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.
MAJOR LAND & INVESTMENT TRANSACTIONS
Oxley Holdings acquired 2 adjoining land plots in 2013 as follows: They acquired a 2,300 sq.m. plot in Duan Penh for US$1,800 per sq.m. from Home Ground Investment Co., Ltd in Q2 2013. Oxley then acquired an adjoining larger plot of 6,625 sq.m. from City Star for US$ 1,700 per sq.m. in Q3 2013.
MAJOR INVESTMENT ANNOUNCEMENTS
A number of significant development projects were announced or launched in 2013 as follows: The Korean developer Booyoung started work on their vast US$1.1 billion mixed use “Booyoung Town” project on Russian Boulevard. Construction started in Q2 2013 of Phase 1 on 25,000 sq.m. of land comprising 17,000 residential units, commercial buildings, a sports facility and a school. A Japanese – Cambodian joint venture between Tokoyo Inn Co., Ltd and OCIC started construction on a 1,200 sq.m. plot near Hang Bridge to develop a 304 room, 3 star hotel which should be open by 2015. Hong Kong Land started construction on their “Landmark”project in September 2013. The 10,700 sq.m. site is located on Street 106 next to the US Embassy. Phase 1 of the project, to be built on approximately a third of the site, will comprise a 20 storey mixed use retail and office tower, providing approximately 12,000 sq.m. of retail space on the lower floors and 18,000 sq.m. of office space above. Additional phases are planned and are likely to include a mix of residential condominiums and either a hotel or serviced apartment. Citystar announce plans to develop their land on Bamboo Island for an integrated hotel resort and villa project over the 25 Ha of land. The development will comprised a five-star hotel of 152 keys and 80 villa residences for sale and the hotel will be branded and managed by Alila.