Buy or Rent Offices in Cambodia

Buy or Rent Offices in Cambodia

In Cambodia, commercial real estate comes with more regulations than residential real estate, which can be bought on a freehold basis.

On the other hand, there are plenty of reasons why investors from outside the Kingdom have a close eye on this market. With its easy to do business environment and less capital control, it is fast becoming the go-to part of the Asian basin to do business.

Being pegged to the $USD has given stability and helped foreign corporations plan a roadmap and finances accordingly.

Multinationals are flooding into the Cambodian market. With the country’s population growing faster than we have seen in decades, infrastructure and urbanisation with increased prosperity now sees Cambodia as a frontrunner in Asia.

Here we cover the following:

• Can a Foreigner Buy Office Space in the Kingdom?
• How to Buy Office Space Using a Company
• The Cambodian Office Market
• Office Space Grading’s
• Lux in Cambodia

Can a Foreigner Buy Office Space in the Kingdom?

As many of you may already know, strata-titled units are the only available option for a foreigner to own outright property in Cambodia under its current laws.

However, an outstanding benefit of investing here is the ability to own a strata office on a freehold basis outright as an individual.

Strate titles typically apply to condominiums where you pay monthly management fees and share facilities.

Although a foreigner cannot own the ground floor, anything up to 70% of the condos and office space within the block can be purchased.

Now, more and more buildings that are going up are strata-titled office space.

In Tuol Kork, TK Royal One is a mixed-development had 4 of its 21 floors build under strata office. At the same time, the rest were classified as residential.

The Peak is a well-known project in the city completed a few years back, was Singaporean backed. It garnered much attention from Singaporean investors who see on average rental income guaranteed at 55% over 10 years.

So, several new projects on the Cambodian market are now turn-key solutions that do not encompass property taxes, maintenance fees or rental income tax.

How to Buy Office Space Using a Company

For many years the common denominator for foreigners has been to purchase office space using Cambodian shareholder(s), whether they be an individual or corporation.

Here at Lux, we aim to keep the process as clean, concise and time-sensitive as possible.

Specific industries will allow 100% control while different regulations apply to real estate.

We will thoroughly explain the incorporation process and always feel free to contact us with any questions you may have.

We can find reputable local Khmer partners with whom we have working relationships and have been through the process before.

The Cambodian Office Market

Although the market has seen a correction during 2020 and 2021, it is nothing we didn’t expect.

Now, we see opportunities in the office market during adversity. It’s plain to see why office buildings would now be on the market for sales or rentals as globally, we have witnessed a downward trend.

This is where the resilience of the Cambodian market shines through against its neighbouring contemporaries. Cambodia will see an average of a 32-35% increase during 2021-2022 during the pandemic of new office space totalling over 125,000m2.

Commercial Market Recovery

The office market sector is set for a significant rebound between 2022 and 2025.

We feel the rebound will have the following domino effect:

• The residential market
• The office market
• Industrial real estate, including the retail market
• The hospitality industry

Foreign investors will hit the market heavily when travel restrictions return to normal. The office market will expand exponentially with the influx of economic activity and growth.

We do not expect hospitality to pick up directly where it left off in 2019. Still, without a doubt, it will gain traction, and just like the other market sectors, once it does, we will see similar patterns of growth we saw in 2010-2019.

Office Space Grading’s

Over the past decade, on the back of the construction and economic boom of 2010-2019 equated to many colonial and decrepit buildings undergoing upgrades from Grade C buildings to Grade B and many Grade A status.

Here is a key to show the difference between the grades:

Grade A –  Equates to premium office space. Daun Penh in Phnom Penh is a prime example of the CBD where major upgrades have taken place. Here we find the latest spec HVAC systems, equipment, and facilities are prerequisites for a Grade A status.

Architects have changed their design ways in the last decade with a focus on green areas, solar, energy-saving technology and energy-saving exterior design, all of this to help sell offices and impress both customers and local governments.

Grade B – Currently, these are the most popular option for SME’s and medium-sized corporations. The facilities and generally of a slightly lower standard than Grade A but are more than competent to create an excellent first impression with walk-in clientele.

Grade C – Are generally on the outskirts or less popular districts in the main cities and are not found in the CBD area of Phnom Penh for example.

Companies with a lower budget or unfamiliar with Cambodia generally look at this level when starting market research. This is a more cost-effective way of beginning in Cambodia before committing a higher office budget for better office space in a higher-class district in the town.

Lux in Cambodia

The commercial Cambodian real estate market can be confusing for those new to the Kingdom and working with a company whose team consists of both local and international staff.

At Lux, we bridge the gap and the uncertainty that people feel when deciding where to base themselves and incorporate.

We understand foreign property ownership, the laws, benefits, and pitfalls and make what appears complex and straightforward.

The evaluation process is by far the essential part of our business relationship. This will set the tone for what we will find and present to you.

With our post-sales service, we always look to see anything we can help our clients with, from networking to general advice. Referral business from existing clients is the lifeblood of our business in Cambodia.

We are here to ensure we point you in the right direction, not just to gain a sale. Your success will reflect well on Lux.

Navigating local markets need not be difficult if we have an initial assessment period and are open to information about each other from the start.

Contact us for detailed information on offices and office building opportunities.