DEVELOPER INTEREST IN CAMBODIAN COASTLINE AS ANNUAL TOURISM GROWTH SET TO CONTINUE
Tourist arrivals have grown strongly in Cambodia with an average annual increase of 19% over the past decade.
According to the Ministry of Tourism, arrivals between January and August 2014 have risen by 4.2%, when compared with the same period in 2013. The drop in growth rate can be principally attributed to a fall in arrivals by land from neighboring countries, Vietnam and Thailand.
The main port of entry for air traffic is Siem Reap International Airport, which has seen an increase of 16.2%, as of August this year, compared to same point in 2013. The significant increase in arrivals by air, attributed principally to tourists visiting sites of cultural interest, bodes well for coastal resort locations, such as Sihanoukville, which could be well placed to capitalize on tourists seeking to visit a coastal destination following visiting Siem Reap.
Siem Reap is currently the most popular tourist destination In Cambodia, with the attraction of Angkor Wat supported by a significant variety and quality of available hotel accommodation.
COAST & ISLAND RESORTS
Alila Villas Koh Russey, a luxury island development, comprising a total of 227 units, located off the coast of Sihanoukville, broke ground in Q3, 2014. The project is set to deliver a new standard of resort property to the emerging Cambodian market. The project is well placed to further expand on the success of Song Saa Private Island, a scheme of 27 villas that completed in 2013.
The scheme launched off-plan sales of the new duplex apartments, which consist of 47 two-bedroom units, in September of this year.
Ta Tai Resort completed the first phase of development earlier this year, comprising a hotel, apartments and villas on the banks of the Ta Tai River in Koh Kong.
Several prominent developers have plans for large resort schemes, both on the coastline and islands, presenting a range of opportunities for investors seeking to enter the market. With some smaller boutique resorts, such as Akaryn Retreat, delivering 35 pool villas on Koh Krabeay, due to come on-stream over the next 12 months.
FOREIGN OWNERSHIP AND INVESTMENT IN THE RESORT MARKET
Under the 2010 Law on Foreign Ownership foreigners can own units in condominiums or co-owned buildings, excluding ground or underground floors, and providing total foreign ownership does not exceed 70%.
Islands in Cambodia are not available on a freehold basis and developers have acquired them on a concession from the Cambodian Government, allowing them to develop the island and hold title by way of a long-lease.
The majority of coastal and island resort properties are offered on a leasehold basis, as sub-lease of the principal lease. This allows foreign individuals and companies to invest in resort property offerings without the need to establish a land holding company, requiring 51% domestic ownership, as would be necessary to purchase freehold property.
There are a number of attractive investment incentives seen on the market, including guaranteed yields for a fixed period, generous periods of annual use for the investor and special discount rates on resort facilities and services.
There has been a wide investor interest in Cambodia, with enquiries coming from principally Asian countries, as well as Europe and Australia. Regionally Cambodia is an attractive destination for residents of countries where gambling is prohibited, such as China, Vietnam and Thailand. A number of large scale resort developers have gaming as part of their development strategy and see it as a key future component to attract Asian tourists.