Should I buy a condo in Cambodia??

AndyKK · Post by **AndyKK** » Tue Sep 21, 2021 5:30 am

HappyChappy wrote: ↑Tue Sep 21, 2021 3:26 am
clutchcargo wrote: ↑Fri Sep 10, 2021 2:24 pm I'm not sure whether the OP intends this for investment or to live in, or whether he meant living first and then rent out later. I think it matters a lot what the intent is for the OP's decision making.

Personally, I'm generally not a fan of condos and units pretty much anywhere. Unless they are exclusive or rare, they mostly make lousy investments relative to house and land..I found out the hard way from experience. Over time buildings depreciate whilst land generally appreciates. Technically, altho not in KOW, you own only a fraction of the land with a condo. But, unfortunately that is the only way to invest in your name in KOW as a foreigner unless you use other dubious 'loophole' methods to buy other types of property.

OTOH Warren Buffett once said that it is wise for investors to be “fearful when others are greedy, and greedy when others are fearful” and when there is so much doom and gloom around here with pandemic restrictions, businesses closing and no tourists, now might logically be a very good time to drive a hard bargain and snap up a great deal. But boy, I reckon you'd have to do a lot of research around real estate values in the areas you intend to buy. I presume you can't look up a register online of previous sales as you might in another country. Contrast that with many western countries where prices of real estate have gone through the roof and arguably expensive and could be due for a correction. OTOH some may say for example that prices in PP were already too high to begin with before covid so I dunno. Nevertheless, I do think there's a lot of potential for growth longer term here.

The other thing I'd be wary of is that you pretty much don't have long term certainty about residency here. You are a guest in the country and cannot become a permanent resident. If the authorities decide to crack down on the visas and associated extensions for foreigners that could be a deal breaker. Depends on your situation though coz myself being a retiree with a good source of income from my home country and not a burden on society lol, I daresay I may have more surety than most but still an issue as far as committing money investments here imo.
Well to clarify on a few points. I've got a girlfriend I plan to settle down with....but am not stupid enough to get a place in her name. I'm a credible teacher out here and plan to stay for years to come.....so if I'm renting anyway surely buying a place saves me from renting which is just dead money. I'm happy to just live in it with the hope that further down the line I will be able to rent it out if I plan on moving or re-investing.

So far I think I've found some places that actually have 0% down payment. So I move straight in and start paying a mortgage. Failing that I can get a 10 percent mortgage and realistically have the money ready by mid/end of 2022.

My main thought is now, if I want back onto the property ladder, do I invest here and live in it saving me on rent. Or buy a place in Europe, rent it out, and have a nest egg ticking away elsewhere.

Really need to take some serious thought here because I would hate for it to all fall to shit and have a worthless apartment and no savings.

You have some very good points there, firstly the girlfriend, and a job you enjoy and feel safe. You have been here for sometime, so you have a good idea how the land lays, I must agree with you about rentals being dead money, it is certainly better too buy, than at least after sometime you may have, or hope to have a return on your investment if, let's say you decided to sell or rent it out.
First question is, who would you expect to buy or rent your condo? This being a serious decision to buy a property in the first place. You may be put in a situation that you never expected, let's say hypothetically you lost your job, or fell ill, leaving you with the only option to give up your new place. Or would you be confident enough that the girlfriend would help you out.
I would think you may find you have a very small market for the condo in such circumstances. You would have to hope that a westerner world buy from you, because they (the buyer) may not have qualified for a 0% mortgage, or have the same benefits, like when you invested in the new property. such has new furniture included in the buying price, free lift or gym pass for a limited period. Its also going to be a time when there are plenty of new properties to rent or buy, pushing you out of the market unless you sell at bargain price and take a loss.
It will be hopefully good for those whom initially invested in the construction of these many new builds If it goes the way these property developers are aiming, being that the Chinese would buy the majority of the properties, or has I have now learnt 70% of them. One other main concern that would be on my mind, how long will these apartment/condo buildings last before they need repairs.
In our own countries its the right way to think has you are doing, but being in another country not of your own. Being referred too has only a mere guest, tells me tomorrow you could be asked to finish dinner then pack your bags and leave. Also think about the Khmer with money, they invest overseas, where the law may protect them if something happened to go wrong.

armchairlawyer · Post by **armchairlawyer** » Tue Sep 21, 2021 8:53 am

AndyKK wrote: ↑Tue Sep 21, 2021 5:30 am
Well to clarify on a few points. I've got a girlfriend I plan to settle down with....but am not stupid enough to get a place in her name. I'm a credible teacher out here and plan to stay for years to come.....so if I'm renting anyway surely buying a place saves me from renting which is just dead money. I'm happy to just live in it with the hope that further down the line I will be able to rent it out if I plan on moving or re-investing.

So far I think I've found some places that actually have 0% down payment. So I move straight in and start paying a mortgage. Failing that I can get a 10 percent mortgage and realistically have the money ready by mid/end of 2022.

My main thought is now, if I want back onto the property ladder, do I invest here and live in it saving me on rent. Or buy a place in Europe, rent it out, and have a nest egg ticking away elsewhere.

Really need to take some serious thought here because I would hate for it to all fall to shit and have a worthless apartment and no savings.

Rental payments are not all dead money. You are getting maintenance taken care of. And you can move more easily if/when there are problems.
If you can find a good place for $200-250 with government price electric, that is good value by international standards.
If you buy a condo, you could end up paying that much for maintenace and overpriced electric. And the sale price they quote is not what you pay, supplements will apply.
If you think you are going to get good capital appreciation on a PP condo, you might - but it wouldn't be the safest or best bet as far as investments go.

Kammekor · Post by **Kammekor** » Tue Sep 21, 2021 8:58 am

armchairlawyer wrote: ↑Tue Sep 21, 2021 8:53 am
AndyKK wrote: ↑Tue Sep 21, 2021 5:30 am
Well to clarify on a few points. I've got a girlfriend I plan to settle down with....but am not stupid enough to get a place in her name. I'm a credible teacher out here and plan to stay for years to come.....so if I'm renting anyway surely buying a place saves me from renting which is just dead money. I'm happy to just live in it with the hope that further down the line I will be able to rent it out if I plan on moving or re-investing.

So far I think I've found some places that actually have 0% down payment. So I move straight in and start paying a mortgage. Failing that I can get a 10 percent mortgage and realistically have the money ready by mid/end of 2022.

My main thought is now, if I want back onto the property ladder, do I invest here and live in it saving me on rent. Or buy a place in Europe, rent it out, and have a nest egg ticking away elsewhere.

Really need to take some serious thought here because I would hate for it to all fall to shit and have a worthless apartment and no savings.
Rental payments are not all dead money. You are getting maintenance taken care of. And you can move more easily if/when there are problems.
If you can find a good place for $200-250 with government price electric, that is good value by international standards.
If you buy a condo, you could end up paying that much for maintenace and overpriced electric. And the sale price they quote is not what you pay, supplements will apply.
If you think you are going to get good capital appreciation on a PP condo, you might - but it wouldn't be the safest or best bet as far as investments go.

Renting in Phnom Penh is much cheaper than buying. Unless you know for sure you're in the game really long term, think ten years more, maybe buying is profitable.

I would be very reluctant to buy something in Cambodia as an investment. Acquiring something is relatively easy, but selling it at the right price?

canucklhead · Post by **canucklhead** » Tue Sep 21, 2021 9:56 am

There would be almost no upside to buying a condo here. If you can find a flat in the center of PP for 500$ or less per sq. mtr. that would bring you much more equity in a shorter period of time. You wont be able to mortgage it though as a foreigner.

ego bibere nimis · Post by **ego bibere nimis** » Tue Sep 21, 2021 10:02 am

I would hold off on buying a condo at the moment. The Evergrande drama in China does potentially (probably) have consequences for Cambodia. Many of the projects here are funded by the same debt source as Evergrande. https://www.ft.com/content/952923b7-f42 ... 2ff190a134

Keep your eye on this as it may force a correction on the well and truly overheated property market. Not just here also. I would wait a few months before committing to a property here, especially a condo.

Post by **Clutch Cargo** » Tue Sep 21, 2021 10:11 am

HappyChappy wrote: ↑Tue Sep 21, 2021 3:26 am So far I think I've found some places that actually have 0% down payment. So I move straight in and start paying a mortgage. Failing that I can get a 10 percent mortgage and realistically have the money ready by mid/end of 2022.

Just on that point there OP. I've wondered about these schemes of 0 or small deposit and then a monthly repayment from the developer.

I don't have much knowledge or experience with this..maybe other members can elaborate more.

Mrs Cargo once took me out to some borey development that was cheap like $50K or something out at whoop, whoop. She got all excited when the sales rep quoted a very small deposit and monthly repayment and you can move in straight away whilst paying off the mortgage.

But I was thinking:

1. I know this probably wouldn't apply to you OP coz you're looking at condos but who would want to live out so far to live in a cookie cutter? I wouldn't and it's cheap for a reason
2. I asked Mrs Cargo: OK, monthly repayment is only $XXX, how long is the term? She had no idea and hadn't asked. And sort of dismissed it with 'rent is dead money' argument. She's only focused on the monthly amount.
3. Now I think in this instance, it's the developer that was providing the mortgages although I have seen other developments advertised where they market them in partnership with one of the local banks. Anyway, to my mind you don't get anything for free in this world and if the the developer is providing the finance, his money is tied up so to speak (albeit secured over the property) and he will want a return on that money. Now with the 0 or low deposit and relatively low/manageable monthly, it seems to me their are 2 ways for the developer to make money as a 'pseudo bank'.

1. a very long term on the mortgage
2. the price of the property is inflated to begin with to cover that.

Hence if it was me, I would extrapolate the monthly by the number of years and come up with the total amount you will repay. Then I would do the same if you organised your own finance from a bank. Then compare the two. I don't know but I reckon the developer option may well equate to some sort of microfinance rate of interest 20+% whereas banks are approx. 10% (Sathapana says from 8.5%).

If I'm right about this, then in theory you could go to the developer and say you have your own finance, bargain hard and negotiate a discount on the purchase price given he's already inflated the price with his finance. But maybe he wouldn't do that coz really he might prefer people to buy at an inflated price and use his 20+% finance. I really don't know what rate they charge but something to explore.

It's funny Mrs Cargo really doesn't have a head for finance and wants everything done easily. Years ago she got sucked into a microfinance loan for a place near the airport. Why? Coz her sister recommended a nice microfinance guy who comes to your house and smooths over all the paperwork such that she hardly has to lift a finger. For her, the thought of going to a bank and asking for loan is onerous and humbling.. Doing some of the legwork to fill out forms, valuation on the property, evidence of her income is all too much.. However easy means 20+% interest. Ouch!

canucklhead · Post by **canucklhead** » Tue Sep 21, 2021 10:20 am

A good point. They have to come up with some way to sell all these borey houses. Usually with low interest for the first year or two then the interest ramps up to 10% or more.

Bitte_Kein_Lexus · Post by **Bitte_Kein_Lexus** » Tue Sep 21, 2021 6:53 pm

HappyChappy wrote: ↑Tue Sep 21, 2021 3:26 amWell to clarify on a few points. I've got a girlfriend I plan to settle down with....but am not stupid enough to get a place in her name. I'm a credible teacher out here and plan to stay for years to come.....so if I'm renting anyway surely buying a place saves me from renting which is just dead money. I'm happy to just live in it with the hope that further down the line I will be able to rent it out if I plan on moving or re-investing.

So far I think I've found some places that actually have 0% down payment. So I move straight in and start paying a mortgage. Failing that I can get a 10 percent mortgage and realistically have the money ready by mid/end of 2022.

My main thought is now, if I want back onto the property ladder, do I invest here and live in it saving me on rent. Or buy a place in Europe, rent it out, and have a nest egg ticking away elsewhere.

Really need to take some serious thought here because I would hate for it to all fall to shit and have a worthless apartment and no savings.

Allow me to give a few pointers as someone with some experience in the local RE sector. I've bought and sold many pieces of land and apartments. Nothing huge, just small-time investor stuff, but I do have experience in the whole buying/selling process and all that stuff.

If I were to do it all over again, I'd rather invest in my home country. Now, some of these Cambodian purchases were great (one with a 16XROI), but in hindsight, I could have used low interest rates back home to leverage myself more efficiently. Property would then be worth ~x3 more in a currently red-hot market. Where I'm from, houses are now selling within days and people have to bid higher than the asking price. I thus could have covered the mortgage easily and ended up with a nice rental income in a country with proper rule of law. I could have paid a company a flat rate (~8%?) to find tenants, deal with them, manage repairs etc. Plus something back home should I ever need to move back. Owning property is never "easy" anywhere, but Cambodia comes with its own set of headaches.

A few issues I see in your case:
1-It appears you don't have enough to buy cash or even for a downpayment. This means you've got no choice but to use local banks.
2-There aren't many "zero interest" options. On paper, a few offer low interest, but you're looking at getting the end product years down the line. Otherwise, you're looking at 5-6% minimum (for 2-3 years, then 8%+), but as a foreigner, only a few banks will take you on and they'll charge 9-12%. That's huge and will make your condo way more expensive than on paper if you can't afford to pay it off FAST. Local banks do allow for early repayments (as opposed to banks back home), but if you can't come up with cash quickly, your 63K tiny condo ends up costing 120K and you'll have trouble offloading it at that price.
3-As mentioned, build quality is an issue in both boreys and condos. If you're done paying after 8 years and now you need a bunch of serious repairs, you won't be happy. I'd choose a house over a condo.
4-As mentioned, Evergrande could have serious repercussions on the local real estate market. Wait and see...

I think your home country or Portugal/Spain would be better long-term options as a foreigner. I mean, I don't regret buying here, but at the moment I don't think it would be worth it. Literally tons of empty boreys and condo towers, and prices are high all things considered. Especially condos. The market for fairly priced condos is very limited, and people can't find buyers. Otherwise you're looking at a 300K+ condo, which is completely bonkers given local infrastructure and worker's salaries.

cabron · Post by **cabron** » Tue Sep 21, 2021 7:49 pm

Doc67 wrote: ↑Fri Sep 10, 2021 9:55 am Don't do it to yourself. Rent, and always be ready to leave at short notice.

smart thinking.

Strawberryshake · Post by **Strawberryshake** » Tue Sep 21, 2021 10:35 pm

Lets assume for a minute that u decided to buy a condo.
What interesting buildings have u seen? and what are are the sqm prices? Will it be off-plan or a finished building?

Should I buy a condo in Cambodia??

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