Alex Frew McMillan
International Herald Tribune (Paris, France)

No man is an island. But plenty of people fancy the idea of owning one.

It may seem that Asia would be a magnet for "islomaniacs." Indonesia is the largest archipelago in the world, with 17,000 islands. The Philippines has about 7,100 or so, depending on the tides. Malaysia, Thailand, Cambodia and Vietnam all have extensive coastlines.

But real estate laws do not make it easy for foreigners to own property in Southeast Asia, and most islands either do not have clear ownership rights or are already settled. Also, the few places that do come on the market can have prohibitive costs, thanks to demand from hotel developers.

Given all those difficulties, several new developments are selling villas on private islands that are adjacent to high-end hotels. Owners can have their island retreat without having to absorb the total cost of keeping it habitable.

Aman Resorts is selling villas that start at $3 million on a private island in the Philippines. Owners have unfettered access to the resort's facilities and can live at their property, use it as a holiday home or include it in the company's rental pool.

Similarly, Soneva Kiri, a resort run by Six Senses on the Thai island of Koh Kood, is selling villas starting at $4.5 million. There also is a private island for sale nearby at $38 million.

And the Jumeirah Private Island project in Phuket, Thailand, is selling private residential villas and estates next to a resort, with prices starting at $3.2 million.

The developers of all these projects say it is too early to tell how the global real estate slump and credit crisis will affect sales - or whether persistent political problems in Thailand will take a special toll on that country's projects.

There are options for buyers with smaller budgets, like The Village at Coconut Island, a private island just off Phuket, with prices starting around $610,000. Also, a startup called Barefoot Investments is beginning its first project on a private island in the Philippines, the Cacao Pearl in Palawan, with homes starting at $210,000.

"There's a wide selection of interest for private islands that would support a development that's a hop skip and a jump from a five-star resort," said David Simister, chairman of CB Richard Ellis for Thailand, Vietnam and Cambodia. "It's the ideal balance."

Marlon Brando's experiences in the South Pacific while shooting the 1962 movie "Mutiny on the Bounty" inspired him to buy Tetiaroa, an atoll surrounded by 13 smaller islands, which he owned until his death in 2004.

In recent years, Dick Bailey, an American hotelier based in Tahiti, has been trying to develop a luxury hotel, The Brando, at Tetiaroa. But the controversial project has faced legal wrangling over Brando's will and wishes for the atoll as well as delays.

Brando had many ideas for his sanctuary, but few came to fruition - a common problem for island owners. Getting enough potable water is a significant problem. So is access, if the island is remote. And owners have to import all their household goods and building materials.

"If the island is too small, just a palm tree and a beach, you can't do anything with that because there is no water," said Charlotte Filleul, general manager of resort property for CB Richard Ellis in Thailand. "It has to be a certain size, and once it is a certain size it is impractical. It is not easy to make it work."

But, with enough money, there are ways to get around the problems.

Six Senses is offering the Thai island of Koh Raet, with a 10-bedroom villa and full management services, for $38 million. It says the spot, opposite Koh Kood and the Soneva Kiri resort, has drawn interest from potential buyers in the Middle East, Taiwan and Russia, but no one has committed.

"There are only so many private islands you can buy, and this one is fully managed and serviced by Soneva," said Adam Taugwalder, the sales and marketing director for the company's residences division.

As required by Thai law, it would be sold on a 30-year lease, with two extensions of the same duration; the company promising additional extensions, if possible.

Six Senses made its name with its flagship resorts in the Maldives, Soneva Fushi and Soneva Gili. The expansion into private property is something of a gamble for the company, but the founders - the chief executive, Sonu Shivdasani, and his wife and creative director, Eva Shivdasani - say they started their hotels so they could have their own house at Soneva Fushi. Now, they are offering such access to others.

The TGR Group is developing a similar project with Jumeirah Private Island, which the owners had originally planned for their own use.

"It grew from the idea that it would be fantastic to have a private island in this region," said Anthony Franklin, a TGR partner and its marketing director. "And then once you start to work on the logistics, you realize you need service."

TGR is a syndicate of European investors that started looking at Thai property, particularly Koh Samui, after the 2004 tsunami. They took on a local partner in Dilokpol Sundaravej, the former Thailand manager of Bovis Lend Lease and nephew of Samak Sundaravej, who stepped down as Thai prime minister in September.

The partners decided Phuket had the international schools and amenities they required, and, with undeveloped beachfront in very short supply there, they decided to expand to nearby islands. But few are suitable, and most are controlled by the Thai Navy.

Jumeirah Private Island sits in Phang Nga Bay, just northeast of Phuket and near its international airport. TGR drilled a tunnel under the seabed to put in fiber-optic cables, electricity and water pipes, to turn the island - also called Koh Raet - into a developable site. It also dredged the marina, put in roads and hired the Jumeirah Group, best known for running the sail-shaped Dubai hotel Burj Al Arab, to operate the resort, which is due to open in 2010.

The project has three types of private property for sale: 15 estates that start at $6 million, 34 large residences and several smaller, two-bedroom villas.

After the election, Hun Sen's gov't mulls foreign ownership of buildings, offices ... again

Cambodian gov't mulls foreign ownership of buildings, offices

PHNOM PENH, Aug. 21 (Xinhua) -- The Cambodian government is mulling to allow foreigners to own condominiums and office buildings in order to prevent a possible downturn in property values and boost long-term investment, national media said Thursday.

At present in Cambodia, foreigners are prohibited from owning land or fixed assets such as buildings, apartments or office space.

Any government move to allow foreigners to own condominiums or office buildings would need to begin with Ministry of Land Management, a move that the ministry is indeed considering, English-Khmer language newspaper the Cambodia Daily quoted a ministry official as saying on condition of anonymity.

"I think the government will de-restrict the property market. Once things start getting more competitive, once things start to slow down, people start to look at other places and the competition starts to get more competitive, they will need to start doing more things to attract more foreigners," said Liam Bailey, head of international research for London-based realtor David Stanley Redfern (DSR), which has real estate business in Phnom Penh.

The real estate business in Phnom Penh and other major Cambodian cities have been booming in the past two or three years, but the market leveled off shortly before the general election in July this year due to the investors' political calculation.

During this period, the price has stayed stable but the demand decreased, which propelled the government, property consultants and retailers to think of the next step to heat up the market.

Lawmakers consider letting foreigners buy real estate

By Cat Barton
Phnom Penh Post, Issue 17 / 01, January 11 - 23, 2008

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 Cinputra, 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.

Sam Rainsy: Foreign property ownership could bring poverty to Cambodians

Foreign property ownership under study

07 September 2007
By Mondul Keo
Radio Free Asia
Translated from Khmer by Heng Soy

Opposition leader Sam Rainsy said that allowing foreign property ownership in Cambodia is a factor that could bring poverty to Cambodian people, and will prevent them from having housing in the future.

Sam Rainsy’s reaction came on the heel of Hun Sen’s speech at the government and private sector forum, in which Hun Sen said that he accepts that the government studies the question raised by the International Business Club asking for an authorization to foreign property ownership.

Sam Rainsy said that many poor countries in the world have clear policy to limit foreigners from owning properties.

Sam Rainsy said: “If these foreigners come to buy properties, they buy both the lands and the buildings, thereby pushing up the price of lands and buildings. And a large number of Cambodians cannot afford to buy lands and buildings. Our children will not have enough money to buy lands and decent houses because the foreigners have more money, they can buy a lot, thereby pushing up the price of lands and houses.”

On 05 September, at the government and private sector forum, Hun Sen said, in response to a question by Bretton Sciaroni, chairman of the International Business Club, who requested that the government allows foreigners to have the legal rights to own properties in Cambodia: “Regarding the issue and the ability to allow foreigners to own properties, lands, just like Mr. Bretton (Sciaroni) raised, and the fact that a number of countries in the region, such as Singapore, Malaysia, Indonesia, and The Philippines allow foreign ownerships of houses, apartments, however, here, the issued raised involves allowing the ownership of lands by foreigners. This issue, regardless of the comments provided, it needs clear study on this subject, because it is stipulated in our constitution related to the ownership of lands by foreigners.”

Nevertheless, economist Dr. Kang Chandararoth said that the authorization for foreigners to legally own properties in Cambodia is not a good way to attract investors for the development of the country. He said that only through the encouragement and the pushing of investors inside Cambodia that would help a good economic development.