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How Foreigners Can Purchase Real Estate in Cambodia

Phnom Penh real estate
Phnom Penh real estate via Unsplash

Cambodia and in particular, Phnom Penh has become an increasingly popular destination for real estate investment. With its rich culture, breathtaking landscapes, and growing economy, many foreigners are drawn to Cambodia as a viable option for buying real estate. However, as a foreigner, navigating the real estate market in Cambodia can be complex due to legal and regulatory nuances. Let’s go over the key steps for foreigners to buy real estate in Cambodia.

  1. Understand Ownership Types: In Cambodia, foreigners are restricted from owning land outright. However, they can own certain types of properties, such as condominium units or properties located above the ground floor (e.g., apartments), with some limitations. It’s important to understand the ownership types available for foreigners and the restrictions associated with each type.
  2. Seek Legal Advice: Engaging a reputable local lawyer who is well-versed in Cambodian real estate law is crucial. They can guide you through the legal process, ensure that all documentation is in order, and help you understand the intricacies of property ownership in Cambodia. It’s essential to conduct thorough due diligence on the property, including checking for any liens, encumbrances, or disputes, and ensuring that the property has a valid title.
  3. Establish a Secure Ownership Structure: Foreigners often establish a secure ownership structure to buy real estate in Cambodia. One common method is setting up a leasehold agreement, which allows foreigners to lease land for up to 50 years, renewable for an additional 50 years. Another option is to form a locally registered company with Cambodian shareholders, as Cambodian companies can own land outright. However, this option requires careful consideration and compliance with local corporate laws.
  4. Obtain a “Hard Title” or “Soft Title”: In Cambodia, there are two types of land titles: “Hard Title” and “Soft Title.” A “Hard Title” is a registered land title issued by the government that provides stronger ownership rights, while a “Soft Title” is a less formal document that may not provide the same level of protection. It’s advisable to aim for properties with “Hard Title” as they are more secure and offer better protection of ownership rights.
  5. Finance the Purchase: Financing options for foreigners in Cambodia may be limited, and interest rates may be higher compared to local borrowers. It’s important to explore financing options thoroughly and understand the terms and conditions, including any fees, before committing to a loan. Additionally, be prepared to provide adequate documentation and demonstrate your ability to repay the loan.
  6. Pay Taxes and Fees: Like any other country, Cambodia imposes taxes and fees on real estate transactions. Foreigners are subject to various taxes, such as Value Added Tax (VAT) and Transfer Tax, which can vary depending on the property’s value and location. It’s crucial to understand and budget for these costs as part of your real estate investment plan.
  7. Comply with Local Laws: As a foreigner, it’s essential to comply with local laws and regulations when buying real estate in Phnom Penh or other parts of Cambodia. This includes obtaining the necessary permits and licenses, adhering to building codes and zoning regulations, and following any other legal requirements. Non-compliance can result in fines, penalties, or even confiscation of property.
  8. Plan for Exit Strategy: It’s essential to have a well-thought-out exit strategy when investing in real estate in Cambodia. This includes considering factors such as potential capital gains tax, market demand, and future development plans in the area. A solid exit strategy can help you maximize your returns and protect your investment.

Cambodia and in particular fast growing cities like the capital Phnom Penh, Sihanoukville and Kampot offer exciting opportunities for foreign real estate investment. It’s crucial to navigate the process with caution and seek professional legal advice.

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