Freehold for Cambodia ‘being discussed’

The government in Cambodia is considering allowing foreigners to buy real estate freehold. Although it may be some time before change comes about, one property experts believes it could be one of Asia's best buys.

It isn't clear yet what this might eventually mean. As in many Asian countries, foreigners can only own land in Cambodia through leasehold title, not freehold. This is enough of a concern for many foreign investors to keep them out of the market altogether.

Perhaps Cambodia will allow foreigners to own condos outright (as Thailand does). Or perhaps they'll open the market even more broadly and allow foreigners to own land freehold, as well.

But there are options, according to Lief Simon, author of a new crash course How to be a Global Real Estate Investor. You could buy leasehold and leave it at that. You'd need a Cambodian in the deal (someone to set up the lease) and holding a lease to a piece of real estate isn't the same thing as owning that piece of real estate. However, leases are typically 99 years and renewable.

You could become Cambodian. In fact, it seems to be a straightforward process that requires an investment of $50,000 (called a "donation" to the Cambodian government). Once you're a citizen, you'll encounter no restrictions to property ownership. Of course, there's no guarantee that some new government someday in the future might not revoke your paid-for citizenship.

But what most foreigners do is establish a local corporation. You need a Cambodian partner. He owns 51%, you own 49%. He signs over the shares to you, and your attorney holds them. Your Cambodian partner also signs a power of attorney allowing you to act on his behalf for the corporation; in effect giving you control over the corporation's assets, that is, the real estate.

This approach has been used in Thailand for many years with success. 'This isn't a fail-safe method of ownership, but, I know guys doing it, so far without problems. They've decided the rewards are worth the risk,' said Lief.

'I'm considering getting in myself. I believe the boom in Cambodia will continue for many more years. In fact, it's just getting started. Most development to date has been in the capital and, to a lesser extent, other major cities around the country. Cambodia could be on its way to becoming the next retirement hot spot in Asia, meaning new areas of the country would enjoy attention,' he added.