Despite the impact of COVID-19 on Southeast Asian economies, Cambodia remains an appealing investment option for real estate investors due to its unique location at the crossroads of multiple trends.
Cambodia has witnessed substantial change since the Khmer Rouge collapsed 20 years ago. The country that was once known for severe poverty and persistent civil turmoil has outperformed expectations, reaching lower-middle-income status by 2015 and aiming for upper-middle-income status by the end of the decade.
It has not seen a recession in over two decades.
Cambodia is an important member of the ASEAN community and a crucial starting point for China’s Belt and Road Initiative. However, Cambodia has seen an increase in foreign investment from a variety of sources in recent years.
It appears to be benefiting from a reshoring movement recently, as corporations seek to relocate or grow their operations in Southeast Asia. Cambodia not only provides inexpensive labor, but the youthful vigor of one of the world’s youngest countries holds potential for long-term industrial and commercial ventures. The Cambodian government has also provided a stable environment for long-term commercial goals.
As a result, there has been an influx of global corporations establishing themselves in the country. It has contributed to a boom in the country’s construction sector, which previously relied solely on the tourism industry’s steady expansion. Simultaneously, as a result of China’s rapid economic recovery, Chinese visitors, many of whom are also prospective buyers of property, are gradually returning to Sihanoukville and Phnom Penh.
A number of conglomerates, like Prince Holding Group, have taken advantage of the chance. Neak Oknha Chen Zhi, chairman of the Group, has aided Cambodia’s economic possibilities by launching or supporting more than 80 subsidiaries, contributing to the thriving economic landscape.
Not only have the member companies under Chen Zhi Cambodia offered up investment, but they have also brought in international talent to improve Cambodians’ standard of life and create a key link between the country and the global community.
The Group’s member companies work in the real estate, infrastructure development, banking, tourist, and aviation industries.
The majority of Cambodia’s recent expansion in Cambodian real estate has been driven by Chinese investment. According to a Bloomberg report, China’s interest in Cambodian real estate investment has consistently expanded year after year – in 2018, Chinese businesses invested $7 billion to assist build motorways and real estate projects. Construction activities behind the boom in Cambodian property development, on the other hand, typically involve hundreds of enterprises from many nations.
Cambodian property is likely to grow as an investment offer in the next years, owing to robust economic growth and an appealing investment climate. Because Cambodia has one of the world’s fastest growing economies – according to the World Bank, the Cambodian economy has grown more than 7% on average for more than a decade – a thriving job market has emerged, assisting the country in diversifying its income base away from tourism, garment exports, and agriculture.
As a result, Cambodians have increased their demand for housing.
Cambodia’s strategic location in Southeast Asia, sharing borders with Thailand, Laos, and Vietnam, as well as the Gulf of Thailand to the south-west, has resulted in the country becoming a favored low-cost manufacturing base for enterprises wishing to export finished goods to developed markets.
According to The Observatory of Economic Complexity, foreign direct investment activity in Cambodia has increased eightfold over the ten years ending in 2018.
Manufacturing, in particular, has expanded, thanks in part to reduced labor costs compared to China. The Asian Development Bank (ADB) stated that the sector has grown from a small beginning to currently account for more than 30% of the total economy.
Furthermore, the ADB predicts that the economy would increase by 4% this year and 5.5 percent the next year as a result of economic recovery in major trading partners. The country appears to be recovering from the pandemic faster than the rest of the region.
In recent publications, other institutions such as the International Monetary Fund and the World Bank have supported the ADB’s assessment. It’s also worth noting that a successful vaccination program has lifted spirits locally, with Cambodia becoming only the second country in the region to secure a first shot for more than 10% of the population.
Clearly, Cambodian real estate is projected to garner increased attention in the coming years, and this trend is especially visible when compared to its equivalent in the Mekong Delta.
“The market is a lot more diverse than the Laotian market, and the occupational market is also more developed,” explains James Hodge, associate director at CBRE Cambodia. “Prices in Cambodia are generally lower than in Vietnam, and the level of market development suggests that there is frequently more negotiation room.”
Cambodian property is not only less expensive, but it also offers considerably greater value than comparable assets and has a broader spectrum of possible buyers and investors.
The current decade could be a watershed moment in Cambodian history, as the country gains international recognition as one of the most promising investment and employment destinations in the world.