Considered as a new type of property ownership in Cambodia, Strata title is the ONLY title granted to a foreign national. Strata title is currently restricted to condominiums, and office buildings which means when you purchase any unit of these two buildings, you will mutually share the property and the land the complex sits on.
Thanks to the enactment by the Royal Government of Cambodia of Sub Decree No. 126 on The Management And Use of Co-owned Building on the 12th of August 2009 which allows foreign ownership of private units in co-owned buildings, we have witnessed a significantly increasing number of luxurious high-rise condos as well as office buildings in Phnom Penh and Sihanoukville. This also opens up unprecedented opportunities for foreign investors to penetrate the local market and diversify it, thus contributing to the fast economic growth.
Legally, foreigners are not allowed to own freehold land in Cambodia. However, they are permitted rights of ownership over specific properties, in this case, buildings that have obtained a Strata Title. The legislation also states that the foreign nationals are free to own up to 70% of the overall units above the first floor in any co-owned condos or strata-titled office.
Before deciding whether strata-titled office or condominium is the perfect fit for you, let’s have a look at how these two differ.
A Condominium, often referred to as “condo” for short, is a privately owned individual unit within a building of other units. Condo residents mutually share common areas like swimming pools, parking space, elevators, outside hallways, and gymnasiums, just to name a few. Some condo projects also consist of outdoor garden, study room, library, childcare center, sports facilities, BBQ pit, function room, auditorium or conference hall as well as laundry room. In Cambodia, we can witness the growing number of high-rise condos in the 3 main economic zones – Phnom Penh, Sihanoukville and Siem Reap. The majority of these condominiums are still new, considering that the Law on Strata titles had only been passed in 2010.
Similarly, Strata-titled office (also known as Office Condominium) is generally the same as residential condominium. Their main distinction is basically how it is used. The term “Strata-titled Office” is relatively new to Cambodia and its market is somewhat untested. Back in the 1990s, most companies in Cambodia rented villas around Boeung Keng Kang or Toul Kork area to be used as their working space or offices. Starting from 2009, we began to see high-rise office buildings which is centrally-owned meaning that it is not mutually shared by multiple owners. As of 2015, there were 5 strata-titled office projects in developments in Phnom Penh up for sale to local and international commercial property investors. By 2021, Strata-titled office space is projected to be significantly increased to 400, 000 sqm as compared to 100, 000 sqm in 2018, according to CBRE.
We all know that investing in rental properties can be a great way to earn income. Investing in condominium and renting it out later to the potential tenants has gained popularity among real estate investors. The average Return On Investment (ROI) for condo units is around 8%. As the value of the condo will continue to appreciate from the first day you purchase the unit, when you decide to sell in the future, you will definitely benefit from it. This could be your long-term investment strategy to generate passive income. However, investing in strata-titled office could provide a higher Return On Investment than investing in condominiums. According to one report from Pointer, strata-titled office could provide an attractive ROI of approximately 10% annually — 2% more than condominiums.
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