Cambodia: A Gem in the Rough

Phnom Penh is not alien to me, I’ve been there a couple of times back in 2009, it was just like any other South East Asian cities but slightly more rugged. However, on my most recent trip in 2015, I was completely astonished at the developments! It is anything but what I remember the place used to be. No more sandy and muddy roads(at least not the central region). No more kids controlled by syndicates asking for money from passersby. Sky scrappers were being constructed and decent malls were already in operation. There is even a casino and another one construction in progress! It was a déjà vu moment as though I time travelled 20 years back in time to China where the exact same thing happened.

Booming Economy

Unbeknownst to many, Cambodia is achieving a consistent economic growth at a rate of more than 7% per annum; one of the highest in the region. Phnom Penh, other than being a major tourism and expat spot in South East Asia, is also one of the cities in the region that offers exceptional investment opportunities because of the country’s growth. According to Asian Development Bank, With the boom in economy, poverty has been reduced drastically from 50% to less than 20%. As the property market is an indicator of the economy of the country, with such growth, housing prices will definitely be trending upwards.

China's Uncertainty, ASEAN's Opportunity

As China’s economy takes off and advances to an age of mass consumption, it is also faced with a growing currency and wages issue, companies’ production cost are also adversely affected and are actively looking for an alternative to manufacture their products. One of the main regions in the limelight is the South East Asia region due to the low wages and its close proximity to China and Singapore, one of the world’s largest transshipment ports. With this, we should see an increase in development in Cambodia, hence more real estate demands.

With this, I want to share the 8 reasons why one should invest in a Cambodian property:

• First mover advantage; if you missed the bandwagon for Singapore/Thailand properties, this is one opportunity you won’t want to miss. Properties in Phnom Penh are much cheaper than those in other cities in the region. For example, a super luxurious high rise condominium can go for as low as US$150,000 while a grade A SOHO office space can go for US$110,000. The same can cost many many times more in Singapore. With the lower quantum, one can expect much higher returns in capital appreciation and rental income.
• ASEAN free trade agreement expected to bring in much more foreign investments to the entire region.
• No restrictions on money transferring in and out of the country
• Good economy growth at a consistent 7% per year
• Young work force with nation-wide average age of 24.1 years, which means the amount of affluent will grow hence be able to afford more high end property
• One of the top tourism spots in the ASEAN region, so BNB is always an option to get rental income
• Over 4000 new companies are being setup every year, hence the demand for residential and commercial space will increase
• Political and currency stability; Current Prime Minister Hun Sen has been in office for almost 30 years. The ruling party are also changing its image to appeal to the younger voters. In addition, as the country primarily uses USD, there is lesser risk of fluctuating currency like what's happening to RMB.

Conclusion

With the low prices required to get into Cambodia's Property market, there are opportunities to make good money in the short term and in the long term, the increase in foreign expats and tourists ensures that the property owner will have little problem finding tenants. All in all, Cambodia's property market is a good shape for a good upward trend, however, one has to grasp the opportunity ahead of other like-minded investors to maximize profits.