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Cambodia Property | Cambodia property prices 2008-2009
By property | November 21, 2008
Cambodia Property | Cambodia property prices 2008-2009
Foreign investment, especially from South Korea and other countries in North Asia, has been key to this recovery, surging to 8 percent of GDP in 2007 from less than 1 percent in 2004.
Most of the new construction projects are headed by Korean construction and investment companies. The biggest foreign direct investment to date – $2 billion – is being made by World City of South Korea, for Camko City, being built on a 119-hectare, or 294-acre, site on the northwestern outskirts of Phnom Penh.
The project, started in 2005 and scheduled to be completed in 2018, will include residential, commercial and public structures.
Opening the country to foreign trade and attracting tourists, especially to the temples of Angkor Wat, has supported the expansion and even produced the beginnings of a middle class.
As a result, property prices have experienced their own boom in recent years. Charles Villar, general manager at Bonna Realty Group, the largest real estate agency in Cambodia, estimates that property prices in Phnom Penh rose between 50 percent and 80 percent in 2007 and between 80 and 100 percent so far this year, depending on location. Land prices in the city center have skyrocketed this year to more than $3,000 per square meter from about $500 a square meter in 2003.
Meanwhile, rental prices have increased 20 percent to 40 percent over the past year, Villar said. A large villa with five to seven bedrooms in a good location will rent for about $5,000 a month, while a two-bedroom place will average $1,300 to $1,500, depending on location.
Despite the sharp increases, prices still compare favorably with those in Bangkok, where a four-bedroom villa would cost more than 200,000 bhat, or about $6,000, a month. And the Cambodian sites are attracting plenty of speculative interest from foreign buyers, mostly from within the region.
Bretton Sciaroni, a senior partner at the law firm of Sciaroni & Associates in Phnom Penh, says foreigners still cannot buy land, but they can buy leasehold properties – typically a 99-year lease or a 70-year lease with an option to renew for another 70 years. The latter formula “was found in the 1994 investment law and, although it dropped out of the law when it was amended, the formula is still used,” he said.
There are rumors that the laws will be changed to allow foreigners to buy land outright but that is unlikely, Sciaroni added. “If anything, earlier this year, the prime minister made it clear in various statements that foreigners will not be allowed to hold property freehold. For this to change, not only would laws have to be amended, but the Constitution as well,” he said. “So we do not expect the law to change anytime in the near future.”
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