Update: 25 July 2015
I wrote this article in 2012, so it’s past time for an update. Sihanoukville continues to grow. According to some sources, land prices are back to 2007 levels. I think they have always been at those levels, but the difference is in the amount of activity: people are buying and selling again. The difference is that they are no longer buying land and holding on to it until the price goes up. They are buying and developing.
I’m not as enthusiastic about recommending buying land or property as I used to be. It’s not because I don’t think property is a good investment. It’s because, as foreigners, we have to be very careful about our decision. It is possible to “virtually” own land by entering into a contract with a Cambodian that gives you full control of the property, but you have to go through the right channels. You can own condominiums, but there can be problems with those, too. If the development doesn’t catch on, you may be one of a few people in the complex and the owners may not be able to afford to maintain the property.
You need inside knowledge and experience to buy property in Cambodia. It can be done, but you can fall on your face, too. Does the person you’re buying from really own the land? Do they have hard title? What about your partner or even your lawyer? Does the agreement you both signed say what you think it says in Khmer? Has it been witnessed by the proper authorities? These are just a few of the questions you have to ask — and you need to get your answers from reliable sources.
Asian real estate websites have been recommending buying luxury condos in Phnom Penh. They stress “luxury” because these condos are built by professionals, often international developers, who know what they need to do to secure their investment and protect investors. If you’re an American, one of these might be a good investment. Other Western currencies aren’t worth much right now, so they probably aren’t such great value if your currency has declined against the U.S. dollar.
Original article: Is it Time to Start Thinking about Real Estate in Cambodia Again?
When I moved to Sihanoukville in 2007, the first piece of advice I was given was, “Buy real estate now.” This advice was coming from all quarters at the time, some dubious, but some informed. It was a moot point, because that’s exactly what I intended to do, but it was encouraging nonetheless.
In 2007, it was good advice. Real Estate prices in Cambodia were rising 40 percent per annum and in some areas, like Phnom Penh and Sihanoukville, they had been doubling in price each year. As a foreigner, I was not allowed to actually own the land, but my intention was to offer my new wife and her family some security for the future.
Sometime in late 2007, a guy rode up to our house on his motorbike and offered us $90,000 for it. We turned him down because we thought the offer was too low. By the time we wanted to sell, the bubble had burst in the United States and the best offer we’ve received since then was $52,000. We accepted, but he ended up getting cold feet. We later learned he had done the same thing several times before.
I’ve been a subscriber to the Daily Reckoning for some time now. If you’re not familiar with this somewhat renegade investment advice site, you should be. Like RT’s Max Keiser, Biller Bonner and Addison Wiggin aren’t too bullish on America. In one recent article, Bonner, who lives in Argentina recommended that American readers “get out of Dodge” and take up residence in a foreign country while they had the chance. Now, apparently, The DR is starting to recommend places for expats to settle down in. That’s what this article, seems to suggest, anyway. Where is the “next Costa Rica“? It’s the coast of Cambodia.
One of my pet peeves is backpackers and expats who still see only the seedier side of Sihanoukville. In spite of all the obvious growth, they continue to go to the same bars on the Hill or at the beach and rarely venture off of Ekareach Street. While the Hill remains pretty stagnant, the changes are blatantly obvious down at Serendipity Beach, but not so obvious is what’s going on behind the scenes. On April 18, for example, 3 IPOs are going to be listed on the Cambodian stock exchange. One of them is the Sihanoukville Autonomous Port. Already a big employer, when it gets an infusion of cash what’s going to happen? Then there’s the new Special Economic Zone down by the port. Word is that they are going to be manufacturing cars there, as well as Cambodia’s bread and butter textiles.
With a projected GDP growth of 6.5 percent, Cambodia is right up there with India and Vietnam and miles ahead of Thailand, which is currently looking at a negative number.
Statistics are one thing, but actual living conditions are something else again. Here in Sihanoukville, we used to have far more limited options when it came to niceties like our Western comfort foods and a variety of international restaurants. Now we can pick and choose. Better yet, we can afford to choose. When you can get a nice wood fired pizza, a Mexican feast or grilled fresh fish for under $5, you can afford to eat out even on a modest income.
Right now, real estate is considered expensive here in Sihanoukville because the asking prices haven’t really fallen since the bottom dropped out of the market. They haven’t really risen, either, though, even though this city has a lot more going for it than it did in 2007. I reckon the time to buy is now, because the day is going to come when prices rise, but they are not likely to fall.
I’m not saying that it’s time to buy real estate in Cambodia, but it is time to think about it again. Come over for a visit, rent an apartment for six months and get a feel for it. Then, if it feels right, start looking at your options. A 50 year lease is as good as a buy, for example and if you find an apartment you like, it can be yours. Another option is to make a lease/buy offer on a two storey house: buy the upstairs, lease the land and rent out the ground or second floor. Just make sure it’s a long lease and make sure it’s legal and documented. Keep your eyes open and don’t take anyone’s word for anything.