The city of Siem Reap in Cambodia is a by-product of the famous UNESCO World Heritage Site Angkor Wat, considered by some experts to be the largest religious structure in the world. As an investor seeking exposure to the Cambodian economy, I ventured there to do some on-the-ground research with a focus on real estate.
We’ll see that the Siem Reap real estate market is a decent investment for people who want diversification, safety, and exposure to a growing economy, but not for those seeking strong rental yields.
Table of Contents
Why invest in Siem Reap?
Here are some of the ongoing catalysts I see for Siem Reap as a real estate investment destination.
1. Strong demographic growth in Siem Reap
First of all, it is important to note that demographically speaking, Siem Reap is absolutely booming.
A few things to note here:
- The population pyramid is young, which promises good growth ahead.
- Siem Reap is effectively Cambodia’s fourth largest city, but is growing faster than the average. Its demographic growth is about 2.5% a year.
- Proper statistics are hard to come by in Cambodia, but extrapolating these 2019 census numbers with the ongoing growth figures gives us a current population of over 280,000.
2. Angkor Wat as a unique tourism driver
Angkor Wat is a world-renowned historical and religious tourism destination. It’s one-of-a-kind and an absolute must-see.
It’s been around for almost a millennium and isn’t going anywhere. It is a unique competitive advantage for Siem Reap.
Until recently going to Angkor Wat was still perceived to be slightly “dangerous” due to Cambodia’s reputation and past. This is changing fast. A trip to Angkor Wat is increasingly becoming a must-do for the monied class of this world. It’s one of those top “bucket-list” things to do before moving on to another life.
This is apparent when spending time in town. While Phnom Penh had a lot of backpackers, sex tourists, and businessmen, Siem Reap had not only the usual backpackers, but many affluent Westerners lodging in luxury hotels before moving on somewhere else in Asia.
For many, a trip to Cambodia means Siem Reap and that’s it – they won’t travel elsewhere. Almost half of tourists in Cambodia go to Siem Reap.
Cambodia is also gradually getting back to pre-Covid numbers, though the pandemic hit its tourism industry hard.
3. More diverse tourism
When I first traveled in South East Asia in the mid 2000’s, most tourism was Western.
In the mid 2010s, tourism was mostly Western and Chinese.
Now, tourism is Western, Chinese, other South East Asians, and increasingly Indian.
In my time in Siem Reap I came across groups of Indian tourists, a sight that would have been unimaginable just a few years ago.
Essentially, as Asia continues to grow and to develop, and as the younger Asian generation goes up Maslow’s hierarchy of needs by seeking to self actualize through cultural trips, Siem Reap is bound to massively benefit from this trend as one of Asia’s prime historical destinations.
4. Big infrastructure development in Siem Reap
The government knows this, and is preparing according. A new Siem Reap international airport was inaugurated in 2024.
Yes, the airport is too big for now. But why? Because the government is planning for scale and for growth. This is visible even in some of the roads being built around town.
The government is actively pushing for more flights to Siem Reap by offering interesting deals to airlines.
If you go onto the website of Siem Reap International Airport you will see flights to Malaysia, Singapore, multiple cities in Thailand, Laos, multiple cities in Vietnam and a few cities in China as well. I fully expect this list of connections and flights to grow overtime.
This airport was built as part of China’s Belt & Road initiative, as well as the expressway currently built to link it to the existing network.
The government recently announced that a new highway will be built to replace the existing Phnom Penh – Siem Reap road. This should cut down the travel time from 6 hours to 3 hours. I doubt it will be finished in 2029 as such projects are typically delayed, but it will eventually be built.
5. Height restrictions for developers in Siem Reap
This is a big one. Traveling in Asia means realizing that supply of real estate can be nearly limitless due to very little height restrictions and zoning regulations.
Siem Reap is different.
The government mandated that no building may be higher than Angkor Wat. This means a cap of 5 stories. This will inherently impose a cap on supply of real estate in prime areas over time.
6. Siem Reap is becoming a lifestyle destination
When I first came to Siem Reap in 2018 it was still very rough around the edges, but the city has dramatically refined itself. There a cute shops everywhere, nice restaurants, beautiful roads and cycle paths all over town. There is an increasing amount of expats and digital nomads who base themselves out of Siem Reap because of how affordable and pleasant it is.
What real estate can foreigners buy in Siem Reap?
There are two types of real estate that foreigners can buy in Siem Reap and in Cambodia in general.
- Condos that foreigners can own. You can buy these in your own name (example below)
- Anything else, using a nominee or local company (not recommended) or a bank trust (very safe, more information below)
Case study of a real estate investment in a new development in Siem Reap
My Cambodian realtor Untac took me around to see the few developments in town that allow foreigners to buy real estate directly in their own name.
There’s one development that stood out as it was very close to downtown, with really nice amenities such as a well-equipped gym, a convenience store, a spacious coffee and co-working space, a pool, decent finishings, parking, etc.
Foe example this was a 47m2 (net), or 505ft2, one-bedroom apartment being sold for the grand total $125,000, including furniture package.
There is quite literally nothing wrong with the product. The pricing is not “cheap” but isn’t outrageous either. So what is the ROI?
What is the ROI of Siem Reap real estate?
So we did the numbers. Interestingly, the developer offers a a rental guarantee (GRR) and buyback guarantee (GBB) scheme. Usually, I am quite skeptical of such schemes as it typically means that you are overpaying upfront.
The developer still had a few units for sale, and prepared a proposal.
So essentially the developer guarantees a net 7% per year as well as a buyback guarantee 10% above purchase price after 5 years (optional after 5 years, you can keep the property if you wish).
So in 5 years you are promised a 45% return, as well as 2 weeks of personal use per year. The developer deals with everything and sends you your money quarterly.
These numbers are quite decent. My immediate thought was “there must be a large discount on the secondary market”. My realtor Untac confirmed that there is a discount on the secondary market and showed me a unit that was for sale.
The listing price was 20% below the developer price.
So it is worth it?
The reality is that the real net rental yields in Siem Reap are very low as there are a lot of hotels in town that are very nice and affordable. As I am writing this article I am staying in a 4-star hotel, with a very large room and breakfast, for $27 per night. So the market is only for people who want to stay mid- to long-term in Siem Reap.
I asked around and met an American who was renting a one-bedroom apartment there on a monthly basis, he said be was paying $750 per month.
Doing all the numbers, talking into account that the owner has to pay for HOA/Service charges, electricity, property management and will invariably have vacancy, a theoretical gross yield of about 7% turns into about 2% net.
| Price 20% cheaper than from developer | $100,000 |
| Closing costs | $1,800 |
| Total investment | $101,800 |
| Monthly rent (lowered the number to be conservative) | $650 |
| Yearly revenue @ occupancy rate of 50% | $3,900 |
| Property management fee 10% of turnover | $390 |
| Yearly HOA fee / Services charges / Sink cost $1 per m2 per month based on 47m2 apartment | $564 |
| Property tax | $100 |
| Incidentals | $400 |
| Total yearly expenses | $1.454 |
| Net yearly income before income tax | $2,446 |
| Net yield before tax | 2.5% |
Effectively the gap between the developer 7% net offering, and the 3% net that the investor receives if managing on his own, is 4%. Over 5 years it is a 20% gap.
| Developer | Developer intrinsic cumulative value without closing costs | Secondary market | Secondary market total cumulative value without closing costs | |
| All-in investment for 1 bedroom | $127,891 | $100,000 | $101,800 | $100,000 |
| Year one income | $8,743 | $108,743 | $2,156 | $102,156 |
| Year two income | $8,743 | $117,486 | $2,156 | $104,314 |
| Year three income | $8,743 | $126,229 | $2,156 | $106,468 |
| Year four income | $8,743 | $134,972 | $2,156 | $108,624 |
| Year five income | $8,743 | $143,715 | $2,156 | $110,780 |
Effectively, if the developer fails within 4 years you will have lost some money versus the secondary market. If the developer does not fail and if you go for the buyback guarantee then you make a decent 9% per year.
Essentially, this is a form of partially secured lending (initially 80%) made to a developer at 9% in USD per year, with two kickers:
- If prices rise substantially (they would need to rise by 37% to beat the rental guarantee)
- Two weeks of personal use per year
So effectively, the developer offering is more interesting for investors who don’t mind a bit of risk (not for people who want to live there). If you buy on your own, you have less upside, but you also have less downside risk.
Why is developer financing more interesting? What’s the trick?
It’s simple. A combination of:
- Economies of scale in management, which you don’t have as an individual
- Cash upfront for his financing needs for other projects (this developer is building one of the largest luxury towers in Phnom Penh)
Seeing that bank lending is very tight and expensive in Cambodia, this is a way for the developer to finance his next projects. What’s the worst case scenario? The developer fails and you don’t get to use the buyback-guarantees after a few years, but your apartment doesn’t disappear. It is in your own name from the get-go.
You only really lose a few % versus buying on your own if the developer goes bankrupt within 4 years of you buying.
So essentially,
- If you are an investor, buy from the developer
- If you want to use it for yourself, buy on the secondary market.
Can I buy a house or land in Cambodia using a trust or nominee?
Yes you can.
Traditionally, foreigners used nominees to buy land or non-hard title real estate in Cambodia. However it is very risky. Essentially the property is in the nominee’s name, and you have a side contract with them. But then you can absolutely get entangled in issues especially if the nominee did not declare everything upfront or ends up in divorce, or dies for example. It can become very messy and Cambodian courts are notoriously slow. The same applies for company structures where the foreigners owns 49% and Cambodians stripped of rights own 51%. Things can go wrong fast.
A new framework has emerged though; trusts. It is now possible to buy any real estate in Cambodia using a bank trust, a bit like in Mexico. Essentially the bank owns the property but within a segregated trust which you control. Bankruptcy of the bank would not result in your loss of the property. It’s a serious legal framework.
What’s the downside?
More paperwork and fees. For example buying a $200,000 house would cost about $6,000 for 5 years including set-up costs. The larger the investment the lower the fees as a percentage. My agent Untac can introduce you to a good trust company.
Case study of an Airbnb investment in Siem Reap
This 3-bedroom 3-bathroom villa is a 7-minute drive from the center of Siem Reap, in an area that is still developing. It costs $235,000.
You can expect an average nightly rate of about $110 with an occupancy rate of 30%.
| Price | $235,000 |
| Estimated price after negotiations | $210,000 |
| Approximate closing costs | $8,000 |
| Total investment | $218,000 |
| Yearly income @ $110 nightly rate with 30% occupancy | $12,045 |
| Property management 20% | $2,190 |
| Utilities & maintenance of pool $250 per month | $3,000 |
| Yearly trust fees | $1,200 |
| Property tax | $200 |
| Maintenance budget | $1,500 |
| Yearly expenses | $8,090 |
| Yearly net income pre-tax | $3,955 |
| Net rental yield | 1.8% |
Net rental yields of about 2% are typical in the Cambodian real estate market, though you can sometimes find better with some specific project.
Who should invest in Siem Reap real estate?
- People who want it for lifestyle
- People who want to buy a landed house or land using a trust as a form of diversification and long term investment
- People who want the developer financing option for higher returns
However as the market stands, it is not attractive for investors who want direct rental income or to make money on Airbnb.
Siem Reap represents great diversification and you can expect the city to boom in the long term, but it is a play for patient investors. It won’t be quick money.
Get in touch with Untac to invest in Siem Reap real estate
Untac lives part-time between Siem Reap and Phnom Penh, so he knows the market well. He can help you locate landed homes, bank repos, land, or introduce you to the better developers in town. He’s helped many foreign investors enter the Cambodian real estate market. More information on his Siem Reap real estate agent services.
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