An Overview of Cambodia 

The last forty years have seen some monumental upheavals in the population size, health and wellbeing, and the education status of most Cambodians. However Cambodia is rapidly making up for lost time. The population is growing and becoming increasingly urbanized. The general health status is improving across the board as access is improved to basic health and sanitation services. Education is improving as more and more Cambodians recognize the importance of quality education in securing their future. The political situation has stabilized and as improvements continue, further opportunities will be unearthed. The economy is booming on the back of strong overseas investment and growth in the Asian region. In particular, the growth of tourism provides some exciting opportunities for well-placed property investments and development.

Economy 

GDP and Inflation

- The latest figures of real GDP growth in 2005 have just been released and at 9.8%, Cambodia is exhibiting phenomenal growth. This is not just a one off as it is on the back of four previous years of an average of 6% growth.

- When coupled with a low inflation rate of 3% the economic outlook is extremely positive.

Overseas Investment 

From 2002-2003 foreign investment in Cambodia was relatively stable. Following a slight dip due to political unrest in 2003, the growth has been astronomical with a 450% increase over 2004-2005 period.

The Cambodian Development Corporation (CDC) expects this trend in FDI to continue, as is indicated by further strong investment in the first quarter of 2006.

When analysed by sector we see that cement, petroleum and mining which were virtually non-existent in 2004, exceed 150 million each in funding in 2005. The tourism and energy sectors also show significant growth.

Tourism in Cambodia 

- Improve political stability since 1997 has seen a resurgence of Cambodia as a tourist destination. Today there are 5 times more people coming to Cambodia that in 1998.

- The 1.4 million visitors to Cambodia in 2005 represented a 35% growth form the previous year, a trend that has been steadily increasing over the last seven years and is projected to continue at this rate.

- The total number of tourists by 2010 is expected to be just over 3 million and should provide an annual income of $2.35 billion USD.

- Average spend per visitor is also expected to increase. In 2005 this was $415 USD, and by 2010 will reach $780 USD as the tourist demographic changes from backpacker to a higher end user with greater disposable income.

- Cambodia has not only seen growth in its gross number of arrivals, there has also been a dramatic shift in the make up of these arrivals, specifically as Siem Reap, where the traveler is becoming tourist focused.

- Currently Phnom Penh and Siem Reap have international airports. Construction for the international airport in Sihanoukville to service the coastal regions is expected to begin in mid 2007 and the Asiai Development Bank (ADB) has recently announced funding for an international airport to be developed in Ratanakiri to service the eco-tourism region.

Cambodian Property Market 

After 40 years of isolation from the rest of the world due to political turmoil, civil war and economic devastation following the Khmer Rouge period, Cambodia is rapidly waking up and realizing the economic opportunities that lay ahead. Whilst the economy is in these early stages of development, the risks are definitely real. However, there are huge opportunities for investors prepared to brave these risks and get in at a ground level. In no industry is this more prevalent than property.

Property ownership in Cambodia is very high after the large-scale land distributions during the communist period of the 1980’s. Most families own their own home and it is in property that most individuals hold the majority of their wealth. There is not a history of investing in property, however, as land prices were stagnant for a very long period and demand was so low that opportunities quite simply were not available. This meant that land values were based on Cambodians’ ability and willingness to buy, and were therefore incredibly low by world standards.

The lack of buying and selling of property in Cambodia meant there was no need for a real estate industry. Without a real estate industry the concept of market value, freely available statistics on sales, demand and supply trends as well as the tools available to most property developers around the world simply are not available. This means there was and still is the potential to buy properties that are grossly undervalued and provide huge returns.

Over the past 5 years, investors in Phnom Penh and Siem Reap have been taking advantage of these opportunities and making fantastic returns. Khmer returning form overseas have fuelled a dramatic increase in demand in Phnom Phen, bringing back with them an understanding of the potential value of properties based on tourism trends and economic development, as well as the required capital.