What are the biggest misconceptions about purchasing Phnom Penh property as a foreigner?
Bobby Peoples: The biggest misconception is that people believe they can own any apartment in their own name. Its is true that if you buy a modern condominium that has a strata title you can own that in your own name, but for virtually all the other apartments, anything above the second floor, you still need to have, as a foreigner, 49 per cent ownership and 51 per cent under a Cambodian national’s name. That can be set up through using a nominee structure, or using a landholding company but it is important to seek independent legal advice through the likes of DFDL or Sciaroni & Associates. They’ll let you know that in order to thumbprint a vente definitive [transfer document] you need to be a Cambodian national. Currently that law isn’t really being enforced, this is the reason why you’ll meet people that have properties in their own name. Real estate agents will still tell you that you can. Transactions happen on a daily basis with foreigners selling to other foreigners, but in the future, should the Cambodian government begin to enforce that law, those people will be in a very difficult situation. The key thing is to seek independent advice.
Which countries are leading in terms of amount invested and impact on the market?
Peoples: The big countries currently investing in Cambodia are the South Koreans, who have been for probably the longest. They’re buying everything from residential property to commercial to large tracts of land. Also, the Chinese and the Japanese, as well as the Taiwanese. Additionally, many European countries are investing here, but to a lesser extent.
How does FDI in residential property compare with retail or office space?
Peoples: I think that in terms of the greatest amounts of money, it’s certainly within retail and office as well as industrial and agricultural land, but a higher number of transactions happen within residential.
Which parts of town are attracting the most FDI?
Peoples: To the west and the south of the city is where most of the development is going. Every time I drive there I see something new that’s being built. The centre of Phnom Penh is moving west as the city continues to develop. In BKK1 in particular, many villas are being bought and then either renovated or demolished to make way for new apartment buildings.
Chroy Changvar is also being developed quite heavily at the moment. With the introduction of the Chinese bridge over Tonle Sap, this will ease congestion. There will be development of the riverfront at Chroy Changvar as well, maybe not to the same extent, but it will create a similar riverfront across from the Riverside area. Over the next five to 10 years this area will become more developed, in terms of both commercial and residential property. The building of the Bellevue serviced apartments recently has also added to the profile of the area.
When purchasing a property, what are the most important things to consider?
Peoples: As a crude measurement look at the price per square metre and compare it with other properties that are on the market. You obviously want to make sure that you conduct due diligence, which includes checking that the owner is actually the person selling it, or checking if there are any complications with the property involving access or complications with a debt being connected to the property. Parking is also an important consideration. You need to check all those things before you actually commit to buying a property. Doing your homework to make sure that the property is as described is important.
What trends do you see defining the next year or two for foreign investment in Phnom Penh property?
Peoples: I think one of the trends is definitely the building of modern condominiums with strata titles, which now makes it easy for foreigners to invest in Cambodia and own property in their own name. That’s a really big development. The integration of Cambodia into the ASEAN economic community will strengthen investor confidence in the Kingdom.
Increasing sophistication in the market means that Phnom Penh is becoming more diverse culturally, which attracts more people. There’s more big business moving in than in the past, and we’re living in a more multicultural society which by definition draws in more people from other parts of the world to come here.