Experts predict a boom in foreign real estate investment if ownership limits are eased.
THE government is pushing ahead with legislation allowing foreigners to own apartments and condominiums in Cambodia in order to boost a real estate sector that has seen property sales slump by up to 50 percent this year.
Im Chamrong, general director of the Department of Construction at the Ministry of Land Management, Urban Planning and Construction, said the ministry was acting on the urging of real estate agents.
He hoped the ministry would "pass the law soon" but declined to provide a timetable. "When the law is passed, it will give a boost to Cambodia's real estate market," he said.
The ministry was working with the Ministry of Economy and Finance on the revision to the law, which would also need to be considered by the Council of Ministers. A key area of discussion was on whether to allow foreigners to own ground-floor units or only units above the ground floor and not attached to underlying land, Im Chamrong said.
The Cambodian constitution prohibits foreign ownership of land but doesn't explicitly ban foreigners from owning buildings. The country's investment law was amended in 2005 to explicitly allow foreign ownership of permanent fixtures but it was never implemented.
Thailand, Singapore and Malaysia all allow foreigners to own property under various restrictions, but not land. In Cambodia, foreigners can only buy property through a minority partnership with a Cambodian national, although they can lease land for up to 99 years under certain conditions.
Calls from real estate agents to open the market to foreign buyers have escalated in recent months as property sales dried up. Some agents have reported sales declines of up to 50 percent this year.
Sung Bonna, CEO of the Bonna Realty Group and president of the Cambodian National Valuation Association, said a change in the law would provide a much-needed stimulus for the sector.
"A lot of my foreign customers have been asking about this for a while," he said. "I would feel uncomfortable if I owned property in another country and it was not under my name."
Foreigners accounted for about 15 percent of residential property sales despite current restrictions, he said. Allowing them to buy apartments above the ground floor could boost foreign investment to between 40 percent and 50 percent of the domestic market.
"Everybody believes that if the law is implemented, then it will be good for our country and that the real estate market will be better," he said. "We need this."
However, he added that the government needed to preserve restrictions on foreign ownership of land, and of ground-floor dwellings, to protect local buyers. This would allow them to own land and build apartments above their dwelling for foreigners.
Government spokesman Khieu Kanharith dismissed concerns the move would drive up housing prices for ordinary Cambodians, noting that few were in the market for high-end condominiums or apartments.
"This will not impact on people's lives because our people generally do not spend millions of dollars to buy apartments or condos," he said.
Cambodian Economic Association President Chan Sophal said the law should be changed to encourage foreign investment in major projects like Gold Tower 42 but restrictions on foreign ownership of the underlying land should be retained to protect Cambodians.
Steven King, general manager of IMS Consulting Group, said a change in the law would change the way developments could be marketed.
"There are two markets," he said. "A Cambodian one and a foreign one. You have to be very specific on how you target Cambodians and how you target foreigners. It's a different market, a different mindset and a different culture."
National Assembly member Son Chhay, a member of the Sam Rainsy Party, urged caution. He said foreigners were allowed to own condominiums above the ground-floor level in Thailand, but he also asserted that many foreigners had already gotten around the restrictions. "In our country, foreigners have obtained our land with different techniques such as using Cambodian ID, industrial land concessions and 99-year leases."
He said the government needed to keep a close eye on foreign investors because they had greater experience and more money than Cambodians.
Union Commercial Bank PLC CEO Yum Sui Sang agreed that it was already relatively easy to circumvent current restrictions, particularly through applying to obtain Cambodian citizenship.