During the Khmer Rouge period from 1975-1979 the land title system was completely abolished and all records of previous land titles were destroyed. The land titles system was not re-introduced until 1992 when the land law was passed, enabling people who have lived on the same piece of land for 5 years to qualify for titles. Currently, land in Cambodia is either owned privately or by the state but not all land is registered as the land system remains underdeveloped. Investors are advised to check whether a proper land title exists.
Land titles are represented in two forms soft and hard title. Soft title refers to a title where a property is registered at the local municipal level but which cannot be used as collateral for bank loans while hard title refers to a title issued at the national government level which can be used a collateral for bank loans. Hard title is the most secure form of ownership. However, the majority of transactions still occur for land with soft title to avoid high transaction costs which include property registration taxes and ownership transfer fees. Private freehold ownership is permissible for all types of land but the full ownership is restricted to Cambodian citizens or companies with the majority of shares being owned by Cambodian citizens.
Foreign investors are not allowed to acquire freehold land unless a land holding company is established with at least a 51% share controlled by a Cambodian citizen or company. Foreign investors can also use land in Cambodia under a long term lease. The maximum lease term is restricted to 50 years determined by the civil code established in December 2011. The lease structure system allows foreign investors to lease property if the property is properly registered with a land title certificate.
Property Tax is levied on all property worth over KHR 100 million (US$24,000) in Cambodia. The tax is payable annually by the owner of the property at a rate of 0.1% of the government assessed value.
Unused Land Tax is payable for all unused land. The tax is calculated at a rate of 2% of the market value of the land per square meter as determined by the Unused Land Valuation Commission of the Ministry of Economy and Finance. The unused land tax is paid annually by the landowner.
Property Transfer Tax is levied on a sale of land with Hard Title, at 4% of the assessed property value determined by the tax department, by the purchaser.
A number of significant developments / transactions were announced or launched in 2014, as follows:
HLH Group announced that D’Lotus Development Ltd, of which it holds a 49% stake, entered into a Sale and Purchase Agreement with Shukaku Inc. to acquire 13,541 square metres of freehold land in Boueng Kak, Daun Penh, for US$14,895,000 (app. 1,100 USD per sq.m). The land is to be acquired for the purpose of a developing a mixed use scheme comprising office, residential and retail accommodation.
Plans to develop a new ‘Grade A’ office tower were announced by a group of investors, operating provisionally under the name of ‘Kingdom Luxury Development Co.’ to develop a 25-storey office tower on Norodom Boulevard.
Oxley Holdings, with their partners World Bridge Land, commenced off-plan sales of the both the condominiums and the ‘SoHo’ units for their mixed-use development, The Bridge, located by the Australian Embassy in Tonle Bassac Commune.
City Star announced an extended minimum guaranteed yield of 6%, for a five year period, on all one-bedroom villas on Alila Villas Koh Russey. The decision was made due to strong projected revenue forecasts for the luxury-island resort.
Times Centre is shorty due to commence sales of the condominiums units within the mixed-use development located by Olympic Stadium.