The Cambodian government could lose out on hundreds of millions of dollars collected through title registration services from foreign-owned properties if overseas investors continue to snap up units without legally registering ownership.
According to data obtained by Post Property from Phnom Penh Municipality’s Department of Land Management, Urban Planning and Construction, only 480 condominium units owned by foreigners have been registered with City Hall since the law of foreign ownership took effect in 2011. However, just within last year 159 units were registered compared to 64 units in 2014 – nearly a 150 per cent increase.
A brief report released a little over a week ago by the Ministry of Land Management, Urban Planning and Construction (MLMUPC) showed that the ministry collected $48 million last year through foreign-ownership title registration.
According to estimates by Kim Heang, president of Cambodian Valuers and Estate Agents Association (CVEA), about 3,000 condominium units were sold last year, with almost 70 per cent going to foreigners.
This leads to the question of why only 16 per cent of foreigner-owned properties have been registered with City Hall.
Sung Bonna, president and CEO of Bonna Realty Group, said the gap between registered foreigner-owned properties and the perceived number of condominiums sold is attributed to inflated sales figures announced by some developers.
“In Cambodia, the exact figure of units sold and the marketing figures are often very much different,” he said.
“The figures we receive are usually not accurate or believable,” he said, adding that inflated sales volumes are a common practice to entice speculators to invest.
However, Po Eavkong, managing director of Asia Real Estate, explained that the small figure of registered foreigner-owned property was more a fact that most developments have yet to be completed, while at the same time titles that haven’t been registered legally with the government are due to some developments being built without proper construction permits. Lastly, he reasoned that when titles are used as collateral to get loans from commercial banks, the process is further slowed as foreign buyers are not required to register.
Moreover, the slow growth of government collection is due to an ambiguous timeline for registration, said Heang.
“Cambodian law does not force developers to transfer ownership to buyers, and most condominium developers still hold all the ownership titles,” he said.
In response to this matter, Cheam Sophal Makara, spokesman for the MLMUPC, admitted that there is a lack of regulation for registration as the government does not have oversight on individual sales.
“It is a deal between seller and buyer. If a buyer pays all the money and a building has already been registered with co-ownership, the buyer has the right to seek a property transfer, while a seller is obligated to transfer the property to a buyer after payment,” he said.
However, Makara called upon all real estate developers and buyers to register their co-owned properties and seek ownership registration to ensure that all foreign-owned properties are legally protected.