Property investment in Cambodia

Property investment is a more stable option as compared to stock markets.

Here are some reasons why you should consider Cambodia as your next property investment destination.

(Image: The Gateway)

1. Establishment of the ASEAN Economic Community

Since 2007, ASEAN member countries have been working towards the establishment of an ASEAN Economic Community (AEC) by the end of 2015. When it comes into full effect, the AEC will transform ASEAN into a region with free movement of goods, services, investments, skilled labour and freer movement of capital.

It will not be dissimilar from the European Union (EU), sharing the EU’s benefits from free trade and close relationships, but not having a common currency. A report by the Cambodia Development Resource Institutes states that companies view the AEC as an opportunity filled with potential gains from more integrated and open economies in ASEAN and better links to global markets and production networks.

The AEC will also link Cambodia up with broader Asian regional cooperation and integration, particularly with China, Japan and South Korea. This will bring greater access to regional markets, resources and investments; increase Cambodia’s involvement in regional production networks, accelerate necessary domestic reforms, thus improving the business and investment climate of the country. All these contribute to accelerating productivity, employment generation and most importantly economic growth in the country, thus boosting property prices in the country.

2. It is a growing economy

Cambodia has been doing well economically, with its GDP growing by an average rate of 7% per year from 2010 to 2014, and this growth expected to continue. The Asian Development Bank has forecasted an uptick in the country’s economic growth to 7.3% and 7.5% in 2015 and 2016 respectively. This is based on the strength of improved performance in Cambodia’s trade partners and a tempered political environment, and the expectations are that it will be further boosted with the establishment of the AEC.

With a growing economy, the demand for homes will only increase and the prospects for projects such as The Gateway are good. As a mixed-use development, The Gateway will boast of a mixture of residential, retail and office space, making it well placed in a burgeoning economy where the population will aspire for better living facilities and a more affluent lifestyle. Adding to The Gateway’s attractiveness is its prime location along the main thoroughfare of Phnom Penh and its easy accessibility to the airport via a direct road from the city centre.

3. Increasing home prices

Cambodia’s property market is on the up and up. This momentum started since the end of the 2013 after the elections, with a property expert sharing that home prices increased in 2014 by between 10 to 20% compared to the year before. This upswing has continued into 2015. A World Trust Estate survey in June 2015 showed that property prices in the first five months of the year rose by 10 to 30% in Phnom Penh. The establishment of the AEC is also set to boost the business community is also predicted to grow and with this, the demand for real estate to increase in line.

A huge majority of Cambodia’s population comprises people under the age of 35, more than 60% according to a report by the National institute of Statistics. This points towards a continued increasing demand for places of residents in Cambodia as the workforce surges annually.

As home prices increase, so does rental income. In 2014, the annual gross rental yield in Cambodia was reported to be 5.3%, outperforming Singapore, Hong Kong and China. 

(First published in Asiaone)