Cambodia is one of the fastest-growing economies in South East Asia – and it is no surprise to tell you that it has become a paradise for real estate people in business and investors. A large number of international companies are investing in Cambodia – especially in the real estate business. A recent report shows that foreign investment in the country has grown by eight-hundred percent for the last ten years.
Sustainability in the Economic Development
Cambodia has seen boosted economic development for the last 20 years. From 1994 to 2015, the country’s GPD grew by 7.6% and continues to grow by 7% from 2017 onward. This is strategically important for the country’s growth and development as well as the increasing the economy – making Cambodia the world’s 6th fastest-growing economy.
According to the Asian Development Bank, Cambodia experienced a sustainable economic growth of 7.1% between 2017 and 2018. The report published by the Asian Development Bank shows that by 2017, the country will continue to sustain the increase by 7% in the coming years. When it comes to GDP growth, Cambodia is coming closer to Myanmar – and currently, it ranks second in the ASEAN countries.
Previously, Cambodia was considered an emerging country because it did not make efforts to bring foreign investments in the country. Later on, after 2005, the state made various efforts to increase bilateral relations with advanced countries in the world, including China and the USA. However, the good thing is that Cambodia is among the few countries which were not hit by the great recession or financial crisis of 2008.
Unlike other ASEAN countries, it is easy and affordable to buy properties in Cambodia. For example, you can purchase a property for less than $1000 per square meter. Likewise, in Phnom Penh, you can buy a property for as little as $150 per square meter in the outskirts and $9000 per square meter in the city center. You can convert these properties into residential spaces, which has an excellent rental yield of 6-8% with capital growth of 1-5%.
Foreigners can own condominium units and apartments in Cambodia – under the 2010 Foreign Ownership Property Law. If you are a foreigner, you can hold up to 70% of condominiums or related projects. Cambodia, the real estate sector, is an available frontier market for local and foreign investors, which means new companies are rapidly jumping into the real estate market every day to take benefit of the growth potential.
The year 2020 will open new opportunities for investors in the real estate market. The Cambodian government is making substantial efforts to focus more on attracting foreign investors in the country – especially in the real estate sector.
Cambodia’s real estate market is no longer a secret as it has caught the attention of every investment fund in the world. The question is, what now when everyone’s looking at its directions and want a piece of the action?
Here’s what will prevail in 2020 and will have the most influence on the Cambodia real estate market.
#1 Local real estate investments are on the rise
Cambodia’s economy is also set to rise in 2020, the same as it did in the last dozen or so years. The newly created middle class is growing in numbers. That means more and more people can afford to have their own home.
As a result, there is an increased demand for mid-price housing and apartments. That demand might be insignificant five or six years ago. But nowadays, it represents the prevailing factor in this segment of the real estate market.
#2 Young people making splashes
Cambodia’s rural youth is flooding the cities in pursuit of new opportunities and employment. Fortunately for them, the economy is growing at quite a pace (6.8%), and there is always work to be found. At the same time, they are not migrating to other countries for work and prosperity.
That created a demand for affordable housing. Most young people are in pursuit of one or two-bedroom apartments, close to a transit station, and to be affordable. The demand for affordable housing has never been greater than in 2018 and 2019. The demand will be ongoing in 2020, and the developers are already aware of that.
#3 Expatriates are growing in numbers
According to official statistics, well over 150,000 expatriates are living in Cambodia. Most of them are situated in urban areas and modern homes featuring western amenities. Their numbers increased along with the country’s economic growth.
Their influence is felt most on the mid-range and high price properties within the biggest cities. Phnom Penh is where the majority of all expatriates work and live. Their influence on these segments of the real estate market will be felt throughout 2020 as well.
#4 No signs of a real estate bubble
A real estate bubble is the greatest fear of all analysts and real estate experts. That is why they constantly crunch numbers and analyze data, hoping that they can get some early warning if the market starts heading in that direction.
The way things are, and from the available data, there are absolutely no signs. According to experts from the World Bank, Cambodia has one of the healthiest real estate markets in the region.
#5 Demand and supply are in perfect harmony
Official data from both local and federal sources point to a harmonious relationship between demand and supply. The only area in which the demand is much greater than the supply is the affordable housing segment.
But, it seems that the supply will meet the demand in 2020 as many new affordable housing projects are on the way. That means a lot of new one-bedroom and two-bedroom apartments on the way.