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Investing in Land in Cambodia: A foreigners guide.

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Its not secret that foreigners can own high rise properties via strata in title in Cambodia. But what is not widely known is that foreigners have additional options to legally own land in the kingdom.

In order to clarify any doubts, here is a simple guide on what are the options for those foreigners who wish to invest in real estate in Cambodia.

Invest by forming a company with a Cambodian citizen.

One way to go is by forming a limited liability company or a private limited company with a Cambodian citizen/s. By law foreigners aren’t allowed to buy land directly, however when a Cambodian citizen owns 51% of the company, that company is then entitled to purchase land under its name and can do anything with the land within the legal bounds of the law in Cambodia.

For those concerned about being a minority stake, careful allocation of shares and an appropriate draft of the rights that are attatched to the share certificates should guarantee full control for the foreigner involved.

Foreigners are expected to pay 100% of real property purchase costs and construction costs. If a decision is made to sell the property 100% of what it was sold for goes to the foreigner. It is advised to detail this on the company and sales documentation.

Invest in land in Cambodia through a long-term lease.

Purchasing land isn’t exactly the same as leading it but it’s easier and less expensive than setting up a company to buy land. This method allows foreigners to “purchase” real property if the registered title deed remains under a Cambodian citizens name. Both parties formally enter a long-term rental agreement; land leases upto 50 years are usually common for foreigners – however cases of 75 and 99 years are not unheard of.

Pros and Cons
The only downside to this method is that you still do not hold full ownership over the land – meaning that some uncertainty remains over security of the asset and, if you wish to sell the property, you will need to first get the thumbprint and signature of the Cambodian national owner.

Fortunately, accurate drafting of property holding and lease arrangement terms help make this a secure means of gaining control over the property. Foreigners can also hold on to the original copy of the title deed as an additional safety measure – Since the Cambodian national would not be able to sell the property without it. A long-term lease provides lessors the rights to develop the land they’re leasing, since they will be able to obtain construction permission under their own names. This also entails the foreigners are able to sell the property and keep all of the sales revenue.

Invest in Cambodian land via a Cambodian citizen (nominee)

This is otherwise known as the nominee structure. This structure lets foreign investors enter a trust agreement with the land holder. The land is put up for mortgage after that. It is leased out to the foreign investor involved. You need to secure 4 documents first. These are the mortgage agreement, the lease agreement, the loan agreement, and the security agreement.

Documents required for nominee structure.

The mortgage agreement is registered at the Sangkat. It transforms the buyer into a bank. This prevents further activity by the Cambodian national without the permission of the foreign national. Further activities would require approval from the foreign national.

The loan agreement is a paper loan that’s made between the nominee and the foreign national. It accrues interest over time. The lease agreement gives the right to legally reside in the property. The security agreement lays out the necessary limitations and obligations of each party with regards to the property. Foreigners are allowed to own any type of property through this structure.

Note that this is in violation of the constitutional prohibition on the direct ownership of property by foreigners. It is a loophole that the government is trying to regulate. Costs for the whole process also varies depending on the agreement of both parties involved and the agreement of the buyer and their lawyer.

How to invest in land through concessions in Cambodia

There are three types of land concessions available in Cambodia. These are the Use, Development or Exploitation Concession, the Economic Concession, and the Social Concession.

Social Concession allows beneficiaries to construct residential projects and cultivate state land. Economic Concessions allow beneficiaries to clear land for purposes of industrial or agricultural exploitation. Use, Development or Exploitation Concessions are not regulated under the 2001 land law – specifically, Article 49 and 50. But this type of concession includes port concessions, airport concessions and fishing concessions.

The land concession must be based on a specific legal document, issued prior to the occupation of the land by the competent authority, such as the State or a public territorial collectives or a public institution that is the owner of the land on which the concession is being granted.

The concession must be registered with the Ministry of Land Management, Urban Planning and Construction.

Land concessions cannot have more than 10,000 hectares and is limited to 50 years buy may be revoked by a government decision if there is a problem with the compliance. The most common concession type foreigners go for is the Economic Land concession.

An investor cannot apply for a economic land concession from abroad, they are required to have a registered company in the country, a valid tax identification number, and an active local bank account. Once this is in place and a piece of land is located the investors must apply through the Ministry of Agriculture which will then review the land details listed on their database and decide whether it can be made available for a concession based on the review. If the application passes all the bureaucratic steps, the investor will then be tasked to create a master plan or a five-year business plan. The CDC will provide special tax status for the investor’s company such as exemptions and reductions. The company is then going to be noted in the investment register through the CDC. The approximate duration to complete the process will be 6 to 9 months.

Investing in Cambodian land by marriage.

Foreigners married to a Cambodian national are allowed to register real property using the name of their spouse on the title deed. In case a citizenship has been granted to the foreigner, the Cambodian law states that the land can be registered under then names of both husband and wife.

In case of divorce, the land and property division will depend upon the conditions of any court ruling that refers to the divorce. Interracial marriages require the participation of the embassy of the foreigners citizenship country and different local government agencies such as the legal and consular department o the ministry of foreign affairs and international cooperation, ministry of interior, and province officials.

Obtain Cambodian citizenship to invest in Cambodian land.

Some foreign nationals obtain honorary Cambodian citizenship. This can be obtained in two ways. Either by donating at least $312,500 for the Cambodian people through the Cambodian Government or by making a significant impact to the country.

Being granted an honorary citizenship allows foreigners to obtain 100% of the rights to real property. But it is important to note that the foreigners original nationality is not affected in any way. Individuals may also gain residential status in the country by living here for 7 years.

Foreign Property Ownership in Cambodia

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A recent law has been passed in Cambodia allowing Foreign overseas nationals to purchase property in Cambodia providing that the property is above the first floor, allowing Foreigners to purchase apartments and condos in the newly built high rise residential compounds.

The law does not allow Foreigners to purchase land in Cambodia, and those who attempt to purchase land in Cambodia risk having the land taken from them.

Foreigners have been long awaiting legal ownership of property in Cambodia since Thailands property market has been booming with Foreign investment, the new law is set to stimulate Cambodia’s real estate developments and property market.

Previous to Foreigners being allowed to purchase property in Cambodia many had purchased though a Cambodian nationals name, this method can be quite risky and requires alot trust to be placed in the local Cambodian buyer who technically owns your property.

The new law passed will allow those who have already purchased a property in the name of a holding company or name of a cambodian local will have 2 years to process the transfer of deeds to their own name.

The new laws passed will increase foreign overseas confidence in the Cambodian real estate market market.

The next six months to twelve months are going to be very good times to purchase property in Cambodia for foreigners, still relatively cheap and more appealing than neighboring Vietnam and Thailand.

Foreigners will not be able to purchase ground floor properties and nor can their properties be located within 20 miles of the Cambodian borders due to national security regulations in the country.

Foreign ownership must represent no more than 49% of any building or property development.

Overall the law has been passed to promote the real estate investment and property sector in Cambodia whilst ensuring their is properties and land available for Cambodian nationals.

Sihanoukville tourism and property developments

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Nearby Sihanoukville is the focus of the early tourism development. Tourism should get a boost from the expanded airport, now able to cater to big jets – but airlines have yet to commit to the service.

The Royal Group, major Cambodian conglomerate, is in the process of trying to develop Koh Rong, the large island next to Song Saa. But it is still in the process of looking for hotel partners and companies to develop the 78sq km island, where it has a 99-year lease.

Royal Group chairman and CEO Kith Meng call that stretch of coastline the “missing link” in the development of Cambodia’s tourism sector.

The Russian-backed Koh Puos Investment Group is also developing a site, Morakot Island, just offshore, where it plans to build one million sq m of space in a vast mixed-use development. It’s intended to have a casino, marina, golf course – and plenty of resort property.

The company is building a bridge to the island that’s due for completion in June. It plans to start work on the island’s infrastructure and utilities, then begin building 36 seafront villas that will sell at prices ranging from US$900,000 to US$1.5 million, for three- to five-bedroom pads.

Only a handful of projects continued without disruption after the financial crisis, so the developer hopes it has an edge on competitors.

“There are not many projects of our scale in Cambodia in general,” sales and marketing director Marina Khrisanova says. “So we are one of the pioneers.”

1) The Government presently restricts the full ownership of land to Cambodian citizens.

2) Land is either owned privately or by the state but not all land is registered.

3) Investors seeking to purchase land must check that full title exists.

4) Foreigners can own land in Cambodia under a lease structure, which can be either short or long term, and a Landholding Company Structure. Short-term leases are common where occupiers intend to occupy premises for up to say 10 years, but long-term leases are more appropriate for ownership. A long-term lease can be secured for a minimum of 15 years and can last as long as 99 years or more.

5) Taxes and fees includes a 4% transaction fee, a service fee, paid to the cadastral office USD$800 – 1000 a tax payable according to the absolute size of the land and building and an unused land tax calculated by the cadastal officer.

6) The whole process of registering a property in Cambodia can take around 50-60 days to complete.

Stretching from Thailand in the west to Vietnam in the east, Cambodia’s southern coast is the best escape from the city. In the fifties and sixties, the country’s elite did just that, travelling to the magical town of Kep and building large country houses. Many of these were abandoned during the Poi Pot years and have since been reclaimed by the jungle, giving the place a mysterious feel. Kep is beginning to flex its tourism muscles again, and the locals and expats are travelling the four-hour road journey for peace ocean-side, the famous green pepper crab and nights at indulgent Knai Bang Chatt, a sixties mansion turned boutique hotel of 11 rooms, huge charm and nearby Sailing Club.

Kampot is another gym on this coast, with crumbling old French mandate architecture still holding up small guesthouses, restaurants and bars, while Sihanoukville, the “capital” of the south coast, boasts a great market and the best beaches in the area.

Koh Rong Eco Resort Investment in Cambodia

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The launch of Cambodia’s koh rong, Asia’s first environmentally resort meets a market niche for prestige holiday destinations. Travellers now are more environmentally aware, while there are several eco-friendly resorts in the region, there are no eco-friendly destinations and this makes Koh Rong a unique development.

The Island, the largest of 22 in an archipelago off the 600km coastline known as the Indochina Riviera, will be created around the stringent set of guidelines that aim to respect and preserve the natural environment of the area.

The implementation of centralised water catchment, and the requirement for developers to maintain onsite water recycling programmes for landscape irrigation and power conservation in addition to adopting ecologically sustainable materials, finishes and systems at every property.

Under the guidelines, destructive and exploitive practices such as felling of natural forest and jungle, the stripping of marine life out of the waters, water pollution and energy waste shall cease.

The rare opportunity to build a resort from scratch, and the chance to ensure all of the islands development projects adhere to a specific environmental benchmark, has been made possible by the ownership structure.

The Cambodian government has granted the Royal Group, a local business conglomerate, a 99-year lease on the island.

It will be difficult to replicate a project like Koh Rong elsewhere given the options to create quality tourism development is shrinking, It would also be difficult to have full control over the developments in other destinations and ensure that all projects conform to a certain environmental standard.

Koh Rong also allows developers to avoid mistakes such as overcrowding of mass speculative developments evident in established resorts such as Phuket, Koh Samui and Bali.

Koh Rong is expected to transform the landscape of tourism in Cambodia, which previously has hinged around Angkor Wat, the Unesco World Heritage site. According to a report from Cambodia’s Ministry of Tourism, only 7.15% of the 2.16 million visitors to the country last year visited its beaches.

With a limited hopper flight schedule in place from Siem Reap and Phnom Penh, it would be easy to take 10% of current arrivals and see them extending with a beach stay by and average of 3 days until Koh Rong becomes an established competitor to similar islands in the region.

Expatriate Healthcare for Expats in Cambodia

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Before coming to Cambodia one has to make the choice of what kind of services they would like to have for themselves. There are local hospitals which are affordable too and one can easily maintain a balance and can take the pains of giving bills to these hospitals but if you are looking for an extra treatment then they may fell short to your expectations and you have to move to other options like international medical establishments.

On the other end, you can go for the premium expat health insurance coverage for you and your family. They pay the rate charged at expat hospitals for Western-style medical coverage, and can provide maternity, dental and outpatient services for you and your family.

Dental insurance is also available easily. Having expat medical insurance is always a good option on order to make yourself safe in extreme conditions and in the cases of costly treatments, as the disease will get insured by the company and you can be relaxed at least from its payment side.

Cambodia is a beautiful place but if you travel toCambodia you get to experience different time zones that may lead to jet lag. It is a condition where your body stops responding to the changing climate. The person may get the illusion of day into night and vice versa. Every human body adjustment period is different, and time will inevitably cure it. But body may suffer with some small and big disturbances like irregular sleep, fatigue, headache etc..

Water is not that drinkable in Cambodia you have to boil it before you are attempting to drink as the government sources has verified some kind of harmful bacteria in the drinking water. However the infrastructure projects are being undergoing in order to purify the water and to make it drinkable. Then also it is recommended to have boiled water in place of the regular water.

Generally health care in Cambodia is not a matter of concern and still it is improving very rapidly. Each expatriate community has their own set of local facilities available in the time of emergency. And the range can vary according to the size of the community.

Most of the medicines can be bought over the counter without any prescriptions. That may lead to a disaster sometimes. One has to be careful while purchasing any kind of medicine.

Investing in Cambodia

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Investing in Cambodia