Here is a good guide to investing in Cambodia that should steer you away from total financial disaster.
The real estate market in Cambodia is extremely varied, more so than most countries, which can make investing either a smooth journey or a rocky one.
What separates a successful from unsuccessful investor is not pure luck, as many think, but the ability to recognise and avoid mistakes.
Investing in Cambodia is no different, so here are some things to consider before you part with your hard-earned cash.
Research
Having a deep wallet may help you in the short term.
However, knowing where the market is now and where it is likely to go is part of a long-term strategy that will prove beneficial.
This is best attained by being aware of and finding more information on upcoming projects short term gains may be made, but knowledge of the real time investment climate will more likely provide better long-term options for you.
Large upcoming infrastructure projects – roads, rail, bridges, shopping centres, subdivisions – generally nudge property values and attract businesses that will generate better investment options.
It is wise to undertake a feasibility study of your own, supported with information gleaned from professionals with a finger on the foreign investment in Cambodia pulse.
Trust
Cambodia’s economy, professional and educational standards are still evolving and there are plenty of silver-tongues out there claiming to know the market better than everyone else.
Be careful, ask around and check the credibility and reputation of those you intend to deal with.
There are plenty of reputable companies and peak bodies you can check in with, such as Chambers of Commerce and other business networks.
They are likely to have some useful information on investing in Cambodia or point you to where you can procure it.
Being financially prepared before you invest in Cambodia
A smaller figure in the actual Sale and Purchase Agreement (SPA) does not necessarily reflect the full cost of a property purchase.
In countries like Australia, for instance, most costs are factored in and can be deducted from the final amount. This minimises nasty surprises!
However, when investing in Cambodia, you will soon be aware of this country’s unique taxes and other deductibles that are not always clear up front.
A good investor will be reasonably aware of things like transfer tax, annual property tax (hard title properties), withholding tax, fees associated with establishing a company or nominee, administration fees from Sangkat and Land Department.
Before investing in Cambodia, it is prudent to factor in all these costs before signing a legal contract.
This will provide a clearer view of the potential (or actual) Return on Investment (ROI) which could make or break the deal for you.
This is not necessarily the end of the world of course as it may steer you to a better investment which leads me to managing risk.
Managing risk when investing in Cambodia
No pain, no gain? This expression does have some merits as many still believe it to be true.
But, it can be equally misleading. As you may already know, there are good risks and there are bad risks in as much as good and bad debt.
It pays to spend time looking into seriously investing in Cambodia and particular deal, terms and conditions and evaluating the merits against potential costs and pitfalls.
Remember too that information is not always static and it pays to update any information investing in Cambodia.
This means knowing about the broader investment landscape, construction projects, land zoning and legislation landscape.
There is an old Chinese proverb investors should consider before closing a deal.
That, while the road ahead may be as steep and uninviting as a goat trail, the view from the top may well be worth it!
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