Law change allowing foreigners to own property
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Law change allowing foreigners to own property
Anyone following the story re Cambodia changing the law to allow foreigners to own property.
Wondering if its a hyped up myth being perpetuated by the local realtors.
Seems very unlikely Cambodia would let foreigners own land given how adamantly against it all their neighbours are.
Perhaps they'll let us own condo's like they do in Thailand and hopefully keep the visa rules relaxed so we can live in them as well.
Alternatively, if they let foreigners own land, it might be a sign that the Cambodian property bubble is about to burst
Eventually the bubble must burst, and rich Cambodian property speculators will be looking for an exit strategy.
Any thoughts ?
Wondering if its a hyped up myth being perpetuated by the local realtors.
Seems very unlikely Cambodia would let foreigners own land given how adamantly against it all their neighbours are.
Perhaps they'll let us own condo's like they do in Thailand and hopefully keep the visa rules relaxed so we can live in them as well.
Alternatively, if they let foreigners own land, it might be a sign that the Cambodian property bubble is about to burst
Eventually the bubble must burst, and rich Cambodian property speculators will be looking for an exit strategy.
Any thoughts ?
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- Doctor Seuss
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The proposed law... which will go through.. is to allow foreigners to own "property" specifically... and not land.
The law to own land remains the same, a foreigner may hold only 49% whilst a Khmer must own 51%. Of course this can be legally loopholed by the foreigner obtaining multiple Khmer nominees who each hold 10% and dont know each other. I know one law firm here who has Cambodian citizenship and so can act as the nominee 51% shareholder for someone wanting to buy land. They simply sign over their power of attorney rights for their holding to the foreigner. There is still an element of risk, but not as much as letting your girlfriend be the 51% shareholder.
Of course options remain for foreigners to buy land ...by getting a Khmer passport.. either by being well connnected, investing more than a million dollars in an economic development project, or by bribing someone $50,000 (although I hear this is getting more difficult)
The reason the government is passing this is law is to encourage investment into the country. You'll notice many high rises and apartment buildings going up all over the city. These things are financed by an initial capital injection from the investors and then building work continues from the cash flow obtained from the advanced sales of the unfinished blocks (advanced buying of unfinished blocks in itself is a good investment, as when the building is finished the price you paid whilst still under construction can sometimes double).
The investment and building construction companies didnt count on Khmer culture when starting this building spree. Khmers have commented that living in apartment buildings, crammed in with other families, reminds them of the Pol Pot times and its not their culture to live like that. As such, no one has been buying these properties. Two Korean companies building on separate locations in Toul Kok have had to stop construction halfway through because they have no advance sales of their properties to provide the funds for further work. The government has bailed one of these companies out by injecting the cash they need to continue building, in exchange for a share of the company.
The government, now with its own self interest, as well as the interest of the investment and construction industries, have realised that the market that these buildings appeal to are more foreigners than Khmers, and for them to succeed, foreigners need to be able to purchase property.
This new law only relates to property though.. the land law will remain the same... 49/51
The law to own land remains the same, a foreigner may hold only 49% whilst a Khmer must own 51%. Of course this can be legally loopholed by the foreigner obtaining multiple Khmer nominees who each hold 10% and dont know each other. I know one law firm here who has Cambodian citizenship and so can act as the nominee 51% shareholder for someone wanting to buy land. They simply sign over their power of attorney rights for their holding to the foreigner. There is still an element of risk, but not as much as letting your girlfriend be the 51% shareholder.
Of course options remain for foreigners to buy land ...by getting a Khmer passport.. either by being well connnected, investing more than a million dollars in an economic development project, or by bribing someone $50,000 (although I hear this is getting more difficult)
The reason the government is passing this is law is to encourage investment into the country. You'll notice many high rises and apartment buildings going up all over the city. These things are financed by an initial capital injection from the investors and then building work continues from the cash flow obtained from the advanced sales of the unfinished blocks (advanced buying of unfinished blocks in itself is a good investment, as when the building is finished the price you paid whilst still under construction can sometimes double).
The investment and building construction companies didnt count on Khmer culture when starting this building spree. Khmers have commented that living in apartment buildings, crammed in with other families, reminds them of the Pol Pot times and its not their culture to live like that. As such, no one has been buying these properties. Two Korean companies building on separate locations in Toul Kok have had to stop construction halfway through because they have no advance sales of their properties to provide the funds for further work. The government has bailed one of these companies out by injecting the cash they need to continue building, in exchange for a share of the company.
The government, now with its own self interest, as well as the interest of the investment and construction industries, have realised that the market that these buildings appeal to are more foreigners than Khmers, and for them to succeed, foreigners need to be able to purchase property.
This new law only relates to property though.. the land law will remain the same... 49/51
Doctor Seuss wrote:(advanced buying of unfinished blocks in itself is a good investment, as when the building is finished the price you paid whilst still under construction can sometimes double).
I agree with what you said. I was up in PP the other day and saw the model of that gold 'erection' planned, as well as hearing about 2 other high rises on the books. They certainly ain't targeted at Khmers in the street, so this leaves the regional tzars and snakeheads ... as well as the more well heeled of us white devils, as the expected residents/investors.
Having spent the 80's on the Gold Coast in Queensland I can attest to the potential of buying off the plan; IF the cards fall into place and the thing gets completed. I saw many instances where pre-sales disappointed and the hole in the ground spent a decade as a carpark. The fate of the early buyers and their deposits? Just about all of them lost everything they put in.
If this happens to any more of these projects, I'd hate to be an early deposit payer praying for this government to bail me out. I reckon it'd depend mostly on the connections of the principal at the time, and the proximity to the election. I'd rather buy lottery tickets!Doctor Seuss wrote:Two Korean companies building on separate locations in Toul Kok have had to stop construction halfway through because they have no advance sales of their properties to provide the funds for further work. The government has bailed one of these companies out by injecting the cash they need to continue building, in exchange for a share of the company.
btw: can anyone imagine the effects on traffic, drainage and sewerage these 800 or so new apartments will have on the city?
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Yes, if there's enough disparity with neighbouring country realestate prices, that may buoy the local marketif property value in saigon is 8-10x of pp's like white coi posted, bubbles ain't to burst anytime soon
http://www.abc.net.au/news/stories/2008 ... 149642.htmFigures from Bonna Realty, a leading estate agent, suggest the price of prime Phnom Penh land doubled last year to $US3,000 ($3,376) per square metre compared to less than $US500 ($562) in 2000.
By contrast, land in Bangkok's downtown Silom district is $US5,000 ($5,626) per square metre, while Ho Chi Minh City, the hub of neighbouring Vietnam's red-hot economy, prices can be as high as $US15,000 ($16,877).
Dr Seuss
Thanks for the informative post. Yes, condo ownership sounds feasible. Just so long as Cambodia maintain the easy visa rules.
I know a few Thailand expats who bought condos during the lax visa rules and now face increasingly difficult hurdles to stay in the country
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This guy is fairly bullish re Cambodian property
Foreigner has 51% ??
Hmmm, 99 year lease then pay $1 to convert to freehold if law changes.
I wonder how that would hold up in court if the Khmer nominee wanted a bigger cut
http://www.squidoo.com/property-cambodiaFor now however, potential foreign investors have two options, 1: form a company, and partner with one or more Cambodian nationals, the Cambodians sharing 49% of the company between them, and the foreigner having the controlling 51% share, or 2: buy leasehold often for periods of around 99 years, which is the tenure of the David Stanley Redfern properties mentioned above. The contract on DSR's Cambodian property states that, should the law change buyers will be able to buy their property freehold for $1.
Foreigner has 51% ??
Hmmm, 99 year lease then pay $1 to convert to freehold if law changes.
I wonder how that would hold up in court if the Khmer nominee wanted a bigger cut
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Yes... and it worked. Its a bit of a hassle when transfering the title; only because of the extra certifications and documents, though.It should be able to have a land-owning company (49 - 51% in the favour of the Khmer partner) but structure the voting rights so that the foreign partner has control in this way. Does anyone know about this?
if you need any information about this, PM me.
- Doctor Seuss
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Yes, this is how foreigners can come to own land here, BUT the legal trail has to be flawless, and if your lawyer is honest with you he will say this "its a safe and legal as anything in this country is and there hasnt been a situation where it has been challenged or put to the test yet". Its not 100% safe because the legal contracts, by this country's nature, are not 100% enforceable. If they were to be broken you would want well connected friends or a well connected lawyer.RobW wrote:It should be able to have a land-owning company (49 - 51% in the favour of the Khmer partner) but structure the voting rights so that the foreign partner has control in this way. Does anyone know about this?
To minimise the risk, the Khmer 49% is often shared amongst 4 or more nominees, none of which know each other.. preventing them from forming a majority. Each of the nominees sign a nominee agreement and are paid a small annual fee as consideration ($100-$200) and also sign over Power of Attorney rights governing their ability to make decisions on the land.
This obviously needs to be put together by a skilled lawyer and the small risks explained clearly. PM me if you need a recommendation.
This is a confusion of facts. Obviously talking about concession land, which can be leased by the government but can only be used for economic land development (doing something on the land that will provide economic activity). There is no 'purchase price' to get access to concession land, but a series of non-receipted payments tp process the many levels of government approvals and activities required to acquire the land.offroadscholar wrote:wrong, 51%some fool wrote:For now however, potential foreign investors have two options, 1: form a company, and partner with one or more Cambodian nationals, the Cambodians sharing 49% of the company between them
or 2: buy leasehold often for periods of around 99 years, which is the tenure of the David Stanley Redfern properties mentioned above. The contract on DSR's Cambodian property states that, should the law change buyers will be able to buy their property freehold for $1.
On top of the initial cost of acquiring the land, there is an annual rental fee which, depending on the quality of the soil, varies between $1 to $5 per ha per year.
The cost of acquiring this land can vary between $150 to $1000/ha depending on the quality of the land and how far up the food chain of the govt you are dealing with, because everyone adds their own 5% commission.
2 years ago, concession land could be acquired for $30 to $50/ha, and the massive increase in price reflects the current demand from overseas investors wishing to acquire the land for economic development.
This land cannot be converted to freehold for any price, as mentioned above. It is, and will always be, State land. HOwever a new law was recently passed giving the leaseholders a title that comewhat resembles standard freehold title.. whilst not giving ownership of the land to the leaseholder, it recognises the value of the land which the leaseholder has merely from holding the lease, and this document will be acceptable to banks and can be used a form of collateral (much the same as your freehold land title) to obtain loans to further develop the land.
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Agree. If the contract is challenged, you want strong backup, (a well connected lawyer) and paying his western priced fees for the initial paperwork could be good insurance .Its not 100% safe because the legal contracts, by this country's nature, are not 100% enforceable. If they were to be broken you would want well connected friends or a well connected lawyer.
Another method I've seen is the Assignment Agreement.
Works like this.
You buy the property in the name of a Khmer friend (assignee) and you keep the title.
Well connected lawyer draws up assignment agreement between you (assignor) and the assignee.
In the contract the assignee agrees to a bunch of terms that basically boils down to the asignee and his/her family waivering all rights to the property and agreeing to transfer the property to whomever the Assignor requests.
In return for acting as the assignors representative, the assignor agrees to pay the assignee a percentage of the total sale price of the property, should it be sold.
To look good in a court of law, a generally accepted commercial percentage of at least 3% is recommended.
So, effectively you own 97% of the property using this method.
Supporting paperwork such as the House Sale and Purchase Agreement are referred to in the assignment agreement.
The house sale purchase agreement names you and your khmer represenative as the Buyer
Banks statements showing paper trail of moneys coming from your account to sellers account also worth keeping.
Suspect this method is not 100% either but sounds relatively OK.
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Some sensible advise above.
However, let me just make one thing a little clearer.
The RGK can not change the Land Law with regard to foreign ownership even if they were so inclined to do.
The 'Khmer Only' ownership part of the Land Law is actually encoded into The Constitution.
The changes that were being talked about refer only to property and property on the 1st floor upwards, not even ground floor property as this rests on the actual land.
Provisions are provided for Land Ownership Companies – as mentioned in part above – and for 49% direct ownership.
My general advice would be:
If you are just investing / purchasing a small amount, the 49% option with 51% held by your Khmer spouse (if you have one)
If you are investing / purchasing a larger amount, go to one of the better law firms here to help you set up a land holding company to complete the purchase and manage it.
The below local law firms can all help, with varying costs and fee scales:
- Sciaroni & Ass.
- DFDL,
- Sarin and Ass.
- BNG & Ass
Full contact details can be found via:
http://www.yellowpages-cambodia.com/
However, let me just make one thing a little clearer.
The RGK can not change the Land Law with regard to foreign ownership even if they were so inclined to do.
The 'Khmer Only' ownership part of the Land Law is actually encoded into The Constitution.
The changes that were being talked about refer only to property and property on the 1st floor upwards, not even ground floor property as this rests on the actual land.
Provisions are provided for Land Ownership Companies – as mentioned in part above – and for 49% direct ownership.
My general advice would be:
If you are just investing / purchasing a small amount, the 49% option with 51% held by your Khmer spouse (if you have one)
If you are investing / purchasing a larger amount, go to one of the better law firms here to help you set up a land holding company to complete the purchase and manage it.
The below local law firms can all help, with varying costs and fee scales:
- Sciaroni & Ass.
- DFDL,
- Sarin and Ass.
- BNG & Ass
Full contact details can be found via:
http://www.yellowpages-cambodia.com/
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Those who are bullish on cambodian real estate should read the bangkok post classifieds and see how cheap condos in bangkok and at the beach are.
Gold tower say they have received 40% of deposits-not enough to commence building I would say.
I will be inspecting gold towers prototype tomorrow and I will be interested to see if there is a sprinkler system or any form of fire protection.
Gold tower say they have received 40% of deposits-not enough to commence building I would say.
I will be inspecting gold towers prototype tomorrow and I will be interested to see if there is a sprinkler system or any form of fire protection.
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