Can Foreigners Own Land in Cambodia? Here’s How.

It is a common knowledge in Cambodia’s real estate industry that foreigners cannot own land property in the country. Under Article 44 of the Cambodian Constitution , “ only natural persons or legal entities of Khmer nationality shall have the right to land ownership. "

Yet, since Cambodia is a country that attracts a lot of foreign investors, the question is “are there ways for foreigners to own or have the rights to land properties in the Kingdom?”

Luckily, THERE IS, be it for residential, commercial, or agriculture purposes, a foreigner can legally own or have a right to a land property under these methods:

Ways for Foreigners to Own/Have Rights to Land Property

1. Leasing A Land Under Long-Term Contract [Leasehold]

Foreigners or foreign entities are permitted to acquire control over Cambodian-owned property through a lease agreement. Entering into long-term leases will guarantee rights over property to foreign individuals and entities.

Property lease agreements in the country may be termed for a minimum of 15 years up to a maximum of 50 years. The term of the lease can be extended for consecutive periods of 50 years . The lease contract can include a provision that the land would not be sold to anyone else without the lessee’s consent. This method is the simplest and provides some protection stating the foreigner’s legal rights to land property.

A perpetual lease may be registered against the title to the land being leased. Registration of the long-term lease with the relevant Land Office is not a condition of lease validity and there is no legal mandatory requirement to register the lease. Nonetheless, to help secure the foreigners’ land tenure and enforceability against third parties, perpetual leases should be registered against the title of the land with the relevant Land Office. Once registered, the relevant Land Office will issue a lease certificate to the lessee. The lease gives the lessee all the necessary rights to develop the land.

Moreover, a foreign bank or foreign entity can take security over real estate in Cambodia. In fact, it is very common for foreign lenders to set up a structure of securities in Cambodia, including security over real estate in order to guarantee payments. A borrower (local or foreign) can grant hypothecation over a long-term lease and such act can be recorded in the certificate of the long-term lease to serve as security for the payment of the borrower’s debt.

2. Investing In Land Through Concessions

Allowing a person or legal entity to occupy, utilize, and have rights over land property is called “land concession,” which is established under an agreement issued by government authorities.

The most sought-after concessions are ELCs or Economic Land Concessions that are generally allocated for agricultural developments. Additionally, ELCs allow investors to clear land for industrial purposes. However, concessions are only limited to lands that are no more than 10,000 hectares. But likewise with the long-term lease, this method is granted through a 50-year concession and is subject to renewals.

Application of such might take some time since the investors must apply for their rights to the land property through the Ministry of Agriculture. Thereafter, the Council for the Development of Cambodia, and representatives from the Ministry of Agriculture, and some relevant provincial government authorities will then need to approve the application, considering any potential social and environmental effects of the concession.

After these departments have approved the concession, the office of the Prime Minister must sign and authorize the Ministry of Agriculture to formally conclude the concession agreement. The approximate timeframe to complete the process and grant the concession is usually between six and nine months.

3. Forming Land Holding Company/Taking The Minority Stake

A foreigner may form a Land Holding Company (LHC) through a joint venture where the majority stake is a Cambodian and the minority stake of up to 49% is a foreigner. An LHC is legally able to purchase land and property in Cambodia.

The 51% Cambodian shareholding can be held by 1 or more nominees who may, through a Power of Attorney and other legal instruments, give control of their 51% shareholding to the 49% minority foreign shareholder. Meaning to say, in setting up an LHC, the minority shareholder (which is the foreigner) has 100% of the rights to make the actions and decisions within the company.

It is one of the lowest-risk options because the company and its assets can be configured to provide layers of security to the foreign shareholder or its lender. However, this approach carries the high registration fees, annual admin costs, and a potentially high tax burden when later disposing of the property asset.

4. Through A Cambodian Nominee

Purchasing land through a Cambodian nominee, also known as a nominee structure, has historically been the most common system used, due to its simplicity and low cost.

Under this structure, foreign investors would need to “nominate” a Cambodian national to be the legal owner of the land being purchased and sign a ‘trust agreement’ with them in which they agree to hold the land in their name. However, the risk lies on whether you are approaching a trusted nominee or not, so it’s advisable to use a professional nominee from a trusted service provider, like IPS-Cambodia, to keep everything purely professional.

It is recommended that in addition to the trust agreements, the property being purchased is mortgaged, using the foreigners’ name as the loan provider. Documents registering this mortgage are placed at relevant land offices making the sale of the land and its title, or its use as collateral for another loan, not possible unless the foreigner first instructs the relevant land offices to release the mortgage that has been placed on the property and its title.

Read about IPS Nominee Structure

5. Marrying A Cambodian

Similar to the nominee structure, when a foreigner is married to a Cambodian citizen, they are permitted to buy a land property under the name of their spouse on the title deed.

It should be noted that under the Cambodian Law, a foreigner married to a Cambodian, but is not a citizen of Cambodia, is not permitted to be registered on a land title. However, if a foreigner has been granted citizenship, both the spouse and the foreigner’s name are allowed to be registered on a land title.

6. Acquiring A Cambodian Citizenship

Under Cambodian Law, only Cambodians have the right to own a land in the country. Therefore, acquiring a Cambodian citizenship would earn a foreigner the right to own a land completely without having to partner with a majority Cambodian stakeholder, lease, or undergo a nominee structure.

Hence in practice, it is quite difficult to obtain citizenship and would only really be a possibility for investors putting greatest amounts of capital into the country.

Legal Framework for Foreign Land Ownership

Foreigners who wish to own land in Cambodia must comply with certain conditions and restrictions as governed by the Land Law, the Law on Investment, and the Law on Condominiums.

Land titles in Cambodia can be classified as “hard title,” which refers to land with a registered title with the relevant authorities, or “soft title,” which refers to land with an ownership claim but no registered title. Before purchasing any land, it is crucial to verify the validity of the title.

Limitations and Restrictions on Foreigners on Land Ownership

Foreigners can own up to 70% of the units in a building, while Cambodian citizens must own the remaining 30%. Moreover, foreigners are required to purchase a minimum of 2500 square meters of land for ownership.

The process of owning land in Cambodia involves several steps, including obtaining a business visa, opening a bank account, and registering the land with the relevant authorities. The registration process includes obtaining a cadastral map and approval from the Ministry of Land Management.

Minimum Investment Requirements and Residency Criteria:

While there are no minimum investment requirements for foreign land ownership, residency criteria apply. Foreigners must have a valid visa and reside in Cambodia to own land. However, the length of residency required varies depending on the type of land ownership.

Conclusion

Foreigners are allowed to own land in Cambodia under specific conditions and limitations. To ensure a smooth land ownership process, it is important to have a clear understanding of the legal framework and the various stages involved. Due diligence is also essential to verify the validity of the land title before making a purchase. Seeking professional assistance from a reputable property agent or lawyer can provide guidance and support throughout the process.

Don’t hesitate to reach out to IPS Cambodia, a reputable property agent in Cambodia, for any queries or assistance. Connect with our experts at +855 77 959 861 or through email at info@ips-cambodia.com.

Faqs

What is the potential return on investment for owning land in Cambodia?

The potential return on investment for owning land in Cambodia depends on various factors such as location, property type, and market demand. It is important to conduct thorough research and due diligence before investing in property.

Can I finance the purchase of land in Cambodia?

Financing options for purchasing land in Cambodia are limited for foreigners. It is advisable to have sufficient funds for a cash purchase.

Can I use land in Cambodia for commercial purposes?

Yes, land in Cambodia can be used for commercial purposes, such as setting up a business or developing property for rental income.

What is the process for obtaining a construction permit in Cambodia for foreigners?

The process for obtaining a construction permit in Cambodia for foreigners involves several stages, including obtaining approval from the relevant authorities and submitting a detailed construction plan.

What are the tax implications of owning land in Cambodia?

Tax implications of owning land in Cambodia include property tax and capital gains tax, among others. It is important to consult a professional tax advisor for specific guidance.