Buying a condominium off the plan
Foreigners are 100% eligible to own a freehold condominium in Cambodia under certain conditions.
The Cambodian Foreign Ownership Property Laws (legislation passed in 2010), allow foreigners to buy and own properties in Cambodia on the 1st floor or higher of a condominium. The property must possess a strata title and cannot exceed 70% foreign ownership.
What does “off the plan” buying mean?
Off the plan purchasing is literally what it sounds like. You are purchasing the condominium (condo) prior to its construction based on its design and construction plans. You sign a contract that reflects the agreed price of the condo as per the architectural specifications, any additions or changes you require. Generally, a deposit is required, (the amount of deposit is at the developer’s discretion and can be as high as 50 percent of the purchase price, or even higher), with the payment of these funds made by installments based on construction milestones set by the developer.
Investors should develop an in-depth understanding of the installment payment plan triggered by construction stage milestones. These milestones may be based on various different construction stages. Some maybe a simple percentage of completion calculation or reliant on certain physical construction stages being met, such as floor topping of your level, electrical installation, certification of plumbing, etc. Unscrupulous developers may call for payments on milestones that have not been achieved. It is important to ensure investors have independent, suitably qualified advisors to monitor this process.
When the building is finished, the developer hands you the keys to your new condo! Be certain to ensure there is a warranty and defects period included in your contract, identifying what is covered under warranty and a clear defect rectification process is in place, including contact details of the party responsible for addressing defects.
What’s the advantage of buying off the plan?
By purchasing at the development stage, buyers have the opportunity to select condos with the best locations, or prime units, in the development. Obviously, as the development progresses the availability of these prime units decreases.
Buying off the plan offers you the flexibility to customise your condo within the limits of construction design. Whether you want to change the floor plan, surface treatments, lighting etc, these changes are easily achieved and are markedly less expensive during development.
Off the plan discounts.
Developers have loans to service and construction costs to cover. The more pre-launch sales deposits they receive, the better. This motivates the sales team to offer discounts on the purchase price, particularly if the market slows during the construction period. Many developers now offer rental guarantees to potential investors as enticement. These guarantees are traditionally based on a percentage return on investment.
Historically, there have been occasions when off the plan buyers have seen substantial capital growth in their investment compared to purchasers who invest post-construction. Investors and speculators find this compelling, however, it is wise to consider that due to oversupply or global financial issues, the opposite can occur.