Even during the Covid 19 pandemic, property markets around the world remain an exciting sector to consider investing in. While some markets – such as the UK – have seen prices rise dramatically over 2020 (September saw the highest rises since 2016), other markets have seen prices fall and many developers offering special deals that can be very attractive to both individual and group investors.

Here at Lux Realty, we monitor the market closely and only work with the best developers with proven track records.

But just what can you – as a foreigner – buy in Cambodia? In this blog, we are going to look at the three main property title types in Cambodia.

  1. Soft Title

Soft title is, by far, the most common form of property ownership in Cambodia, perhaps because any taxes and fees are cheaper than the hard title option. While this type of tile does provide a legal ownership document, they are only recognised at Sangkat and Khan level (local government tiers).

While foreigners are usually prohibited from owning soft title, it may be the case that your partner does own one or that in the cases of apartments, soft title may be granted where the ground floor has hard title. Lux Realty can confirm any legal aspects of the property you are interested in.

  • Hard Title
  1. Hard Title

Under Article 44 of Cambodia’s constitution, foreigners are not allowed to own land (and this covers being prohibited from owning a hard title). However, there are legal – and illegal – ways to circumvent this hurdle:

  1. Forming a locally incorporated company or using an existing one to purchase land. This offers the safest option for foreign investors but it can be an expensive route to take if not planning a profit-making venture. The law also states that 51% of any such company should be owned by Cambodians but this potential problem can be solved through share structuring, minority control documents, or land security/mortgage clauses.

If this is an option you wish to consider, Lux Realty can not only help you identify potential land to purchase, but also signpost you to the very best companies in Cambodia who can help you navigate the legal maze of setting up a company.

  • Land leasing. This is a very common option for foreigners wanting to run a business in Cambodia and can range from a small piece of land for a guesthouse business to larger properties in prime locations such as Raffles Hotel in Phnom Penh which is built on eased land. While perhaps less secure than the company option, it is still a safe route to take. Under Cambodia’s Land Law, there is no set term for the length of lease, though they commonly range from 15 to 99 years. However, if the land is state-owned, then the maximum term is 40 years though this may be extended. All leases of more than 15 years in length must be registered with the Land Office.

If looking at leasing land for any purpose, it is wise to look closely at the owner to ensure a relationship built on trust and to give the foreign individual or entity a sense of security. Lux Realty can help you identify the ideal location for your planned business and assist in investigating the owner too.  

  • A third way to legally own land under hard title in Cambodia is to acquire Cambodian citizenship. There are three main routes to achieving this. The first is if you have been married to a Cambodian citizen for at least three years (and the marriage is legally registered). The second is naturalisation where you have lived in Cambodia for at least seven years, are fluent in Khmer, and have in-depth knowledge of Cambodian history. Both these routes can present their own hurdles and can be time-consuming and possibly costly.

A more common option as far as land ownership is concerned is citizenship by investment or donation. This is the route taken by major individual or company investors looking to gain a solid foundation in Cambodia. The costs for this are in the region of $300,000 and does include language requirements though it is reported that these are often overlooked.

If you are seriously considering taking the citizenship route, we can refer you to an experienced partner who has many years of experience in assisting people gain Cambodian citizenship.

  • The final way many people acquire land in Cambodia is by purchasing the property through a local nominee. Cambodian law does not usually recognise nominee structures. However, as the country’s legal and financial systems continue to develop, there are ways of doing this. These are usually expensive but Lux Realty can refer you to expert lawyers who can advise you on how to achieve this.
  • Strata Title

As a foreigner, this is the title type you will most likely be looking at purchasing. It is a special title category for condo unit purchases and is available to both Cambodians and foreigners. To qualify as a strata title, the property must meet certain criteria:

  1. The building must have been constructed in 2010 or later.
  2. Strata titles can only be given to units on the first floor or above. Ground floor and basement/underground units are excluded.
  3. Foreigners can only own 70% maximum of the total area of the entire building (including non-strata areas).
  4. No strata titles can be issued for any building within 30km of Cambodia’s land border.

Cambodia’s Ministry of Land Management, Urban Planning, and Construction are responsible for issuing all strata titles so they are nationally recognised and offer strong legal protection to the owners. Once you have purchased a strata-titled property, you will be due to pay a transfer tax of 4% of the property’s total value.

With every property listed at Lux Realty, we ensure that it meets all legal obligations under Cambodian law. If you are unsure of any details regarding a property you are interested in, simply contact us and ask any questions. Why not contact us today by emailing us at [email protected] or calling on 015537577.