With prudence, it’s easier than you think to buy land in Cambodia
It has truly been the year of the insular and inward-looking. From Brexit to Trumpxit, 2016 will go down in history as the year of nationalist populism: the fear of the other.
2016 will also be remembered for an exodus of the non-political kind: Brangelexit.
A coupling thought to be set in stone, actors Brad Pitt and Angelina Jolie stunned celebrity watchers in September with news of their divorce. The surprise announcement went on to shed light on the couple’s raft of properties around the world — including Angelina’s real estate purchases in Cambodia.
Angelina aside, Cambodia has become fertile ground for real estate investments in recent years. While the Phnom Penh market is feeling the pinch of an oversupply, other areas in the country are slowly turning into investment hotspots, notably the beaches of Sihanoukville and other parts of the southern coast. The US dollar is also widely circulated, surely a convenience to American investors.
Here are a few ways you can get a piece of the action in the kingdom like Ms. Jolie:
Do the country a favour
Whether you’re Team Jennifer Aniston or not, Angelina was practically a godsend in the eyes of many Cambodians. For her humanitarian efforts, the UNHCR special envoy (and adoptive mother of a Cambodian boy) was awarded an honorary citizenship by King Norodom Sihamoni in 2005. Angelina is consequently able to buy land and exercise all other rights afforded to native Cambodians.
Citizenship by investment or donation
The government is likely to make similar concessions to you — at the right price. The quickest route toward citizenship is by donating KHR 1 billion ($247,000) to the national budget of the Royal Government of Cambodia. You may also earn your citizenship by investing at least KHR 1.25 billion ($308,000) in a project or business venture authorized by the Cambodian Development Council.
Or you can obtain citizenship through naturalization, a process that requires you to reside and work in the country for at least seven years. During this time, you will be expected to learn the Khmer language, your fluency of which will be scrutinized in an exam. If you marry a local and live with him or her in the country for three years afterwards, you’re also eligible for Cambodian citizenship.
Create a landholding company
Cambodia is well-known in Southeast Asia for its liberal investment regime, which allows 100 percent foreign ownership. Except, that is, for land. Under Article 44 of the Cambodian constitution, non-citizens are forbidden from owning the freehold on real property.
The oft-touted way for non-citizens to gain control over land is to set up a landholding company. The majority or 51 percent of equity must be apportioned to a Cambodian citizen though, and the shares of the alien cannot exceed 49 percent.
In 2003, two years before she became a citizen, Angelina founded the Maddox Jolie Pitt Foundation, which bought 60,000 hectares of land that was later made into a wildlife reserve. She also reportedly bought a traditional home on a 39-hectare lot in the province of Battambang.
Register a mortgage on the land
Local and foreign shareholders don’t have the same rights of control over a landholding company, so it’s important to be prudent in your choice of a partner. “A foreigner can do various things to have more power in the company, so that the end effect is pretty strong,” said James Whitehead, director of content at RealEstate.com.kh. One way the foreigner can bolster his or her control over the land is to have the company register a mortgage on the lot. As a result, the land cannot be transferred without the consent of the foreign stakeholder.
Own through a nominee
The other way to control land in Cambodia is by way of a nominee. In this method, you own land in the name of a Cambodian partner, your protection being a set of documents that stops the nominee from transferring or selling the property without your consent. “The investor signs a trust agreement that basically says: ‘I hold this land for you.’ The land is then mortgaged or leased to the foreigner,” Whitehead said. It is important to note that this kind of ownership is fraught with risks.
“If your nominee has the right money and power, you’ll lose ownership,” Whitehead warned. The land could end up being expropriated or forced to sell by the state.
Set your boundaries
Additionally, it’s not unknown for foreign buyers to run into land parcels owned by government officials. In Angelina’s case, she allegedly purchased land from an official of the Khmer Rouge, the murderous party that swept the nation into genocide in the late 1970s. Many politicians still have claims to land all over the kingdom, so it would be best if you conduct a thorough title search before zeroing in on a purchase.
Seeking a lawyer well-versed in Cambodia’s property laws would truly be advisable, given the country’s convoluted, oft-opaque land ownership schemes. The obliteration of government records under the Khmer Rouge has had a lasting effect on the way land titles are transacted in the country.
With good advice, you’ll avoid a “Maleficent” time looking for the right parcel.
article via: http://www.property-report.com/