Real Estate 2/2 (ISSUE 02 in August 2018)

■ Rental housing
 If you look at the popularity of the rental apartments among the foreigners, Boeung Keng Kang 1 in Chamkarmorn District is in a very high demand. However, due to the high rent, the distribution has gradually started to spread among different areas, such as the Boeung Trabek, the Toul Tom Poung, Boeung Keng Kang 2 and 3, Tonle Bassac and the area behind Phnom Penh Tower. Both Boeung Kak 1 and 2 (BK1 and 2) in Tuol Kork district are known as a luxury residential areas, but you can find many houses with a rich equipment for a relatively low price. Also due to the relatively in-expensive rent prices, the popularity of the Russian Market is also increasing among the foreigners, especially among Westerners.

 George She of Ho Hsin Development Co., Ltd, which currently develops in BKK1 in Chamkarmorn district, a luxury service apartment, has said that “Since all service apartments have tailored design targeted towards the specific group of customers, it is hard to speak in general. But in case of “The View”, our main targets are Japanese and Taiwanese” – he says.

Mr. Kobayashi Ryosen of Leopalace 21 which provides service apartments with the Japanese quality in Tuol Kork hopes, that “it will become in future a symbolic grade S apartment, which will be combining effectively both the service and the equipment”. Because maintaining a living environment is very important to be able to concentrate on work, it is also crucial to pay a proper attention when searching for the apartment.

 Regarding the lease prices, Knight Frank expert points out, that the occupancy rates and rental prices are affected by the rapid increase of residential properties and they anticipate that prices will most likely decrease as a result of increasing supply volumes in the future. Also, in contrast to condominiums, the number of properties with services such as pools, parking spaces, and gyms is also increasing.

  Since in the past we could witness a large insufficiency of luxury houses and lodging spaces, their owners had tendency to set the rent prices quite high, but in 2018 due to the supply growth and ongoing struggle to get new clients, there are predictions, that the owner’s market may shift from lenders’ market to borrowers’ market?

■ Real estate investments
 As a foreigner, it is important to note, that the Cambodian Constitution generally forbids foreigners and companies from possessing a land (Article 44). The exception is that it is possible to purchase a land if being in a joint venture with a Cambodian, whose stake in the company is 51% or more. If one wants to buy as an individual, he or she can choose from different options. For example they may use buy through a ‘nominee’, whose services are used often during the house purchase. There is also a way to buy the land through a Cambodian friend, the company who deals with nominees, discuss it with a lawyer or just buy through a real estate company. Even if the house is registered in a Cambodian’s name, by mortgaging the house, unless there is no mortgage exceptions or the full amount has not been paid, there is possibility to protect the land and become the real owner, because it is impossible to sell it to the third-party.

Mrs. Mey Prek Bora of Kanagawa COP says that “Since foreigners are not able to buy the land in Cambodia, we are becoming an owner’s representative (a nominee) and own the land. Then, we bind a contract with the owner, that all the rights toward the land belong to the owner. We as the company just get the handling charge in case if the purchase would be successful. Taxes, lawyer costs etc. are treated as the cost reimbursement”. However, this system brings also a lot of troubles, like differences in the obtained money amount, demanding an additional expense costs, cases when in reality it is impossible to obtain the land trough the intermediary and many more. Mrs. Bora also adds that, “a lot of troubles could be avoided if the client would learn about the market and observe it by himself/herself”.

 Additionally, when choosing land to purchase, it is necessary to check whether the document the seller has, is a hard title or a soft title.

 On the other hand, there is also a way to divide and own condominiums etc. as a small office spaces. Initially, an ownership is registered in the name of the builder in the name of the condominium building, and the name of the new owner is registered when the sale is made. Hard title is issued then to the owner of each unit. It is required when constructing a segmented building such as a condominium building or an office/retail complex.