Cambodia is an Association Southeast East Asian (ASEAN) country. It had a thriving real estate market before the pandemic. The Cambodian real estate sector was a major economic pillar that maintained high GDPs along with the construction sector.
Before the pandemic, the Cambodian real estate sector favored foreign investments, especially from Chinese investors, because they readily made huge investments in properties in the kingdom. Although Cambodia’s Trust law prohibits foreigners from direct land ownership, they are permitted to recruit the services of a trustee to hold the right and manage their real estate properties. These foreigners can also rent properties without restrictions.
The Cambodian real estate sector took a sudden hit, much like every sector of its economy. However, the Cambodian real estate market is growing but evolving because there have been changes in the growth drivers of the real estate market. The recent reports of survey of 2,000 mixed individuals of foreigners and locals show that the market’s focus has shifted from foreigners and upper-middle class buyers to a broader market.
This broader market has new sets of priorities and considerably lower budgets, but they have proven their ability to drive growth in the market. Here we highlights the reasons why the Cambodian real estate market is still growing after the pandemic:
There Are Strong Financial Institutions
Despite the economic impact of the pandemic on the real estate industry, investors are still getting capital from banks to continue trading. According to Mr. Chrek Soknim, president of Cambodian Valuers and Estate Agents Association (CVEA), the propensity of these financial institutions to provide loans and capital at low-interest rates is a major driver of the Cambodian real estate market.
The selling point for most financial institutions in the real estate market is its predictable cash flow for investors. Real estate financing is a growing business for Cambodia’s financial institutions, with high-profit potential in a few years.
There Is A Strong Local Demand For Properties
There is a strong local demand for Cambodian real estate properties. Expectedly, foreign investment in the real estate industry has declined. However, local investors are still driving the market through sustained buying and selling of properties.
According to Investopedia, the real estate market depends heavily on supply and demand. If the market has a high demand for properties and a consistent supply of properties, the real estate market tends to fair well. The Cambodian real estate market is experiencing growth because there is both a supply and a demand.
Khmer Times reports that the local demand for properties has kept the real estate activity in Cambodia growing in the mid and affordable market range. The regular discounts and lower quoting prices offered by realtors continue to drive interest from local middle-class and international buyers.
Investors Are Investing For The Long Term
According to the Motley Fool, those investing in real estate should not look to make a short-term profit because it’s a high-risk strategy. Cambodians get it, and they are thinking in the long term.
The COVID-19 pandemic hasn’t discouraged them because they know that the lower prices could help them turn a huge profit in the long term. Therefore, buyers are still buying real estate properties at a high rate.
The pandemic is being viewed in light of the 2008 global recession. Although existing property holders are recording losses, buyers just coming into the market have an opportunity to buy lower-priced properties and hold them for the long term.
Cambodia Has No Land Use Master Plan
The absence of a land-use masterplan in Cambodia makes the property buying opportunity open. According to the World Bank, a master plan includes analysis, recommendations, and proposals for a site’s population, economy, and housing. It’s a document that sets out the urban development processes for all regions in a country.
Without a land-use master plan, real estate players and buyers can make calculated high-yield investments in new locations. According to Soknim, choosing potential government development areas can make investors huge profits in the long term.
Cambodian Government Policies Assist In Real Estate Development
Effective government policies assist in real estate developments across the country. For example, the Cambodian government launched the Land Management and Administration Project (LMAP) in 2002 to improve land security for the poor. The project, funded by the World Bank and three countries, created systems for registering and issuing land titles.
Land registration support continues through another donor-assisted titling project called Land Administration Sub-sector Program (LASSP), funded by Germany. The accessibility provided by the Cambodian government’s policies encourages investors at all levels to make investments in its thriving real estate sector.
Although the Cambodian real estate sector was hit during the pandemic, it still offers a highly desirable property investment opportunity to all categories of investors. This industry growth has been affiliated with favorable policies, lower prices, and high demand. Regardless of the real estate market opportunities, professional realtors like IPS Cambodia should be consulted ahead of any investments. If you are looking for your next property investment, browse available properties on our website today!