Over the past decade, Cambodia's investment landscape, particularly in the real estate sector, has become increasingly attractive to foreign investors. The nation's advantageous Southeast Asian position, combined with a young and vibrant labor force, has accelerated economic expansion and urbanization. Major cities like Phnom Penh, Siem Reap, and Sihanoukville are experiencing a real estate boom due to increased demand for residential, commercial, and industrial properties.
The Cambodian government has been instrumental in promoting this growth through the implementation of investor-friendly regulations, such as the creation of Special Economic Zones (SEZs) and the streamlining of the business registration process. Furthermore, Cambodia's membership in regional trade agreements—most notably the ASEAN Economic Community (AEC) -enhances its attractiveness by providing preferential market access. Despite these advantages, foreign investors must carefully navigate Cambodia's distinct and complex foreign ownership laws and requirements.
For instance, while foreigners are allowed to own property in Cambodia, they cannot own land outright but can hold strata titles for properties above the ground floor. Understanding these legal nuances, including leasehold arrangements and investment incentives, is essential for mitigating risks and ensuring a smooth entry into Cambodia's vibrant real estate market. This foundational knowledge equips investors to capitalize on the opportunities while adhering to local regulations, thereby fostering sustainable growth and profitability.
The legal framework governing foreign ownership in Cambodia is primarily derived from the Cambodian Constitution, the Law on Investment (LoI), and the Land Law. Understanding these laws is essential for foreign investors seeking to establish a presence in the country.
The Cambodian Constitution is the supreme law of the land and plays a crucial role in shaping the country's real estate landscape. Article 58 of the Constitution establishes that land and other natural resources in Cambodia are considered state property, which has significant implications for foreign ownership. Article 44 further reinforces that „only natural persons or legal entities of Khmer nationality shall have the right to land ownership," effectively prohibiting foreign individuals and entities from directly owning land in the country.
However, the Constitution does allow for foreign investors to acquire land through long-term leases ranging from 15 to 50 years, as well as to own buildings and structures through locally incorporated companies where Cambodian nationals hold at least 51% ownership. These legal structures enable foreign investors to participate in Cambodia's real estate market while adhering to the constitutional restrictions on direct land ownership.
The benefits and protections offered to foreign investors are outlined in the Law on Investment, first enacted in 2003 and revised in 2021. By providing security from state meddling, guarantees against nationalization, and the ability to transfer funds and earnings overseas, the law seeks to foster an environment favorable to investment.
The main organization overseeing and promoting foreign investment in Cambodia is the Council for the Development of Cambodia (CDC), which houses the Cambodian Investment Board (CIB). The CDC offers one-stop services that expedite the process of acquiring required permits and approvals.
The law itself aims to create an open, transparent, and favorable legal environment to attract both domestic and foreign investment. Specifically, the law provides important provisions related to real estate investments, allowing foreign investors to acquire long-term leases of up to 50 years, with the possibility of extension.
The Land Law of Cambodia, initially implemented in 2001 and subsequently modified, forms the basis of the nation's real estate industry. The legislation defines the procedures for transferring and registering land and clarifies several forms of property rights, including ownership, leases, and concessions.
Under the Land Law, only citizens of Cambodia and legal companies with at least 51% Cambodian ownership are permitted to directly possess land. Nonetheless, foreign investors can purchase buildings and structures through locally incorporated firms and obtain long-term leases of up to 50 years.
The law also allows foreigners to own up to 70% of private units in co-owned buildings, such as condominiums, from the first floor up, excluding the ground and underground floors. The Land Law, along with the 2007 Civil Code and the 2011 Law on the Implementation of the Civil Code, forms the main legal framework governing real estate transactions in Cambodia.
Foreign ownership laws in Cambodia present both opportunities and challenges for investors. While restrictions on land ownership and sector-specific regulations exist, the country offers a favorable investment climate with numerous incentives and protections. By understanding the legal framework and adopting best practices, foreign investors can successfully navigate the Cambodian market and capitalize on its growth potential.
No, foreign individuals and entities are not allowed to directly own land in Cambodia. However, they can acquire land through long-term leases (15-50 years) or by setting up a landholding company wherein Cambodian nationals hold at least 51% ownership.
Foreigners can own condominium units in Cambodia, provided that the total foreign ownership in the building does not exceed 70%. They can also hold leasehold properties for 15 to 50 years, with the possibility of extension.
Based on precedents in other areas, there have been no retroactive penalties or nullification of sales for properties transferred into a foreigner's name. However, the future consequences for foreigners holding soft title properties in their own name remain unclear.
Whether you are an individual, company, or NGO, you can use a trust to hold various assets, including property, money, shares, and other financial assets.
There are numerous benefits of forming a trust, including privacy protection, risk mitigation, tax planning, ownership of various types of assets, and effective inheritance management.
CCU Trust (Cambodia) is an affiliate of CCU Bank - an innovative financial institution in Cambodia. Our team of seasoned trust professionals, strategically situated in Cambodia, harnesses our robust banking network and resources to offer you exceptional, bespoke trust advisory services tailored to meet your financial aspirations. We leverage a vast network of global connections to provide unparalleled trust advisory services.
CCU Trust is a subsidiary entity of CCU Bank, with the bank holding a 100% stake. Although CCU Trust is a relatively new entrant in the Cambodian trust market, it benefits from the international expertise and connections of trust specialists in the team.
CCU Trust is duly registered with the Cambodian Trust Regulator and adheres to stringent trust regulations under the supervision of this governing body. As the only bank-affiliated trust company in Cambodia, we do not engage in real estate or construction activities. Our primary function is to provide trustee services and manage assets on behalf of clients. Despite holding the assets, the Trustor retains full ownership rights as specified in the registered trust deed.
The trust deed governs the actions of all parties involved. For legal validity, the trust deed must be registered. CCU Trust operates in compliance with the Trust Regulator’s regulations, executing responsibilities as outlined in the trust deed. Should a Trustee breach the trust deed, the Trustor is entitled to seek legal recourse and file a complaint with the Trust Regulator.
CCU Trust implements a comprehensive internal control system designed to protect client assets. This system includes rigorous checks and balances, clear segregation of duties, and ongoing monitoring and supervision. We conduct regular audits to assess the effectiveness of these controls and address potential vulnerabilities. In cases of fraud, clients may file complaints with both the Trust Regulator and local law enforcement.
In the event of insolvency, the Trust Regulator will assume control of all assets held under the trust deeds managed by the insolvent Trustee, overseeing their liquidation and management. The Trustor, as the beneficial owner, retains the right to appoint a new Trustee to continue the administration of their trust.
During our initial consultation, we will meticulously outline the procedures and arrangements to be followed upon the Trustor’s death. This includes decisions on whether assets are to be sold with proceeds distributed to beneficiaries, the appointment of a successor Trustor, and other specific arrangements. We advise clients to distinguish between assets held in trust and those covered by a will to prevent duplication. For Cambodian Trustors, the Trustee will continue to manage and distribute assets according to the trust deed. If the Trustor is the sole Trustor, CCU Trust will manage the trust until its conclusion and distribute the assets as directed. For multiple Trustors, remaining Trustors may assume control upon the passing of one.
If a spouse is listed as a Trustor, they will assume control of the trust upon the Trustor’s death. If the spouse is not a Trustor, CCU Trust will continue to administer the trust and distribute the assets according to the trust deed. For immovable property, distribution will follow the Trustor’s instructions and be executed via the Sale and Purchase Agreement (SPA), with all taxes cleared beforehand.
Our rigorous legal due diligence process, conducted by third-party professionals, ensures there are no encumbrances on the property and verifies its ownership status. Only after receiving a favorable legal due diligence report will we proceed with the purchase and trust setup. Once the property title is transferred to the Trustee and the trust is registered with the Trust Regulator, the Trustor retains full rights to the asset. Should the Cambodian government initiate a compulsory purchase, it follows a structured process involving notification, property valuation, and compensation based on fair market value.
We strongly recommend that both Cambodian and Non-Cambodian Trustors open a personal bank account with CCU Commercial Bank. This facilitates smoother transactions and trust administration, minimizing interbank transaction fees.
There are no fees associated with opening an account. However, remittance fees may apply depending on the originating bank.
