How to Calculate the Real Rental Yield of a Phnom Penh Apartment

Prepared by the NovAsia Editorial Team

A realistic rental yield for a Phnom Penh apartment is not calculated from the highest advertised rent divided by the developer’s headline price.

The model should use the rent that is likely to be collected, the number of paid months, tenant incentives, service charges, management, leasing fees, repairs, taxes and every amount spent before the unit becomes ready to rent.

This is why the same apartment may show 9% in a sales presentation, about 7% as effective gross yield and less than 4% as cash flow to the owner. None of those percentages is automatically false. They answer different questions.

The purpose of a serious calculation is not to produce the lowest possible figure. It is to identify which assumptions create the result and test whether the property remains acceptable when conditions are less than perfect.

This article provides general analytical information, not an investment recommendation or an individual tax calculation. Rental evidence, costs and tax treatment should be verified for the specific unit, owner and tenancy structure.

Four yield measures that should not be mixed

The word “yield” is often used without explaining the numerator, denominator or expenses. A useful model separates four measures.

Each measure can be useful when labelled correctly.

Gross yield compares the headline rent with the headline price. It is fast and useful for eliminating obviously weak options.

Effective gross yield replaces ideal twelve-month rent with expected collected rent and normally uses the full acquisition cost.

Net rental yield deducts operating costs. A professional model should say whether it includes local income tax, financing costs and major capital expenditure.

Cash-on-cash return is relevant where the buyer uses an instalment plan or loan. It measures annual cash flow against the owner’s money contributed, but it does not replace the yield of the underlying apartment.

Whenever a percentage appears in a presentation or spreadsheet, ask:

• What rent was used?
• How many paid months were assumed?
• Which costs were deducted?
• What amount appears in the denominator?
• Is financing included?
• Are taxes included?

Without those answers, the percentage cannot be compared reliably with another property.

Why the promotional calculation looks attractive

The simplest formula is:

Monthly asking rent × 12 ÷ apartment price × 100%

Assume an apartment costs USD 65,000 and similar units are advertised at USD 500 per month.

USD 500 × 12 ÷ USD 65,000 = 9.23%

The formula silently assumes all of the following:

• the tenant signs at USD 500;
• rent is collected for all 12 months;
• no free month or discount is offered;
• the owner pays no management or leasing commission;
• the building charges no service fee;
• nothing breaks;
• furniture never needs replacement;
• there are no taxes, legal fees or banking costs;
• the owner invested only USD 65,000.

Those assumptions may be useful for a first screen. They are not a realistic ownership budget.

The comparison is similar to evaluating a business only from revenue without asking about payroll, rent, repairs or tax.

Use the full cost of acquiring and launching the unit

The denominator should normally be the all-in cost: every amount spent before the apartment is legally acquired, furnished and capable of producing rent.

Possible items include:

• booking fee;
• purchase price under the SPA;
• buyer-side legal review;
• banking and international-transfer charges;
• registration and title costs;
• applicable transfer tax;
• furniture and appliances;
• curtains and lighting;
• kitchen items;
• linen;
• internet installation;
• cleaning;
• inventory preparation;
• minor repairs before first letting.

Assume the unit price is USD 65,000.

Additional expenditure:

• legal and administrative work: USD 1,200;
• banking and completion costs: USD 900;
• furniture and appliances: USD 4,000;
• curtains, internet and setup: USD 600;
• cleaning and small household items: USD 300.

All-in cost:

USD 65,000 + USD 7,000 = USD 72,000

Dividing rent by USD 65,000 makes the percentage look higher, but the investor has committed USD 72,000.

A genuine developer-funded item should not be added twice. “Free furniture”, however, should be checked against the signed specification. A package may include a bed, sofa and television but exclude curtains, kitchen equipment, linen, a desk or the later replacement of the appliances.

An instalment schedule changes when the money is paid. It does not reduce the full cost of the property.

Asking rent is not signed rent

One online listing is not market evidence.

The same Phnom Penh unit may appear through several agents at different prices. An advertisement may remain online after the property has been leased. A newly listed premium unit may not show the discount ultimately accepted by the owner.

The strongest evidence is a recent signed lease for a comparable apartment in the same building.

Where that is unavailable, build a transparent sample.

1. Collect current listings in the same building and direct competitors.
2. Remove duplicates for the same apartment.
3. Compare like with like: studio with studio, one-bedroom with one-bedroom.
4. Match area, floor, view, condition and furnishing.
5. Separate asking prices from known signed rents.
6. Check whether service charge, internet or cleaning is included.
7. Identify free months and renewal discounts.
8. Use a conservative rate rather than the highest listing.

Suppose the apartment is advertised at USD 500 but comparable landlords frequently accept USD 470. The model should start at USD 470.

If the tenant receives one free month on a twelve-month lease at a nominal USD 500, the owner collects:

USD 500 × 11 = USD 5,500

Effective monthly rent:

USD 5,500 ÷ 12 = USD 458.33

For yield, the effective rent matters more than the number printed at the top of the listing.

Model vacancy in paid months

“Strong demand” is not a vacancy assumption.

A tenant may leave on 30 June. Cleaning, painting and repairs take a week. Viewings continue, and the next lease starts on 20 July. Most of one month has been lost even though the apartment is considered easy to rent.

Vacancy should include:

• completely empty days;
• a free month;
• renewal discount;
• repair period;
• unpaid rent that is unlikely to be recovered.

A useful sensitivity range is:

These are modelling assumptions, not an official Phnom Penh occupancy statistic. Replace them with building-level evidence where possible.

The condominium market contains substantial supply. District reputation alone does not guarantee that one apartment will be occupied throughout the year, particularly where many investor-owned units in the same building have identical layouts and furniture.

The tenant deposit is not revenue

A security deposit is held to secure the tenant’s obligations.

It is normally refundable at the end of the lease after lawful deductions for unpaid amounts or documented damage.

The deposit should therefore be recorded as a liability, not annual income.

Spending the deposit on routine ownership costs does not improve yield. It creates a future cash shortfall when the tenant leaves.

Only an amount properly retained after the final settlement may become income or reimbursement. A cautious model assumes the full deposit will be returned.

Operating costs that reduce gross yield

Expenses fall into three categories:

• recurring;
• periodic;
• infrequent but material.

The common mistake is to deduct only the property manager’s monthly commission.

Service charge

Service charge may cover common-area management, security, lifts, pool, gym and building systems.

Verify:

• rate;
• billing currency;
• area used in the calculation;
• whether the rate applies during vacancy;
• commencement date;
• sinking-fund contribution;
• planned increases.

A project may charge on gross or contractual area rather than the internal usable floor area.

Rental management

Management may include rent collection, tenant communication, repairs and reporting.

The fee may be based on:

• rent actually collected;
• rent stated in the lease;
• a fixed monthly amount.

Additional charges may include:

• leasing commission;
• renewal fee;
• inspection;
• onboarding;
• photography;
• contractor markup;
• bank transfer fee.

“Management included” should be supported by a written scope.

Repairs and replacement

Air conditioners require servicing. Washing machines, refrigerators, mattresses, curtains, paint and plumbing components wear out.

A new unit may have no major repair in year one. That does not make the long-term cost zero.

Build a repair and furniture reserve

A reserve is not necessarily a payment made every month. It is an accounting allowance for predictable future replacement.

Assume:

• an air conditioner costs USD 600 and is expected to serve for five years;
• a washing machine costs USD 400 and is expected to serve for four years.

Simplified annual reserves:

USD 600 ÷ 5 = USD 120

USD 400 ÷ 4 = USD 100

Add allowances for:

• repainting;
• mattress;
• curtains;
• television;
• small appliances;
• plumbing;
• locks;
• upholstery.

The exact service life cannot be known. The point is not to predict the failure date. It is to avoid pretending that replacement will never occur.

For a furnished apartment, maintain an asset list with:

• item;
• current condition;
• replacement price;
• expected useful life;
• annual reserve.

A cheap furniture package can produce an attractive initial price but a higher long-term replacement rate.

Tax should be a separate layer

Tax treatment depends on the owner, tenant, management arrangement and tax residence.

Cambodian tax materials distinguish rental-related obligations, while withholding rules may differ depending on whether payment is made by a registered business, a private tenant, a Cambodian resident or a non-resident.

Do not apply one universal percentage to every private tenancy.

A clear model can show:

Operating income before tax

Less tax under the confirmed treatment

Owner cash flow after local tax

Where the tax treatment has not yet been confirmed, use a clearly labelled provisional reserve for sensitivity analysis rather than calling it the final tax rate.

The owner should also check:

• annual immovable-property tax;
• local filing obligations;
• tax in the country of residence;
• foreign-asset reporting;
• treatment of management-company receipts;
• tax consequences of later sale.

Dollar-denominated rent in Cambodia does not automatically remove tax obligations elsewhere.

Worked example: from 9.23% to 3.56%

The following example is illustrative. It is not a Phnom Penh average, an offer or a projection for a particular NovAsia property.

Assumptions

• advertised unit price: USD 65,000;
• all-in cost: USD 72,000;
• asking rent: USD 500 per month;
• realistic signed rent: USD 470;
• paid months: 10.5;
• annual service charge: USD 600;
• management: 8% of collected rent;
• annualised leasing fee: USD 235;
• repairs and furniture reserve: USD 400;
• property tax, insurance and bank costs: USD 250;
• provisional tax reserve: 10% of collected rent.

Promotional gross yield

USD 500 × 12 ÷ USD 65,000 = 9.23%

Effective gross income

Collected rent:

USD 470 × 10.5 = USD 4,935

Effective gross yield:

USD 4,935 ÷ USD 72,000 = 6.85%

Operating result before the provisional tax reserve

Management:

USD 4,935 × 8% = USD 394.80

Other operating costs:

USD 600 + USD 394.80 + USD 235 + USD 400 + USD 250 = USD 1,879.80

Operating income:

USD 4,935 − USD 1,879.80 = USD 3,055.20

Operating yield:

USD 3,055.20 ÷ USD 72,000 = 4.24%

Cash flow after the provisional reserve

Tax reserve:

USD 4,935 × 10% = USD 493.50

Cash flow:

USD 3,055.20 − USD 493.50 = USD 2,561.70

Cash-flow yield:

USD 2,561.70 ÷ USD 72,000 = 3.56%

The conclusion is not that every Phnom Penh apartment yields 3.56%.

The conclusion is that each reduction can be traced to a visible assumption. A different unit, rent, cost structure or tax treatment will produce another result.

Stress-test the weak year

A single base case is not enough.

The apartment may rent faster and at a higher price. The investor should still know whether the purchase remains acceptable during a weak year.

Keeping the all-in cost at USD 72,000:

The strong scenario can assume lower repairs and a stable tenant.

The weak scenario can assume:

• one leasing commission;
• higher repair reserve;
• nine paid months;
• lower rent.

The tax line in this illustration remains provisional and should be replaced with the owner’s actual treatment.

The stress test answers a practical question:

“Would I still accept the investment if one year produces approximately 1.6% cash-flow yield instead of the advertised 8–9%?”

A model that fails after one extra vacant month has little margin for error.

Self-management is not cost-free

An owner can avoid a monthly management fee by handling the tenancy personally.

The work still exists:

• advertising;
• viewings;
• tenant checks;
• contract administration;
• deposit accounting;
• payment follow-up;
• repairs;
• inventory inspections;
• cleaning;
• emergency communication.

For an owner living abroad, every small problem becomes a remote operation.

The model should therefore include at least:

• leasing fee;
• local inspection;
• banking cost;
• repair coordination;
• time or assistance required during vacancy.

A zero management line is justified only where the owner has a credible local system and has consciously chosen not to value their own time.

Financing and instalments

Financing changes the return on the owner’s equity. It does not change the underlying apartment’s operating yield.

A misleading calculation may state:

• buyer contributed USD 20,000;
• annual rent is USD 6,000;
• return is 30%.

That ignores:

• remaining purchase payments;
• interest;
• loan fees;
• all-in property cost;
• vacancy;
• operating costs.

First calculate the apartment’s unlevered result.

Then calculate owner cash flow:

Property operating cash flow − debt payments = cash flow to equity

Assume property cash flow before debt is USD 2,562 and annual financing payments are USD 5,000.

USD 2,562 − USD 5,000 = −USD 2,438

Part of the financing payment may reduce principal and increase the owner’s equity. Current cash flow remains negative.

The financing model should separately show:

• interest;
• principal repayment;
• balance outstanding;
• owner equity contributed;
• payment dates;
• refinancing or balloon payment;
• cash-on-cash return.

An interest-free developer instalment plan may be valuable for liquidity. It does not transform weak rental economics into strong rental economics.

Guaranteed rental returns

A guaranteed rental return, or GRR, is a contractual programme rather than evidence of open-market rent.

Where a developer advertises 8%, check:

• the calculation base;
• legal entity making the payment;
• start date;
• payment frequency;
• service charge;
• tax;
• furniture requirements;
• owner-use restrictions;
• maintenance deductions;
• termination rights;
• security for the promise.

Run two models:

1. Cash flow during the contractual GRR.
2. Cash flow after the programme ends under market rent.

If the apartment does not work after the programme, the GRR may postpone the weak period rather than remove it.

The word “guaranteed” is not the same as a bank guarantee. The strength of the promise depends on the contract, the obligor and available enforcement.

Capital appreciation is not rental yield

Rental yield measures income during ownership.

Capital appreciation belongs to total return and is realised only when the unit is sold.

A simplified total-return formula is:

Rental cash flow + sale proceeds − acquisition cost − ownership costs − sale costs − tax

A developer’s new asking price being 15% higher does not prove that a resale buyer will pay the same amount.

The resale buyer may compare:

• new developer stock;
• instalments;
• promotions;
• new furniture;
• other owners in the same building;
• actual rental history.

A responsible base rental model should work without assuming automatic annual appreciation.

Capital growth can be shown separately as:

• no growth;
• moderate increase;
• decline.

Compare apartments using one template

Two units should be compared using the same assumptions.

For each, record:

• all-in cost;
• realistic rent;
• paid months;
• service charge;
• management;
• leasing costs;
• repair reserve;
• furniture reserve;
• insurance;
• taxes;
• annual cash flow;
• likely sale costs;
• liquidity.

Do not compare the asking rent of one unit with the signed rent of another.

Do not use 12 paid months for one building and 9 months for another without evidence.

Do not omit furniture from a unit only because the developer calls it a gift.

Sensitivity matters more than the headline base case.

Change one variable at a time:

• rent falls by USD 50;
• vacancy increases by two months;
• service charge rises;
• a USD 1,500 repair occurs;
• management commission increases;
• the unit requires refurnishing.

A resilient investment remains acceptable after moderate deterioration. A fragile one reaches zero after the first repair.

Questions to ask the agent, developer or manager

Instead of asking, “What is the yield?”, ask for the inputs.

Useful questions include:

• Which signed leases support the rent assumption?
• How many comparable units are currently vacant?
• How long did the last similar apartments take to let?
• What discounts or free months were offered?
• Who pays service charge?
• Which area is used for service-charge calculation?
• What is the management fee?
• Is there a separate leasing fee?
• Is there a renewal fee?
• What is included in the furniture package?
• Who approves repairs?
• Does the manager add a contractor markup?
• Can I see an example owner statement?
• Is participation in a rental pool compulsory?
• What happens after the GRR ends?
• Which taxes were included in the model?

A strong answer contains documents and identifiable figures.

“Units normally rent quickly” cannot be inserted into a spreadsheet.

Red flags in a yield presentation

Pause where:

• yield is calculated from the first instalment;
• the highest asking rent is used;
• vacancy is zero;
• service charge is absent;
• leasing cost is omitted;
• maintenance reserve is zero;
• free furniture is treated as permanent;
• tax is zero without explanation;
• future price growth is included in net rental yield;
• GRR is presented as market demand;
• income begins before realistic handover and setup;
• only an annual percentage is shown, with no monthly cash-flow schedule;
• the seller will not disclose the calculation.

A precise-looking percentage is not necessarily a well-supported percentage.

A simple spreadsheet structure

A useful model can be built in four sections.

Acquisition

• purchase price;
• booking fee;
• tax;
• legal cost;
• bank charges;
• registration;
• furniture;
• setup;
• all-in cost.

Income

• nominal rent;
• discount;
• free month;
• vacancy;
• rent actually collected.

Operating costs

• service charge;
• management;
• leasing;
• repairs;
• furniture reserve;
• insurance;
• tax;
• banking.

Exit

• estimated sale price;
• agent commission;
• legal and registration cost;
• tax;
• expected marketing period.

The exit section is not used in rental yield. It is necessary for total return and internal-rate-of-return analysis.

Where financing exists, add:

• interest;
• principal;
• payment dates;
• outstanding balance;
• owner equity.

Keep the inputs. Do not store only the final percentage.

Conclusion

A realistic Phnom Penh rental yield begins with the all-in acquisition cost and the rent likely to be collected.

Then deduct:

• vacancy;
• discounts;
• service charge;
• management;
• leasing;
• repairs;
• furniture replacement;
• tax;
• insurance;
• banking.

Gross yield remains useful for screening. It is not the owner’s profit.

Net yield should always state its method: which costs were included, whether tax was deducted and whether the denominator is the full cost of the unit.

In the worked example, a promotional 9.23% became 6.85% effective gross yield, 4.24% before the provisional tax reserve and 3.56% cash-flow yield after it.

The value of the model is not the universal number. It is that every step can be checked and replaced with evidence from the actual building.

A purchase should be acceptable under the weak scenario, not only the best one. Where the result depends on twelve perfect rental months and an automatic resale gain, the model is not measuring a robust investment. It is measuring hope.

Sources

1. Knight Frank Cambodia — Cambodia Real Estate Highlights H2 2025, published in 2026.
2. General Department of Taxation of Cambodia — Tax on Property Rental materials.
3. PwC Worldwide Tax Summaries — Cambodia withholding-tax and other-tax guidance, updated April 2026.
4. Ministry of Economy and Finance — Prakas No. 576 on Immovable Property Tax, effective from 2025.
5. Knight Frank Cambodia — Cambodia Real Estate Highlights H1 2025, used as supplementary serviced-apartment market context only.

Frequently asked

Which yield should be used to compare Phnom Penh apartments?

Gross yield is useful for an initial screen, but a purchase decision is better based on net yield calculated from the full acquisition cost and the same expense assumptions for every unit.

Is the tenant’s security deposit rental income?

No. Until the tenancy is settled, it is a liability owed back to the tenant. Only an amount properly retained for documented damage or debt may eventually become income.

How should an instalment plan be reflected in the calculation?

Calculate the property’s yield using the full purchase and setup cost. A separate cash-on-cash calculation may then measure the owner’s annual cash flow against the equity actually contributed.