Story : Daniel Calderbank
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Construction is reaching for the skies in Cambodia as the capital Phnom Penh enjoys a building boom driven by post-war political stability, increased tourist dollars and confidence in the country’s ability to govern itself.

Million Dollar Apartments

A South Korean funded development Gold Tower 42 recently announced the sale of skyscraper apartments ranging from around US$500,000 to $1.6 million. The building is due for completion on Monivong Boulevard, one of the city’s main thoroughfares, where one square metre of land used to sell for as low as $30 when the country was gripped by fears of a coup and the boom of grenade attacks.

Set to top this development, another South Korean construction company recently announced plans to build a 53 storey skyscraper that will become the capital’s tallest structure when completed, due in 2012.

Analysts estimate real estate prices have increased at least tenfold in the last decade as the economy continues to develop. The property sector is also booming on the hopes that revenue will roll in from expected oil and mineral deposits due to be tapped within the next five years.

Attractive Location

Phnom Penh covers just 375 square kilometres and has a population of just over one million people compared to Bangkok’s 10 million inhabitants.

Investors are also attracted by its location at the convergence of the Mekong and the Tonle Sap Rivers, its French colonial architecture and its low pollution levels.

A less positive spin off from the economic upturn has been what amounts to a land grab by wealthy and powerful Cambodians and unresolved issues related to title registration that may take years to rectify. A high percentage of the rural poor also remain landless and this issue has yet to be addressed.

Coming Home

Another emerging trend is the interest shown in the property market by ex pat Cambodians seeking to return home, armed with dollars, euros and pounds, which represents serious buying power in the context of the local property market.

Outside of Phnom Penh, Korean investment in hotels close to Angkor Wat has had a huge bearing on the hike in land prices in Siem Reap.

Siem Reap’s proximity to the Angkor Heritage Park has virtually guaranteed that real estate in and around the town will remain attractive to investors in the short-and-long-term.

Visitor numbers continue to increase as the perception of Cambodia as a safe tourist destination becomes more widespread.

Increased Security

Membership of Asean (Association of South East Asian Nations), and increased foreign investment has sent out the signal that Cambodia is no longer a volatile and lawless nation.

David Coleman general manager of the Cambodia Angkor Real Estate Company said, ‘‘The real estate market in Siem Reap is almost exclusively driven by tourism. It is likely Angkor Wat will remain one of the world’s principal tourist attractions making Siem Reap a safe town to invest in.’’

Currently, the most expensive land in Siem Reap retails at over US$1,000 per square meter. Land prices near the centre of town top $500 per square meter, though it is still possible to buy development land away from the more central areas for around $30 per square meter but prices are rising rapidly.

Land in and around the Angkor Heritage site is controlled by the Apsara Authority under the auspices of UNESCO. This restriction on development has helped drive up prices.

Prices for luxury villas at the top end of the market begin at around $300,000. Typically these are two storey with 250-350 square meters of interior floor space.   

Another Property Hot Spot

The sun is also shining on Cambodia’s third property hot spot Sihanoukville, the country’s main beach resort, which is enjoying a growing ex pat market in residential property for foreigners seeking a home to relocate or retire to.

Road access is good, a new deep sea port is able to handle cruise ships and the local airport is being upgraded.

Villas in Sihanoukville retail between $165,000 to $400,000, though it is possible to buy luxury apartments with a floor area of 200 square meters for around $150,000.

Foreign Ownership

Regarding foreign ownership of property, the most secure method is to form a company in Cambodia and register any property purchased in the name of the company. This requires good legal representation, but is regarded as too convoluted a process by many small investors.

So is Cambodian real estate a good investment? The answer is still an emphatic “yes”. 

Cambodia Angkor Real Estate Company’s David Coleman said, “Even accounting for some unhelpful property ownership laws for foreigners and a long standing problem with the national registration of land titles, real estate prices continue a meteoric rise that began five years ago and shows no sign of abating.

“Property bought in and around Phnom Penh’s commercial areas is likely to bring good returns and real estate values in Siem Reap are unlikely to diminish give the town’s proximity to the Angkor temples.”

The property boom has come fast, back in 2002, the capital’s first shopping centre was opened with special instructions to shoppers on how to use a previously unknown contraption in Phnom Penh, the escalator.