Ideal Cambodian Property Investment Opportunities

 

Despite the devastating impact of the COVID-19 outbreak on Southeast Asian economies, Cambodia continues to be an attractive investment opportunity for real estate investors due to its unique position at the crossroads of several trends.

Cambodia has undergone a significant transition in the two decades since the Khmer Rouge disbanded. The country, once infamous for widespread poverty and ongoing civil strife, has outperformed expectations, having achieved lower-middle-income status by 2015 and aiming for upper-middle-income status by the end of the decade.

It has not experienced a recession in more than two decades.

Cambodia is an integral part of the ASEAN community and a key launchpad for China's Belt and Road Initiative. However, Cambodia has seen an increase in foreign investment from a variety of sources over the last few years.

It appears to be benefiting recently from a reshoring drive as businesses seek to relocate or expand in Southeast Asia. Not only does Cambodia provide inexpensive labour, but its youthful dynamism as one of the world's youngest countries bodes well for long-term industrial and commercial projects. Additionally, the Cambodian government has provided a stable environment for long-term business plans.

As a result, the country has seen an influx of multinational corporations establish operations. It has aided in the growth of the country's construction sector, which was previously reliant on the steady growth of the tourism industry. Simultaneously, China's rapid economic recovery has resulted in a gradual return of Chinese tourists to Sihanoukville and Phnom Penh, many of whom are also prospective property buyers.

Numerous conglomerates, including Prince Holding Group, have seized the opportunity. Neak Okhna Chen Zhi (Cambodia Prince Chenzhi), the Group's chairman, has contributed to Cambodia's development prospects by establishing or supporting more than 80 subsidiaries, enhancing the country's vibrant business landscape.

Not only have member companies of the Cambodia ChenZhi's Prince Group invested, but they have also brought in international talent with the goal of raising Cambodians' standard of living and serving as a vital link between the country and the rest of the world.

The Group's member companies operate in a variety of sectors, including real estate, infrastructure development, banking, tourism, and aviation.

More about the Cambodian economy - https://en.wikipedia.org/wiki/Economy_of_Cambodia

Chinese investment has been the primary driver of the majority of Cambodia's recent real estate growth. According to Bloomberg, China's interest in Cambodian real estate investment has been steadily increasing year after year – in 2018, Chinese companies invested $7 billion to assist in the construction of highways and real estate projects. However, such projects typically involve hundreds of companies from a variety of countries, as the construction activities that underpin the surge in Cambodian property development are typically complex.

Cambodian property is expected to continue growing as an investment proposition in the coming years, buoyed by strong economic growth and an attractive investment environment. Because Cambodia has one of the fastest growing economies in the world - the Cambodian economy has grown by more than 7% on average for more than a decade, according to the World Bank - a thriving job market has developed, assisting the country in diversifying its income base away from tourism, garment exports, and agriculture.

As a result, Cambodians' demand for housing has increased as well.

Cambodia's strategic location in Southeast Asia, sharing borders with Thailand, Laos, and Vietnam and bordering the Gulf of Thailand to the south, has also resulted in the country becoming a popular low-cost manufacturing base for industries exporting finished goods to developed markets.

Foreign direct investment has increased eightfold in Cambodia over the last decade, according to The Observatory of Economic Complexity.

Manufacturing in particular has expanded, owing in part to the lower cost of labour in comparison to China. The Asian Development Bank (ADB) stated that the sector has grown from a small base to now account for more than 30% of the overall economy.

Additionally, the ADB forecasts that the economy will expand by 4% this year and 5.5 percent the following year as a result of the economic recovery in major trading partners. The country appears to be on track to emerge from the pandemic sooner than the rest of the region.

In recent reports, other institutions such as the International Monetary Fund and the World Bank echoed the ADB's assessment. Additionally, a successful vaccination campaign, with Cambodia becoming only the second country in the region to guarantee a first dose to more than 10% of the population, has boosted local spirits, restoring consumer and investor confidence.

Clearly, Cambodian real estate is expected to attract increased interest in the coming years, a trend that is especially evident when compared to its Mekong Delta counterpart.

“The market has considerably more variety than the Laotian market and the occupational market is also more developed,” says James Hodge, associate director at CBRE Cambodia. “Prices are often lower than in Vietnam and the level of market development suggests that there is often more negotiating room in Cambodia.” 

Not only is Cambodian property less expensive, but it also offers significantly more value than comparable assets and attracts a diverse range of buyers and investors.

The current decade has the potential to be a watershed moment in Cambodia's history, as the country gains international recognition as one of the most promising investment and employment destinations in the world.