1. Fast-Growing Economy
Cambodia has experienced stable growth for over the last 20 years. Despite the COVID-19 pandemic, Cambodia has incurred just a negative growth of 3.1%, which is comparatively better than the global average of negative 4.9%, according to the most recent update of Cambodia overview from the World Bank. Even though the economy took a hit from the current lockdown situation due to the 20 February community outbreak, Cambodian economy remains substantially stable even in times of economic crisis. Moreover, Cambodia's economy is predicted to bounce back and rise by 4% in 2021.
With the constant economic and population growth, the Cambodian population is projected to reach 19.14 million by 2030, according to United Nations World Urbanization Prospects in 2014. This population increase will demand for new houses by 1.1 million between 2014 (when the study took place) and 2030, 800 000 of which will be located in Phnom Penh. This presents a huge opportunity for real estate developers as well as any investors looking to finance for potential return on investment in real estate.
2. Political Stability
Since 1992, Cambodia has restructured its economy drastically and transitioned to a dollar-based economy country that opens for trade and welcomes foreign investments. Furthermore, an article by Invest Monitor mentions that political stability also attracts a lot of foreign direct investments (FDI) which contributes to the rising real estate market and increase of property prices. Rapid economic growth and infrastructures development are the two evidences of this stable economy.
In addition, political stability and economic growth also led to the rise of the middle class and professional individuals. As the middle class has grown and accumulated adequate income, many have invested into buying real estate and housing, thus creating more investment opportunities in the real estate industry.
3. Dollarized economy
During the United Nations mission to democratize Cambodia in 1992, the US dollar was introduced to circulate in Cambodia's economy, and since then it became the second currency of Cambodia. According to the National Bank of Cambodia, dollars accounted for more than 80% of the total transactions conducted in Cambodia.
Having the US dollar as an alternative currency to carry out transactions provides multiple benefits for foreign investors. According to an article titled “Dollarization in Cambodia '', published on UKEssays, transferring money in and out of Cambodia conveniently as it does not require crossed-currencies. Moreover, US dollars is used as the global reserve currency at the Central Bank, which makes it the most stable currency in the world. Additionally, dollarization offers an extra layer of protection against foreign exchange risk for foregin direct investment. As a result, this also shields Cambodia from inflation.
4. Promising return of investment
It is evident that investing in Cambodia real estate is profitable. Throughout over 20 years of continuous economic growth, real estate investors have seen significant profits due to high return on investment. Cambodia's housing and real estate are a lot more affordable than other ASEAN countries and it provides a significant return on investment with residential spaces rental yield that can reach up to 6-8% per year. Thus, giving Cambodia another major attraction to invest in.
To conclude, the return on investment in real estate in Cambodia is very promising. With factors such as the growing economy and encouraging government policies, the real estate market is filled with potential for growth. Moreover, the benefits provided by dollarization and a stable political climate also encouraged foreign investment into the country.
Are you looking to invest in Cambodian real estate? Don’t hesitate to reach out and get in contact with our R&F consultants. Our resourceful consultants are here to provide research data, analytics, and insights to help you make the best and most well-informed decision. Contact us and learn more about this lucrative investment!
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