Cambodia’s housing market is plummeting, and the government is considering a new law to allow foreigners to own buildings.

In 2005, the government amended an investment law to allow foreign ownership of buildings. However Cambodia’s property market was then experiencing one of the biggest booms in Asia. As a result, the law was never implemented and the idea floundered.

The boom saw prices surge 25% to 40% annually from 2004 to 2007. Land price increases were at first confined to Phnom Penh, Siem Reap and Sihanoukville, but the boom spread right across Cambodia. Other hot spots have been the border areas with Vietnam and Thailand and, to a lesser extent, Laos.

The capital’s most sought after locations fetched US$500 per square metre in 2000, but were sold at around US$4,000 or more per square metre along Norodom Boulevard, and US$2,500 per square metre in the central residential neighbourhood of Boeung Keng Kang (BKK).


A downturn started in July 2007 after the government announced new investment guidelines for developers.

Then in mid-2008, the bubble burst. The global financial crisis had hit Cambodia’s biggest investor, South Korea, and Korean investors began pulling out foreign assets to increase liquidity.

Real estate sales plummeted 30% to 50% from a year earlier.

To prevent the market from sliding further, the government is considering moves to allow foreigners to fully own buildings. Land ownership is still out of the question.

The housing boom

Cambodia has just witnessed one of the biggest real estate booms in Asia.

The reasons are obvious, as soon as you visit Cambodia. Phnom Penh is an attractive colonial city, with broad avenues, charming housing, a hip and young atmosphere, and a riverfront view. Siem Riep, which houses Angkor Wat, is even more charming, and has a cooler, more agreeable climate. There are agreeable beachfronts at Sihanoukville.

Cambodia is in a strategic position in the centre of IndoChina. Prices are laughably inexpensive (from a foreign perspective) and economic growth is exploding. The combination is hard to argue with.

More Global Property Guide pages:

Cambodia housing market research - in-depth
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Blogs and forums about Cambodia
Rentals are far higher than in days when Phnom Penh was a sleepy outpost where the only foreigners worked for aid organizations. In BKK I, according to a report in the Bangkok Post dated March 2008, a spacious, four-bedroom apartment with gym, swimming pool, parking and 24-hour security is on the market for US$3,000 a month. Nearby, the owners of a two-story, four-bedroom villa are looking for US$5,000 per month.

Phnom Penh has, as a result, experienced a construction boom. The government is aggressively pro-development, and squatters and other eyesores are simply cleared away, by a government which is in league with wealthy developers.

Part of the charm may be about to be lost as Phnom Penh succumbs to development. A 42-story US$250 million twin condominium, twice as high as Phnom Penh’s current tallest building, is being built in the most conspicuous position possible - at a busy corner leading to the city's Independence Monument. Residential units in the ‘Gold Tower 42’ project, which will not be completed till 2011, range from US$459,000 to US$1,500,000, according to developer Yon Woo Cambodia Co. Around 70% of the buyers are Cambodian. Around 40% of the sales have gone to speculative investors.

World City Co. Ltd., a South Korean company, is investing US$2 billion to build a satellite city called Camko City on a 120-hectare (300-acre) in northwest Phnom Penh. The single biggest foreign direct investment in to date, Camko City will include residential units, villas, condominiums, commercial and public facilities, trade and financial centres, office buildings, shopping centres, hotels, schools and hospitals. The project will include about 500 apartments with price tags ranging from US$112,000 to US$1.8 million a unit. Construction will take 3 1/2 years to complete. Nearly half of the units have already been sold.

Land values in Siem Reap have risen 25% to 30% every year for the last four years at least. The average price of land per square metre is now around the US$500 - US$600 mark. But premium land in downtown tourism districts is around US$1,600 per square metre.

Housing mortgages

Mortgage finance is now available in Cambodia. Acleda Bank entered the home lending market in January 2007; by March 1 2008 Acleda’s home loan portfolio was worth about $40 million. To get around foreclosure risk, given the corrupt legal system, Acleda keeps the title to the property until the loan is repaid.

ANZ also offers 15-year installment loans, allowing customers to borrow up to 60% of the home purchase price at variable interest rates, lending against registered titles.

Foreign-ownership schemes

Foreign individuals cannot buy real estate in Cambodia directly. But land can be held by foreigners on long (renewable) leases and through majority locally-owned companies incorporated in Cambodia. This company structure is the safest for a foreigner wishing to buy land. It is not totally bullet-proof, but in practice it works.

Foreigners typically take two Cambodian nationals as partners in the land-holding company, with the 51% share allocated so that the foreigner is the biggest single partner. Other safeguards include

1. Creating different classes of shares, giving the foreigner more rights;
2. Minority control documents;
3. A mortgage on the land, stipulating that the land cannot be transferred without the consent of the foreigner.
   

Leases up to 99 years are another common acceptable structure – the magnificent Raffles Hotel le Royal in Phnom Penh, for instance, is held on a simple lease.

Nominee structures should be avoided.

Source: Global Property Guide

While a property investment in Cambodia would not necessarily be top of the list for many property investors, there have been a number of major changes over the last few years with regard to internal difficulties within the country, and it looks as though Cambodia could become one of the new property investment boom areas for 2008 and beyond.


We hereby list a number of reasons as to why you should be monitoring the situation in Cambodia and why it may well be an interesting area for property investment for the future.

 1. Political Stability Is Attracting Property Investor Interest in Cambodia

For many years Cambodia has seen brutal internal fighting between the government and factions looking to over throw the current regime.  We have seen the likes of China supporting the rebels as well as Vietnam flexing it muscles in the region, seeing both parties at loggerheads and unwilling to step down.  However, there have been a number of around the table discussions by the parties involved and it looks as though China is intent on a peaceful settlement, with signs that the current Cambodian government are finally willing to give up some of their powers.

2. A Growing Economy in Cambodia Bodes Well For the Future

While there have been internal problems in Cambodia on and off for many years, the economy has remained surprisingly resilient with GDP growing by some 10.8% in 2006 and expected to show a rise of around  8.5% for 2007.  While these figures are unsustainable in the longer term, there is every chance that we should see significant increases in the short to medium term with the economy starting from a very low base.  Inflation was around the 2.6% level in 2007, and while the level has crept up to 6% of late there are no real causes for concern.  A little inflation is often a great way to kick start a property market.

3. Overseas Investors Are Starting To Notice the Long Term Potential of Cambodia

Even though the building blocks for a long term success story have been evident in Cambodia for some time, the internal fighting between the warring factions has held back many overseas investors from entering the market.  As the chances of peace in the country increase, so the risk reward ratio is now more in favour of the investor, with many overseas companies looking to enter what is being seen as one of the rising so called “Tiger Economies”.

4. Prospects for the Cambodian Tourist Market Have Never Been Better

The Cambodian tourist industry has always been central to the growth of the economy, and from being virtually dead just 10 years ago we are now seeing over 2 million people a year visiting the country.  This influx of foreign interest has increased the demand for property (with prices starting at a very low base) and local services.  While confined to a number of tourist hot spots, it is inevitable that interest will spread throughout the country and offer a number of interesting property investment opportunities.

5. The History and Culture of Cambodia Is Proving a Great Attraction

For any years Cambodia has been off the tourist map which is a great shame when you consider the culture and history of this great country. Historic records show the emergence of what is now Cambodia as far back as the 1st millennium, with the control of the country changing hands on many occasions over the years.  This changing control ensured a constant flow of new and different cultures, a large span of religious beliefs with the French connection apparent since the mid 1800s, when the country sought the protection of France.  Beautiful countryside, a mass of architectural influences as well as a climate which is attracting many tourists are just some of the factors assisting the growth in the country’s economy.

6. Favourable Government Policies Towards Overseas Investors in Cambodia

While the Cambodian government have signed up to a raft of trade and economic agreements with many of their neighbours in the region, they have also instigated a wide ranging tax regime which is attractive to many overseas investors.  In affect we are seeing a trade off between taxation in the country and overseas investment, with both parties very happy with the current situation which is encouraging further investment.

7. The Cambodian Government Have Instigated Massive Investment into the Infrastructure

After many years of internal conflict the infrastructure of Cambodia has for some time been a major problem for investment in some areas of the country.  However, as investment grows in the hot spots of places like the capital Phnom Penh we are seeing significant investment in improving the infrastructure of the whole country.  While this will take some time to complete and be fairly expensive, it will ensure a regular drip feed of investment opportunities into the Cambodian property market.

8. "New Thailand"

Dubbed the ‘New Thailand’, Cambodia offers the opportunity to experience virgin beaches and undiscovered landscapes to date as yet untainted by tourism development. General tourism numbers in Cambodia are also on the up with a 20% increase reported in 2007 alone. The main hub of the Cambodian tourist sector seems to be Sihanoukville where the natural terrain and beautiful beaches such as Serendipity Bay are attracting large numbers of foreign visitors eager to be one of the first to experience South East Asia’s newest hotspot. While the Cambodian authorities are desperate to develop the country’s tourism economy, they are also acutely aware that there is a need to consider the environment and the long term implications making an investment in a tourist based property development in Cambodia something of a long term venture.

Whilst the development of Cambodia’s tourism sector will move at a slower pace than many investors would hope, the wider impact upon the country’s economy should be rapid. As local economies around the country continue to benefit from the growing numbers of tourists visiting, there will be more money for the population to spend and many are expecting a steady rise in property prices. The policies of the government and controlled growth of the economy are vital not only to the country as a whole, but the property sector in particular.

Property prices at the moment are relatively low, the norm for emerging markets but when compared to other similar regions of the world and there is the potential for long term capital gains and substantial rental income in the medium to longer term. A new national carrier is the first step for Cambodia along the road to tourism success.

Source: Nubricks

1. Land can be bought through a local company.
2. Land can be leased.
3. Acquiring Cambodian citizenship brings the right to buy land, a route actively encouraged by the government.
4. Land is sometimes bought through a Cambodian nominee, but this has been ruled to be against Constitution, and is unsafe.
   

1. Different classes of shares. The land holding company must be 51% Cambodian owned, but is usually structured with 2 classes of shares having different rights, one class held by foreign investor, one by local investors. For example the Cambodian entities or persons might have lesser rights to transfer shares and to nominate directors, and company decisions might require a 2/3rds majority.
2. Minority control document. A series of private agreements are usually drawn up by which the Cambodian shareholders grant the foreigner special rights – e.g. a permanent majority on the board, or different powers of attorney, or blank shareholder transfer forms.
3. Land Security. The landholding company often registers a mortgage on the land, which means that the land cannot be transferred without the consent of the foreigner.
   

• Name of the company
• Form of the company
• Summary of business objectives
• Office address
• Term of the company
• Total capital in cash
• Name and family name, occupation, nationality, address of a director and/or auditor
• The location where the company is to be registered

• Copies of Registration Application Form
• Memorandum and Articles of Association (2 copies)
• Statement of Conformity (2 copies
• Application for publication in the authorized newspaper (2 copies)
• Copies of identification cards or passports of directors and shareholders (2 copies)
• Photos of directors and shareholders (2 copies)
• Declaration of non-guilty of directors (2 copies)
• Decision of share contribution (2 copies)
  

       7. The registration documents must then be stamped and approved by the Phnom Penh Tax Department. This can be accomplished in one day. The fee is US$

2. Taking control of land through a lease.

Long-term leases are another common way for foreigners to control land in Cambodia. For instance, the super-luxurious Phnom Penh Raffles Le Royal Hotel is held on a long-term lease. A long term lease gives the lessor all necessary rights to develop the land – e.g., he can get construction permission in his own name.

This is a very simple structure, but is less secure than the company structure.

There is no maximum term for which land can be leased from a private owner – the period is indefinite in the Land Law. Leases commonly last 50 years, 70 years, or 99 years. Leases longer than 15 years must be registered at the Land Office. On state land, there is a 40 years maximum, with the possibility of extension.

A background check on the owner is essential, as in the case of the landholding company structure. Leasing from a greedy, politically well-connected owner can be disastrous.

Safeguards typically built into the lease contract involve:

1. Dispute resolution is often placed by contract outside Cambodia, e.g. in Singapore. This is less effective than widely believed, as many land disputes do not involve disputes over the contract itself, but over other matters. In addition, Cambodian courts often refuse to recognize foreign arbitration, or revisit issues already decided in the Court of Arbitration.
2. A clause is often inserted requiring the owner to get the lessee’s permission to sell. Or preventing the owner from selling, unless the new owner recognizes the lease.
3. In addition, a ‘block sale notice’ can be registered with the Land Office, instructing the office not to sell the land without the lease owners’ permission.
   

There are currently two problems with the lease structure.

Problem 1 – ownership of the buildings at expiry of lease

It is not settled who owns the buildings after the lease has finished. The 2nd and 3rd floors of buildings clearly belong to the lessee, who can register title. Because the owner of the 1st floor also owns the land, according to the Land Law, once the lease is finished the owner of the building is the landowner. But according to the Law on Investment (covering companies registering for tax incentives) the buildings are owned by the lessor.

The issue could be settled by changes in the revised Land Law and elsewhere: “The Cambodian authorities are reportedly thinking of setting up a separate registry to registed the ownership of buildings. This would be a massive step forward,” says Matthew Rendall of Sciaroni & Associates. Such a register would give effect to the Law on Investment provisions.

Problem 2 – leases not recordable at Land Registry

Hitherto leases been recordable on title deeds at the Land Registry. “I have heard that now that they are registering,” says Rendall. “If this is true, it is another significant development, which would greatly improve the leaseholder’s security.”

3. Buying land by acquiring Cambodian citizenship.

Taking out Cambodian citizenship is one way of getting the right to buy land, which the government is encouraging. Citizenship applications will be considered if a significant investment is being make in Cambodia. It is important to ensure that the Ministry of the Interior, the Council of Ministers, and the President, all agree to the grant of Citizenship.

4. Buying land through a nominee structure

Often used by investors because it is simple and cheap, the nominee structure ignore the Constitutional prohibition on direct ownership of property by foreigners, and is illegal and strongly discouraged by all land lawyers.

The following is how the structure works. The investor signs a trust agreement with the holder of the land: “I hold this land for you.” The land is then mortgaged, and leased to the foreigner.

The consequence of adopting this structure could be expropriation by the state, or forced sale of the land.

Land titles

Between 1975 and 1979, there was no private land ownership in Cambodia. Almost all judges were killed during this period, and all records destroyed. In 1989 a Land Law was issued. In 2001 a new Land Law was issued. A further revision is in preparation.

There are two kinds of land title, in terms of documentation:

1. ‘Soft title’(possessory right), which is based on the right of possession and is issued by the local village chief officials.
2. ‘Hard title’, which is registered with the Land Office, and trumps claims of ownership based on possessory right.
   

1. There is US$800-US$1000 ‘service fee’, paid to the cadastral office, which covers all other ‘service fees’.
2. A tax is payable according to the absolute size of the land and building, according to type – commercial, residential, or rural.
3. On sale, there is an unused land tax, calculated by the cadastral officer.
   

1. Deposit 10%
2. Second payment of 10%
3. Balance – 80%. Typically the balance is not paid until the title is converted into ‘hard title’.
   

The Global Property Guide looks at inheritance from two angles: taxation, and what inheritance laws apply to foreigners leaving property in Cambodia: what restrictions there are and whether making a will is advisable.

There are no taxes on inheritance or estates in Cambodia.

INHERITANCE LAW

By law, foreigners must apply for citizenship to be able to inherit property in Cambodia. But if the property is being held through a resident company, such disadvantages are avoided.

Cambodia’s laws affect everyone who owns property in Cambodia.

The main laws concerning inheritance are:

• Constitution 1993,
• Land Law 1992 and 2001,
• Family Law 1989,
• Inheritance Law 1972,
• Code of Civil Procedure 2006, and
• Commercial Enterprise Law 2005
  

The Draft of Civil Code 2006 is currently being adopted, but some provisions of Inheritance Law 1972 that do not contravene the current laws are still effective.

Under the Cambodian Constitution, no distinction is made between foreigners of different nationalities or religions.

Yet although foreigners and Cambodians are treated the same, the owner of real property registered in Cambodia must be a Cambodian citizen.

According to Draft of Civil Code, Article 1155, an inheritor who is not Cambodian cannot own real property in Cambodia through inheritance. The estate becomes a legal entity which must be sold by the foreigner within three months, and the value of the estate distributed to the heirs (including foreigners) according to the law or the will, and then, the entity is dissolved.

If the estate can not be sold within three months, it must be delivered to an inheritor in the next rank who is a Cambodian citizen, and then the entity is dissolved.

The court where the property is situated has jurisdiction.

In Cambodia, the municipal or provincial court has jurisdiction over all lawsuits. The general principles concerning jurisdiction over property are:

• Issues concerning property rights are resolved by the court where the property is situated.
• Lex rei sitae: Cambodian laws apply to property situated in Cambodia.
  

In practice, lex fori applies to the ownership of immovable property in Cambodia, whereby the Cambodian court applies Cambodian laws to all claims submitted to it.

No legal provision specifies how long an inheritance case takes in the court. It depends on the complexity of each case.

There is a reserved portion, usually half of the estate.

The general reserved portion for descendents is one half of the whole estate. Through a will, parents can dispose of the other half of their property to persons other than their surviving descendants, unless the latter are disinherited. If the surviving heirs are the deceased’s parents or grandparents, the reserved portion is one third of the whole estate. These rules also apply to foreign heirs.

Intestacy

In case of intestacy, according to Draft of Civil Code 2006, the deceased’s property goes first to the descendants (including adopted children) of the deceased. In the absence of descendents, the estate goes to the ancestors. If there are no ancestors, the property goes to the siblings. A spouse is an heir of class number five, therefore a surviving spouse of the deceased is also an inheritor. If the deceased has no living spouse or relatives, the property goes to the State.

The non-reserved residue of the estate can be freely distributed by the property owner, without restriction, except that some people are legally excluded from inheritance (e.g. the doctor of the deceased, a priest present at the time of death, or people considered “unworthy” (e.g. a person accused of murdering the deceased)). If the testator includes such people in a will, the will still valid, but the judge will declare null the stipulations which give the inheritance to the unworthy people, if there is a claim to the court.

It is quite normal to make a will in Cambodia.

Under Inheritance Law 1972, a will in Cambodia can be established through either a certified or a private deed. A certified deed is dictated by the testator, in the presence of the local “mekhum” (commune chief) assisted by two witnesses, who must not be legatees or heirs. A will must be dated and include the names, ages and domiciles of the witnesses. After the will is read out aloud by the mekhum, the testator, witnesses, and mekhum must append their signatures. The mekhum must mention on the will if the testator and witnesses are illiterate. A private deed is entirely written and signed by the testator in Cambodia.

The Draft of Civil Code 2006 defines how the will must be formed. The will can be made as an authentic document or as a private or secret one. Each type of will has its own formality to be respected.

Cambodian laws do not provide explicit guidance for inheritance from foreigners who own assets in Cambodia. If the inheritance law of a foreigner is more favorable than Cambodian Law, then it is recommended that he/she should make a will under his/her national law. On the contrary, if Cambodian Law is more favorable, then it is advisable for him/her to make a local will.

In principle, if a foreigner with assets in Cambodia makes a will under his/her national law, and if his/her national law does not include a reserved portion, he has to respect the reserved portion if such portion is part of the public order provided by law. But, under the Cambodian law, we don’t know whether it enters the notion of public order, as neither the law nor the Cambodian courts have ever mentioned or decided on this matter.

A will made by a foreigner under his national law does not need to be authenticated by the authorities in Cambodia. If a foreigner wants to validate a local will, he/she must be present in Cambodia. A lawyer in Cambodia can draft a will for a foreigner, but the testator needs to be there to sign the will. The signature of the lawyer has value as a witness.

An owner can give away his property, before death.

It is necessary for gifts of real property in Cambodia to be legally recorded. The transfer of ownership needs to be done through registration at all levels of the land offices.

After the death of the owner, any gifts of property which included the reserved portion can be legally challenged by the heirs who are entitled to receive the reserved portion. The heirs also have rights to claim abatements to preserve their reserved portions. Abatement commences with the latest gifts and extends in successive order to the earliest gift.

Ownership of property is recorded on title deeds.

Cambodian laws look primarily at the name on the title deeds to determine the ownership of real property. All property transfers, including transfers through inheritance, are recorded in the Cambodian land registration system.

In addition to title deeds, the concept of legal possession is protected in Cambodia. A legal possessor who owned an estate before August 31, 2001 is protected by Cambodian Land Law. Such legal possession can be transferred by inheritance.

Minors can own property.

The Cambodian Constitution and Land Law 2001 do not mention the legal age of ownership of real property. However, the property of a minor must be administered by a curator or living parent. A guardian can be also be nominated in a will or by a civil court.

Source: Global Property Guide

INDIVIDUAL TAXATION

Residents are taxed on their worldwide income. An individual is considered a resident for tax purposes if he has stayed in the country for an aggregate of 182 days or more within a calendar year.

INCOME TAX

The applicable tax rates vary depending on the source. Employment income is taxed at progressive rates. Income from other sources is subject to profits tax while some specific categories of income are taxed by way of withholding.

(Salary) Income Tax
Employment income is taxed at progressive rates on a monthly basis.

There are no regulations that specify deductible expenses against salary income tax. However, taxpayers earning employment income may claim deductions of up to KHR75,000 (US$19) for each dependent child and another KHR75,000 (US$19) for the taxpayer’s spouse (housewife).

Profits Tax
Income from sources other than employment income is taxed at a flat rate of 20%. Taxable income is computed by deducting income-generating expenses from the gross income. Some specific categories of income are taxed by way of withholding.

Profits tax is levied on the following categories of income:

• Profits obtained from operations of an enterprise
• Capital gains
• Income from investments
• Interest
• Rental income from movable and immovable properties
• Royalty income
  

RENTAL INCOME
Income from leasing real estate properties earned by resident individuals is subject to withholding tax at 10%.


PROPERTY TAX

Real Estate Tax
Real estate tax is levied on unused Cambodian land, including unused land with attached abandoned buildings. The tax is levied at 20% on the market value of the property. The owner of the property is liable to pay this tax.

Source: Global Property Guide

INDIVIDUAL TAXATION

Non-resident individuals are taxed only on their Cambodian-sourced income.

As a matter of practice, Cambodia’s tax administration can be divided into ‘non-real regime’ taxpayers and ‘real regime’ taxpayers (businesses) who are registered with the tax department and required to submit a monthly tax return.

However, most individuals are ‘non-real regime’ taxpayers. Non-real regime taxpayers do not submit tax returns as there is no practical mechanism for their doing so (though tax on employment income is withheld by employers), and in practice do not pay income tax on rent.

INCOME TAX

The applicable tax rates vary depending on the source. Employment income is taxed at progressive rates. Income from other sources is subject to profits tax while some specific categories of income are taxed by way of withholding.

Profits Tax

Income from sources other than employment income is taxed at a flat rate of 20%. Taxable income is computed by deducting income-generating expenses from the gross income. Some specific categories of income are taxed by way of withholding.

Profits tax is levied on the following categories of income:

• Profits obtained from operations of an enterprise
• Capital gains
• Income from investments
• Interest
• Rental income from movable and immovable properties
• Royalty income
  

RENTAL INCOME

Income from leasing real estate properties earned by non-resident individuals is subject to withholding tax at 14%.

PROPERTY TAX

Real Estate Tax
Real estate tax is levied on unused Cambodian land, including unused land with attached abandoned buildings. The tax is levied at 20% on the market value of the property. The owner of the property is liable to pay this tax.

Source: Global Property Guide

Rents: Can landlord and tenant freely agree rents in Cambodia?

The parties to a property rental contract may freely negotiate the terms - the rent, period of lease, rental fees, other legal rights and obligations, renewal, rent increase, and the conditions for the termination of the contract.


Cambodian Laws do not regulate increases in the rent at renewal of the contract, or specify any method. The landlord shall inform the tenant if he wants to increase the rent within a reasonable time (as specified in the contract). Both parties can then negotiate the new rent. If the negotiation fails, the contract may be terminated.

Security Deposits

There is no legal restriction on security deposits or rental deposits. Rental deposits are normal, the most common being from three months to six months’ rent, depending on the lease duration: short or long term. Security deposits are rare.

What rights do landlords and tenants have in Cambodia, especially as to duration of contract, and eviction?

A lease contract can be made for an undetermined period (though an undetermined lease may not exceed 12 years), or a determined period, which can be long term (15 years) or short term. There can be an option to renew, by mutual agreement between the parties.

A lease contract can be oral if the lease is less than one year, but must be written if the lease is longer than one year. Any oral lease agreement is considered to be a temporary lease, and can be terminated at any time by giving prior notice equal to the rental payment period.

If no prior notice is given by either party and there is no clause mentioning the automatic termination at the end of contract, in the case of both determinate and indeterminate contracts, the contract is automatically renewed.

Termination of the contract by either party is not easy, if the lease contract does not contain a termination clause. Cambodian Laws do not set out a suitable prior notice period for eviction at the end of a lease, except in the case of the undetermined lease contract, which requires at least one or two months prior notice for its termination. Therefore it is very important to insert a termination clause in the contract, providing a suitable prior notice for termination of the contract.

Termination before the contract’s date of expiry by the landlord is possible if:

• The tenant does not perform his obligations or
• The tenant improperly uses the lease property in a manner inconsistent with its normal function or
• The tenant uses the property in a manner which causes damages to the leased property.
  

Subleasing is prohibited, unless explicitly permitted by the contract.

Clauses for terminating the contract before its expiry date may be included in the contract. In the absence of such a clause, the suffering party shall be entitled to remedies and damages, in accordance with the lease contract and/or the court’s decision.

The contract ends if the tenant dies, unless the tenant’s heirs want to continue it. But the contract remains in effect if the landlord dies.

The effectiveness of the legal system

Disputes between landlord and tenant are resolved through the ordinary provincial or municipal courts. Two attempts at reconciliation in front of a handling court clerk or judge are required, after the filing of the complaint, before the trial hearing.

The timeframe for the trial process is not clearly defined by law.

If one party is unsatisfied with the court’s decision, he can appeal to the higher courts.

Legislation

Laws and Regulations which cover Landlord and Tenant issues:

Land Law dated August 30, 2001; and
Decree-Law No. 38 dated October 28, 1988.
Circular No. 01 Dated January 18, 1990 regarding the management of Residences and Land Leased to International Organizations, Foreign Companies and Foreigners.

Brief history

Cambodia does not have one law which entirely states the rights and obligations of landlord and tenant. There are two different laws (Land Law, dated August 30, 2001, and the Decree-Law No. 38, dated October 28, 1988). There are also regulations (such as Circular No. 01SR on the management of residence and land leased to International Organization, Foreign Companies or Foreigner dated January 18, 1990), which authorizes Cambodians to lease their real properties to international organizations, companies and guests.

Decree-Law 1988 defines the validity and types of frequently used contracts, and has governed contract law in all transactions since the 1993 election.

The 2001 land law provides only general provisions. Detailed formalities regarding real property leases will be issued later, by Sub-Decree of the Royal Government of Cambodia.

Source: Global Property Guide

Gross rental income on flats in Phnom Penh is around 4.6%, reaching as high as 4.88% for 120-sq. m units. The average selling price of flats is around US$2,502 per sq. m.

There is no yields information on villas in Phnom Penh due to insufficient data.

Source: Global Property Guide

Foreign investment, especially from South Korea and other countries in North Asia, has been key to this recovery, surging to 8 percent of GDP in 2007 from less than 1 percent in 2004.

Most of the new construction projects are headed by Korean construction and investment companies. The biggest foreign direct investment to date - $2 billion - is being made by World City of South Korea, for Camko City, being built on a 119-hectare, or 294-acre, site on the northwestern outskirts of Phnom Penh.

The project, started in 2005 and scheduled to be completed in 2018, will include residential, commercial and public structures.

Opening the country to foreign trade and attracting tourists, especially to the temples of Angkor Wat, has supported the expansion and even produced the beginnings of a middle class.


As a result, property prices have experienced their own boom in recent years. Charles Villar, general manager at Bonna Realty Group, the largest real estate agency in Cambodia, estimates that property prices in Phnom Penh rose between 50 percent and 80 percent in 2007 and between 80 and 100 percent so far this year, depending on location. Land prices in the city center have skyrocketed this year to more than $3,000 per square meter from about $500 a square meter in 2003.

Meanwhile, rental prices have increased 20 percent to 40 percent over the past year, Villar said. A large villa with five to seven bedrooms in a good location will rent for about $5,000 a month, while a two-bedroom place will average $1,300 to $1,500, depending on location.


Despite the sharp increases, prices still compare favorably with those in Bangkok, where a four-bedroom villa would cost more than 200,000 bhat, or about $6,000, a month. And the Cambodian sites are attracting plenty of speculative interest from foreign buyers, mostly from within the region.

Bretton Sciaroni, a senior partner at the law firm of Sciaroni & Associates in Phnom Penh, says foreigners still cannot buy land, but they can buy leasehold properties - typically a 99-year lease or a 70-year lease with an option to renew for another 70 years. The latter formula “was found in the 1994 investment law and, although it dropped out of the law when it was amended, the formula is still used,” he said.

There are rumors that the laws will be changed to allow foreigners to buy land outright but that is unlikely, Sciaroni added. “If anything, earlier this year, the prime minister made it clear in various statements that foreigners will not be allowed to hold property freehold. For this to change, not only would laws have to be amended, but the Constitution as well,” he said. “So we do not expect the law to change anytime in the near future.”

Source: A weblog for the real estate investors

Preparing Your Home for Sale

Preparing to sell your home can be stressful and time consuming. Knowing what kind of things to focus on can greatly reduce your stress and keep you focused on the projects you need to undertake in preparing your home for sale. Having a home that is clean and in good condition will typically sell for a higher price and more quickly than homes that are not well maintained.

The difference between a home in good condition and one that is not many times is as simple as a new paint job or replacing damaged fixtures throughout the home. Put yourself in the potential buyers’ shoes and take a good hard look at your home. What would you want to have fixed if you were to buy this house?

When preparing to sell your home don’t neglect the yard. Your yard is the first thing home buyers will see. Keep you lawn mowed and hedges trimmed. If it is spring time plant some flowers in the front to add some color. Pick up any clutter than is in your yard, front and back. I’ve seen homes where all is going well and I like what I am seeing until I get to the backyard and it looks like a junk yard. Typically, the seller of the home will clean it up but sometimes they don’t and the buyer is left with the mess. Plus upon seeing the mess the buyer may forget about the good things and remember your home by, “the one with all the crap in the yard.”

Consider painting your home, especially the inside. Newly painted walls add to the overall appearance of your home and may help it sell. Repair doors, windows, walls, and anything else that needs to repaired. If there are things that you can’t afford to repair at the time or if you are not interested in repairing it know that it will reflect in the price people are willing to pay for your home.
 

Inexpensive Tips to Sell Houses

In the past years, selling houses focus only on recreating the exterior so as to invite buyers. However, a shift has now occurred wherein the emphasis is given towards the inner appeal as well. After all, there is no point in selling (or buying) a beautiful house judging by the external offers it has if you are going to sacrifice the design of the interior.

Look at your own house with a critical eye, as if you are somebody looking at another person's house. Don’t dismiss any flaws that you think are acceptable enough on your own perspectives. Think as if your prospect buyers are the worse critics you will have and your future dignity would lie on them. Strange isn’t it? But we tell you, this technique is effective enough to warrant easy market for you. This is because you have already limited the possibilities of rejection and scrutiny.

As you may have already noticed, there are various television programs that let people see what they can do in their own houses that could make them appealing for buyers. In most cases, the houses are reconstructed in inexpensive ways yet cause dramatic changes. Well, it would help if you'll follow the suggestions such home improvement shows provide.

But you must always keep in mind that you have to maximize the effects of such changes through incurring lesser expenses. Thus, you must seek the best prospects that would bring out the best in your house while not taxing your wallet.

For one reason or another, the floor seems to matter much and buyers took notice on the type of flooring you have used in your house. Also, focus on the condition of your flooring. If this needs reconstruction then see to it that it is reconstructed in the least possible expenses you can have.

Don’t hasten the changes though. You will have to plan the design and the outcome of the changes in your flooring. Go for economical yet appealing floor tiles and other types of flooring. There are lots of options for you. In fact, there is almost an endless list of materials you can use to furnish your floor with. Among the most common are laminated tiles, ceramic tiles, cork tiles, wood and others. Of course, the type of material you will choose will be largely dependent on the entire setting of your interior.

Some houses seem to have its distinct odor that act as repellant against promising buyers. You may not know this but you must understand that any possible turn offs should be removed.

This is typically hard to judge. Since you have already lived in your house and has already become accustomed to its smell, it would be hard for you to detect any unwanted odor. In this case, you must ask the assistance of another person who hasn’t been in your house for long. Whatever his or her opinion is, you have to analyze and consider them in great detail.

Also, take a look on your walls. Maybe there are marks that should not be there. Or perhaps cracks are already appearing on some of its portions. Wall blemishes could affect both the price and the interest of the buyer of your house. Be sure that you have completely fixed your walls that expansion cracks and nail pops barely have their traces.

These are just some measures you could use to help get the higher prices for your houses while incurring minimum expenses on the repairs.

Sell Your Home At Top Dollar With An Inexpensive Face Lift

Have you ever why some homes sell faster than others? It could be the very same model in the same neighborhood, and one home moves quickly whereas some just remain on the market with disinterested buyers. Here are some tips to stage your home to not only sell it, but to get top dollar.

First, examine your home from the curbside as though you had never seen it before. It may be difficult to really put on your objective glasses, but if you can, you will be surprised of how accustomed we become to that broken gate, the damaged garage door, or the garden hose that isn?t rolled up. These may sound like minor issues, but to the home buyer, they?re touring your home with a magnifying glass and a white glove. Begin your evaluation by writing down everything you notice that could improve your property in the slightest way. Here are some inexpensive, easy tips to enhance your home and get top dollar!

Be sure to replace or trim trees and plants and try livening up your garden with some colorful, fragrant flowers near the entrance. In some cases, you can even use beautiful silk floral pieces in large pots as long as they look real!

Varnish or paint the entrance door with subtle colors such as black, burnt brown, gray, forest green, or white. If you?re home is older, replace the old door with a glass entrance door. If you have a screen door, consider purchasing one of the newer models and make sure the latch works for easy entry. First impressions and anticipation of walking into your ?dream house? begins here.

The first thing people notice is if the home is bright and cheery. The last thing homebuyers want to do is walk into a dark hole and depend on a realtor to turn on (and off) the lights and open (and close) all the blinds or shades. The cheery greeting your home gives to people will give them an immediate impression as to how they FEEL about your home. If you have pets, be sure to pack away all their toys and dog foot or kitty litters. Keep your home smelling fresh and clean that doesn't repel the prospective homebuyer.
Flooring is one of the most important features homebuyers will judge. Clean the carpet and don?t request that buyers take off their shoes. Do everything in your power to welcome visitors and keep them there. Any excuse you give them NOT to view your home will lower your numbers. Remember the more people who view your home, the better chance you have in selling it.

Replace bathroom fixtures with the newer ones ?Hollywood lights are out. Make sure the bathtub is scrubbed clean as well as shower stalls. Buy a new shower curtain, if necessary and caulk around tiles in the shower and tub. Be aware that bright colors or children's colors may be a turn-off to new buyers. Paint your walls with neutral colors such as beige or off white.

Take out the clutter, garbage, stinky shoes, and put your dirty clothes in the hamper. It's very important to have those beds fixed in the morning too! Clean the sliding glass door to the patio as well as the patio furniture. Cut and trim the grass often for a fresh, clean smell.

People want to imagine their families living in their future home and you have the ability to set the stage. The home should be complete with bar stools at the breakfast nook, soft lighting, and nice furniture. Remember, the backyard has become an extension of the home. Show off your BBQ, patio furniture or children's play area in a way that they feel their own family would enjoy.

If you have a pool, have the pool guy come over so your pool is sparkling clean. Buy some Tahiti candle torches for a tropical look. If you have a bar, place plastic glasses and trays as though you were ready to have a party. If you don?t have a covered patio, you may want to make a small investment by buying a canvas cabana that warms the heart and sets a romantic mood. Put some candles on your patio table and accentuate with lots of plants surrounding the patio.

Blinds, plantation shutters, and Roman shades are in. The least expensive, but most popular choice, is to replace your verticals or outdated mini-blinds with wooden blinds. They?re easy to install yourself and will make a big difference in the overall look of the home. You may find some very nice Roman shades that are reasonable and can be used in lieu of curtains as a trim. Curtain panels from the high ceilings will serve as a window treatment and add elegance or magnitude to your room also.

Make sure your kitchen and bathrooms are always clean and remember that homebuyers will look in your pantry and closets. You can always fake it by cleaning the sinks every morning before leaving for work and wiping down the mirrors if there are any noticeable spots. Never leave dirty dishes or pots and pans in the sink. Just hide them in the dishwasher.

Dare to be open enough to get opinions from your friends, neighbors, and realtor. Ask if they have any suggestions as to how to arrange your furniture and be willing to give it a try to see how it looks. Their perspective may make a big difference in your entire floor plan. People are looking for space so you want to do whatever it takes to make your home look open and spacious.

If you feel that your bottom line can handle more expensive upgrades to compete against other newer homes, you may want to replace old carpeting with 18" tile and new carpeting in the bedrooms with a thick pad. I wouldn’t suggest changing your countertops to granite or changing the kitchen cabinets as that would be very expensive and may not be compensated unless you are doing a total renovation.

Selling a Home - The Preparation Stage

There are certain processes that are vital in any endeavor. And selling a house, being something that truly posses its own difficulties, also require some activities that would prepare it for the subsequent processes. Here are some of the initial stages that mark the preparation of your house for sale.

Getting started

You want your house to be impressive and friendly enough with future buyers? Then clear the clutter.
This might be among the most difficult thing you would do with your house. During your years of ownership, you might have attached emotions into your house that it would be hard to detach yourself from it. But this is more than that.

Years of emotional attachment could mean years of clutter collection. We collect all sorts of materials that could be difficult to separate ourselves from. This clutter would be evident on the top shelves, drawers, countertops, closets, attics, garages and basements.

Well, if you want to sell your house immediately, then you must let the buyer see more open spaces.
Look then at your house from an anonymous point of view. Try disconnecting your emotions for awhile and see it from another person's eyes. If you can't do this then find someone who will gladly do it for you.
You might not realize the extent of help this activity could bring but you would soon find that the precious materials in your eyes are not as much precious from the view of another.

This can't be done unless you start thinking your house as a commodity. If you would have noticed, when you buy a house the real estate agents would refer to it as your "home" but if you are selling one, he would make it a point to call it as "property". This helps the process of realization occur faster since words connote even the emotions that are embodied in each article.

Your realization must come from the point that it is no longer your home but theirs. By doing this, you will re-channel possibilities that could inadvertently make the selling a longer process.

Separate the person from the personality

When selling a house, be prepared to separate even the most valuable things from it. It would do you no good if you would leave picture frames with your own photos on it. Instead, leave anonymous items that would make the buyer feel that this is a potential home for him and not a trace of your own personality could be found.

If the buyer of your property sees anything that would remind him that this is not his home yet, such as a family picture hanging on the wall, you could shatter their hopes that this is the potential home for them. These would leave your marks in the house which in turn, could repel the prospect of recreating the personality of the home from their own point of view.

Remove all things that would remind the buyers of the memories of the previous owners. Put them all in storage somewhere apart from the attic, garage and basement.

The two suggestions we have given here are not only effective for making your house a bit friendlier for sale. This also eases the hard process of letting go of something you have owned yourself for long. Undeniably, this would take much effort on your side since it is not that easy to make you forget of something you have accustomed yourself to love.