Can Foreigners Own Land in Cambodia?
It is a common knowledge in Cambodia’s real estate industry that foreigners cannot own land property in the country. Under Article 44 of the Cambodian Constitution, “only natural persons or legal entities of Khmer nationality shall have the right to land ownership.”
Yet, since Cambodia is a country that attracts a lot of foreign investors, the question is “are there ways for foreigners to own or have the rights to land properties in the Kingdom?”
Luckily, THERE IS, be it for residential, commercial, or agriculture purposes, a foreigner can legally own or have a right to a land property under these methods:
1. LEASING A LAND UNDER LONG-TERM CONTRACT [LEASEHOLD]
Foreigners or foreign entities are permitted to acquire control over Cambodian-owned property through a lease agreement. Entering into long-term leases will guarantee rights over property to foreign individuals and entities.
Property lease agreements in the country may be termed for a minimum of 15 years up to a maximum of 50 years. The term of the lease can be extended for consecutive periods of 50 years . The lease contract can include a provision that the land would not be sold to anyone else without the lessee’s consent. This method is the simplest and provides some protection stating the foreigner’s legal rights to land property.
A perpetual lease may be registered against the title to the land being leased. Registration of the long-term lease with the relevant Land Office is not a condition of lease validity and there is no legal mandatory requirement to register the lease. Nonetheless, to help secure the foreigners’ land tenure and enforceability against third parties, perpetual leases should be registered against the title of the land with the relevant Land Office. Once registered, the relevant Land Office will issue a lease certificate to the lessee. The lease gives the lessee all the necessary rights to develop the land.
Moreover, a foreign bank or foreign entity can take security over real estate in Cambodia. In fact, it is very common for foreign lenders to set up a structure of securities in Cambodia, including security over real estate in order to guarantee payments. A borrower (local or foreign) can grant hypothecation over a long-term lease and such act can be recorded in the certificate of the long-term lease to serve as security for the payment of the borrower’s debt.
2. INVESTING IN LAND THROUGH CONCESSIONS
Allowing a person or legal entity to occupy, utilize, and have rights over land property is called “land concession,” which is established under an agreement issued by government authorities.
The most sought-after concessions are ELCs or Economic Land Concessions that are generally allocated for agricultural developments. Additionally, ELCs allow investors to clear land for industrial purposes. However, concessions are only limited to lands that are no more than 10,000 hectares. But likewise with the long-term lease, this method is granted through a 50-year concession and is subject to renewals.
Application of such might take some time since the investors must apply for their rights to the land property through the Ministry of Agriculture. Thereafter, the Council for the Development of Cambodia, and representatives from the Ministry of Agriculture, and some relevant provincial government authorities will then need to approve the application, considering any potential social and environmental effects of the concession.
After these departments have approved the concession, the office of the Prime Minister must sign and authorize the Ministry of Agriculture to formally conclude the concession agreement. The approximate timeframe to complete the process and grant the concession is usually between six and nine months.
3. FORMING LAND HOLDING COMPANY/TAKING THE MINORITY STAKE
A foreigner may form a Land Holding Company (LHC) through a joint venture where the majority stake is a Cambodian and the minority stake of up to 49% is a foreigner. An LHC is legally able to purchase land and property in Cambodia.
The 51% Cambodian shareholding can be held by 1 or more nominees who may, through a Power of Attorney and other legal instruments, give control of their 51% shareholding to the 49% minority foreign shareholder. Meaning to say, in setting up an LHC, the minority shareholder (which is the foreigner) has 100% of the rights to make the actions and decisions within the company.
It is one of the lowest-risk options because the company and its assets can be configured to provide layers of security to the foreign shareholder or its lender. However, this approach carries the high registration fees, annual admin costs, and a potentially high tax burden when later disposing of the property asset.
4. FOREIGN OWNERSHIP THROUGH CAMBODIAN CITIZENSHIP
In 1996, the Law of Nationality made it possible for foreigners to apply for Cambodian citizenship based on an amount invested within the country.
Applying for citizenship as an investor will waive the conventional citizenship eligibility process, which involves the foreigner maintaining residency for 7 years (3 if the individual was born in Cambodia), as well as knowing Khmer history, language, and traditions. The citizenship applicant must also prove that he/she does not pose a threat to the safety of the nation and its people.
The 7-year residency requirement can be waived if the foreigner donates $330,000 to the state treasury. All other requirements, however, cannot be waived and must still be satisfied. Once citizenship is granted, the foreigner will be able to own land and property in their own name. Furthermore, the foreigner may apply for certain concessions which are only available to Cambodian nationals.
Due to the benefits of citizenship, it has become a common practice for international companies to send representatives to apply for citizenship, in order to acquire the land or property on behalf of the company. Legislation on Cambodian citizenship laws is currently being revised by authorities.
5. MARRYING A CAMBODIAN
Similar to the nominee structure, when a foreigner is married to a Cambodian citizen, they are permitted to buy a land property under the name of their spouse on the title deed.
It should be noted that under the Cambodian Law, a foreigner married to a Cambodian, but is not a citizen of Cambodia, is not permitted to be registered on a land title. However, if a foreigner has been granted citizenship, both the spouse and the foreigner’s name are allowed to be registered on a land title.
Can I Ask You for Advice?
Feel free to question us any concerns you may have not limited mutual trade, foreign direct investment in Cambodia, and what we have in the business alone. You can find contact us page on the right corner of our website or email us via our address; [email protected] here. Or email us via [email protected] for land purchase, land conversion, and hold the land on your behalf.