NovRisks of investing in Cambodian real estate
Honest investment content starts not with returns but with risks. Cambodia is a market with real advantages — a dollarised economy, direct foreign ownership, developer installments — but every overseas investment has a downside, and you need to know it before the deal, not after. Below is a consolidated list of the key risks of buying property in Cambodia, honestly and without sugar-coating: what the risk is, how real it is, and how it can be reduced. None of them is a reason not to invest — but each is a reason to check. And before the risks of a particular unit there is a broader question worth answering: where this purchase sits in your finances as a whole — illiquidity, the reserve you never touch, concentration by country and currency are covered in how a purchase fits your portfolio.
1. Construction risk: delay or non-completion
The main risk when buying at the construction stage is that the property is delivered late or not completed at all. Building in a developing economy depends on the developer's financing, the pace of sales and external factors. How it's reduced: by choosing a developer with a real track record of completed projects, checking the current construction stage and the contract terms for delay and termination. That's why vetting the developer matters more than the presentation — covered in detail in how to vet a developer.
2. Developer risk: counterparty reliability
Even if the project is completed, it matters who stands behind the income and buy-back programme. Guaranteed rent and buy-back are the obligations of a specific developer or operator, not an abstract "market guarantee". If the counterparty fails to perform, recovery follows the contract. How it's reduced: by verifying the party to the contract (who exactly pays the GRR and the buy-back), the realism of the promised rates and the legal force of the wording in the SPA. We break down the mechanics in the piece on guaranteed rent and buy-back. Some counterparty problems are visible well before the paperwork — in how a pitch is worded and how direct questions are answered: those early warning signals, with the follow-up question for each, are listed separately.
Payment-chain risk: a developer account is not the same as escrow
Sub-Decree No. 50 of 2 March 2023 requires a licensed developer to receive SPA deposits through a developer account and to submit an annual audited financial report to the regulator within three months after the end of each financial year (DFDL review dated 7 November 2023). A developer account should not, however, be assumed to be escrow: the account name alone does not show who controls withdrawals or what happens to buyer funds if the project stops.
Before the first material payment, ask for the licence covering that project type, the account and beneficiary details, a specimen official receipt, the latest available audit opinion, and the SPA clauses on refunds, termination and the buyer's priority of claim. Where payment is requested to an agent, affiliate or account that does not match the seller's documents, an independent lawyer should confirm the entire payment chain in writing.
3. Market risk: oversupply
In certain segments of Phnom Penh — above all the mass-market condo class — supply grew faster than demand. Oversupply pressures rental rates and resale prices in overcrowded locations. How it's reduced: by choosing a district with real demand and a project with a clear differentiation (location, quality, segment), rather than buying a generic unit where thousands of the same exist. The supply-and-demand context is in the breakdown of the Cambodia property market.
Valuation risk: the national price index is not a condo benchmark
IMF Technical Assistance Report No. 24/37, published in April 2024, says the published Cambodian residential property price index examined by the mission was built from commercial-bank loan data. It excluded cash purchases, developer-financed transactions and loans from foreign banks; condominium and apartment observations were too few, so the published index covered houses only.
The practical consequence is that a national index, a developer price list and an asking price do not establish the market value of a particular unit. Request comparable completed transactions in the same building or genuinely similar completed projects, and label each figure as a verified transaction, lender valuation or asking price; treat furniture, incentives, instalments, taxes and fees consistently across all comparables.
4. Rental risk: income below expectations
The market rental yield in Phnom Penh is usually quoted in the 6–10% range, but that's a benchmark, not a guarantee. The real rate depends on the district, the quality of the property, vacancy between tenants and management costs. How it's reduced: by soberly calculating net yield with vacancy and costs, not gross; and by choosing a property with real rental demand. To see what is left of the calculation under a long vacancy, a rent below plan and rising costs, run it through the deal stress test. It's also important to understand which amenities actually raise rent and which only raise the service charge.
5. Liquidity risk: hard to exit quickly
Phnom Penh's secondary market is less developed than the primary one, so a quick sale of a completed property is not guaranteed and may require a price concession. How it's reduced: by planning the exit strategy before purchase, choosing liquid central locations and checking the assignment right in the contract. Full breakdown on the resale and exit page.
Tax-at-exit risk: model net proceeds under the rule in force on sale
Cambodia's General Department of Taxation lists Prakas No. 1130, dated 31 December 2025, as valid. PwC's review dated 2 April 2026 states that capital gains tax on immovable property is due to apply from 1 January 2027 at 20% of the taxable gain, with a choice between an 80% standard deduction and documented actual expenses, and that the return and payment are due within three months after the gain is realised.
An exit model should therefore show the net amount after tax, selling commission, legal costs, any buyer discount and the cost of preparing the unit for sale, not merely an assumed resale price. Keep the SPA, payment evidence, fit-out and renovation records, tax receipts and transfer-cost documents: using actual expenses depends on evidence, and the applicable rules should be checked again immediately before disposal.
6. Currency and country risk
Cambodia's economy is effectively dollarised: prices, contracts and rent are in USD. This removes local-currency devaluation risk for the asset holder — a meaningful advantage over ruble or tenge assets. But country risk (political and economic) remains, as does cross-border transfer risk; and for an investor from another currency zone there is exchange-rate risk relative to their home currency on entry and exit. How it's reduced: by understanding that dollarisation removes only part of the currency risk, and by transferring funds correctly — how that works is covered in the piece on paying for an apartment.
7. Legal risk: title and quota
A foreigner's right to an apartment is enshrined in the co-ownership and strata-title law, but it applies within limits: above the ground floor, within the building's foreign quota (typically up to 70% of the area) and with no ownership of the land. The main legal risk is buying a property without a correct strata title or outside the quota. How it's reduced: by legally verifying the status of the specific project and unit before booking. The basics are in can a foreigner buy property and the breakdown of strata title. How we verify projects is on the "How we check projects" page.
8. Management risk: who maintains the building
After handover, the quality of living and the rentability of the property depend on the management company: maintenance, upkeep of common areas, the size and reasonableness of the management fee and sinking fund. Weak management reduces both rental income and resale price. How it's reduced: by checking the management operator and the cost structure before purchase. More in apartment upkeep in Phnom Penh.
Physical risk: flood exposure is not limited to the apartment floor
The 2021 Climate Risk Country Profile for Cambodia, prepared by the Asian Development Bank and the World Bank, estimates that about 90,000 people are affected by flooding each year and that expected annual urban damage is about USD 105 million. These are national estimates, not a probability for a particular project, but they show why physical risk cannot be dismissed merely because the unit is on a high floor.
Project-level checks should cover rainy-season road access, the parking-ramp threshold, the location of switchboards, transformers and generators, pumps and backup power, prior flood and incident logs, and insurance for common areas. A dry apartment can still lose tenants and resale appeal when water blocks access, disables lifts or damages equipment in lower plant rooms.
Summary of risks and how they're reduced
A short table for a quick assessment. It doesn't replace checking a specific project — it shows the logic of working with each risk.
The "how real it is" rating is a general market benchmark, not a forecast for a specific property. The risks of an individual project are set out in its listing in the catalogue. The list does not close at completion either: which few measures to reconcile quarterly and annually, so that a broken thesis is spotted in time, is covered in monitoring an investment.
Want to see the risks of a specific project, not a general list? Contact us — we'll break down the property for your goal: the party to the income programme, the title status, the construction stage, the district's liquidity and exactly what needs confirming before the deal.
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What is the biggest risk when buying a new-build in Cambodia?
For under-construction properties the main risk is non-completion or a delayed handover. It's reduced by choosing a developer with a real track record, checking the construction stage and the contract terms for delay. Vetting the developer matters more than a nice render.
Is there an oversupply in Phnom Penh?
In certain segments — yes, especially the mass-market condo class. This pressures rental rates and resale prices in oversupplied locations. The risk is reduced by choosing a district with real demand and a project with a clear differentiation.
How protected are foreign owners' rights?
A foreigner's right to a unit above the ground floor is set out in the co-ownership and strata-title law, within the foreign quota and with no land ownership. The main risk is buying without a correct title or outside the quota; it's reduced by legally verifying the specific project.
What happens with currency risk in Cambodia?
The economy is dollarised: prices, contracts and rent are in USD, which removes local-currency devaluation risk. Country risk and cross-border transfer risk remain, and for an investor from a ruble or tenge zone there is exchange-rate risk on entry and exit relative to their home currency.
Sources
Cambodia's co-ownership and strata-title law (foreign ownership of units) · developers' public materials and contracts for NovAsia projects on income and buy-back programmes · market benchmarks for rental yield and demand in Phnom Penh · NovAsia analysis of developer vetting, taxes and property upkeep. Capital-gains tax (CGT) status: start deferred to 01.01.2027. The risks of a specific project are checked against current documents before the deal.