Real estate accounts for 46% of Trust properties
According to the most recent data, foreigners are particularly interested in using the trust framework established by the Cambodian government to purchase real estate in the nation instead of using it for pensions, fixed deposits, shares, green bonds, or other purposes. According to information released by the Trust Regulator, 46% of all Trust properties in Cambodia are real estate
As of July 5, 2024, the Kingdom had 925 Trust cases registered, totaling $1.47 billion. 67 percent of all trusts in the nation, or $684 million, were made up of real estate trusts. Next came the creation of trusts for escrow services, which accounted for $169 million (17%), shareholdings, which accounted for $92 million (9%), pension funds, which accounted for $64 million (6%), fixed deposits, which accounted for $11%, and green bonds, which accounted for less than 1%, with $1.2 million.
Out of the 905 trust cases that have been registered nationwide, 700 of those instances are related to real estate, 129 to escrow services, 30 to fixed deposits, 38 to pension funds, 3 to shareholding, and 2 to green bonds.
A "Law on Trusts" was introduced in 2019 to establish guidelines for establishing and administrating trusts within the nation. The Financial Sector Development Strategies 2016-2015 of the nation, which aim to encourage investment in the nation, also served as the foundation for the decision.
This is important since foreign direct investment (FDI) is a major factor in Cambodia's infrastructure development and economy. According to data from the Council for the Development of Cambodia (CDC), China accounted for 46% of the FDI inflows totaling 197.8 trillion riels ($48.4 billion) between 2018 and 2023. Other countries that followed were South Korea (11.8%), Singapore (6.5%), Japan (6.2%), Vietnam (5.3%), Malaysia (4.4%), and Thailand (4%).
According to market participants, international investors accounted for a sizable portion of the money in Cambodia's trusts. Since foreigners are not allowed to directly buy land in Cambodia, an increasing number of them are investing through trusts. According to Oknha Tan Khee Meng, President of the Malaysian Business Chamber of Cambodia (MBCC), "the trust framework is important to Cambodia as it can help foreigners and locals manage their personal wealth and belongings; so that they have a concrete plan for transfer of assets to loved ones." This information was provided to Khmer Times.
Also helping this trend and promoting investor confidence is the establishment of escrow services by banks in Cambodia. Today Cambodia has as many as 17 licensed Commercial Banks providing escrow or retention services namely ACLEDA Plc bank, ABA Bank, Phillip Bank, CIMB Bank, J Trust Royal Bank, Asia Pacific Development Bank, Maybank Cambodia, Bred Bank Cambodia, Wing Bank, Sathapana Bank, BIC Bank, PPC Bank, Canadia Bank, CCU Commercial Bank, Shinhan Bank, SBI Ly Hour Bank, and Cambodia Post Bank.
How Has Cambodia’s Real Estate Sector Performed At the 2024 Half-Way Mark
The "Socio-Economic Trend Report" for May 2024 published by the Ministry of Economy and Finance in Cambodia states that as of now, 1,330 construction projects totaling 4.278 million square meters have been approved. This represents a 23% decrease in the number of projects and a 9% decrease in the total area when compared to the same period in 2023. A 20% decrease from USD $2.27 billion in 2023 to USD $1.81 billion, the total value of the approved projects was stated.
The following is a breakdown of these projects:
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1,095 housing developments
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88 industrial developments
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90 commercial projects
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21 tourism-related projects
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35 public developments
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1 investment project
On the other hand, local cement production has climbed by 4.7% (3.5 million tonnes) throughout this time, despite a 23.1% increase in the import of building materials.
Imports of iron and steel were valued at over USD $296 million in 2023, a more than 50% increase.