The choice between buying a house or an apartment in Cambodia is very important and very different. Purchasing property in Cambodia as a foreigner involves navigating distinct legal frameworks and practical considerations depending on whether you are buying a house or an apartment. Here, we delve into the key differences and provide detailed guidance on what to expect in each scenario.

Cambodia’s property laws allow foreigners to own apartments but restrict direct ownership of land. This fundamental difference shapes the buying process for houses and apartments.

1. Buying an Apartment

Under the 2010 Law on Providing Foreigners with Ownership Rights in Private Units of Co-owned Buildings, foreigners can legally own apartments (strata-titled properties) in Cambodia, subject to specific conditions:

  • Ownership Limitations: Foreign ownership is limited to 70% of the total units in a co-owned building. This ensures that Cambodian nationals maintain a majority interest in any given development.
  • Floor Restrictions: Foreigners can only own units above the ground floor. Ground floor units must be owned by Cambodian nationals.

2. Buying a House

Foreigners cannot directly own land in Cambodia, making the process of buying a house more complex. However, several legal mechanisms exist to facilitate foreign investment in land-based properties:

  • Long-Term Leases: Foreigners can lease land for up to 50 years, with the option to renew for additional terms. This leasehold agreement allows foreigners to build and own structures on the leased land.
  • Local Company: Establishing a Cambodian company, in which the foreigner can hold up to 49% of the shares while a Cambodian national holds at least 51%, is a common strategy. Through this company, the foreigner can effectively control the property.
  • Nominee Structure: Involves a Cambodian national holding the title deed on behalf of the foreigner. While widely used, this method is legally precarious and less secure.

Practical Considerations

1. Cost and Availability

  • Apartments: Phnom Penh, Siem Reap, and Sihanoukville have seen a boom in condominium developments, offering a range of options from affordable units to luxury penthouses. Prices vary significantly based on location, building amenities, and unit size. For example, a mid-range apartment in central Phnom Penh might cost between $1,500 to $3,000 per square meter.
  • Houses: Purchasing a house, especially in urban areas, can be more challenging due to the need for legal workarounds. Houses in prime locations like Phnom Penh’s BKK1 or Riverside areas are highly sought after, with prices reflecting their desirability and land value. A house in these areas can easily exceed $1 million.

2. Financing and Taxes

  • Apartments: Foreign buyers typically have access to financing options through local banks. Mortgage terms, however, can be restrictive, often requiring substantial down payments and higher interest rates than those offered to Cambodian nationals.
  • Houses: Financing a house purchase is more complex due to the indirect ownership structures. Banks may be hesitant to lend to foreigners, and when they do, the terms can be stringent. Additionally, all property purchases are subject to a 4% transfer tax on the property’s value.

3. Maintenance and Management

  • Apartments: Condominiums usually come with management services, including maintenance, security, and communal facilities like pools and gyms. Owners pay monthly management fees, which vary by building and service level.
  • Houses: Maintenance and management of houses fall solely on the owner. This can involve higher costs and logistical challenges, especially for those not residing in Cambodia year-round.

4. Lifestyle and Community

  • Apartments: Living in an apartment offers a more cosmopolitan lifestyle, with easy access to amenities, social activities, and expatriate communities. High-rise living can also provide security benefits and stunning city or coastal views.
  • Houses: Owning a house offers more privacy, space, and the potential for gardens or outdoor areas. This is ideal for families or those seeking a quieter, more suburban lifestyle. However, integrating into local communities might require more effort and cultural understanding.

Steps to Purchase

For Apartments:

  1. Find a Reputable Real Estate Agent: Local expertise is crucial. Agents can guide you through available properties and the legal process.
  2. Legal Due Diligence: Ensure the property has a strata title and confirm that the building meets the foreign ownership cap.
  3. Sales Agreement: Sign a sales agreement and pay a deposit (usually 10% of the purchase price).
  4. Transfer of Title: Upon full payment, the title deed is transferred to your name, and you register with the Ministry of Land Management.

For Houses:

  1. Legal Consultation: Engage a Cambodian lawyer to navigate lease agreements or company formation.
  2. Company Setup: If using a company structure, register a company with a Cambodian majority shareholder.
  3. Lease Agreement: Draft a long-term lease agreement if leasing land. Ensure it is registered with the relevant authorities.
  4. Building and Ownership: Once legal frameworks are in place, proceed with the purchase and construction of your house.

Conclusion

Buying a property in Cambodia as a foreigner presents unique challenges and opportunities. Apartments offer a more straightforward path to ownership with fewer legal hurdles, making them an attractive option for many expatriates and investors. Houses, while requiring more complex legal arrangements, provide potential for greater privacy and space. Regardless of the choice, engaging knowledgeable local professionals and conducting thorough due diligence are essential steps to ensuring a successful property purchase in Cambodia.