Last week, I made a downpayment for my very first property investment in a country that most investors in Singapore have probably never considered before - Cambodia. My property of choice was a freehold small office/home office, also known as SOHO in a 45 storeys tall mixed residential and commercial development mixed development in Phnom Penh called The Bridge Cambodia.
Cambodia is one of the countries that I have shortlisted as a potential destination for retirement. The country has a rather impressive average of 7.8% GDP over the last 12 years. With 100% foreign ownership, competitive wages and tax incentives, Cambodia is ready for business. While most Singaporean investors are looking at investing in properties in Australia, Malaysia and the United Kingdom, I decided to jump on the Cambodia wagon to capitalise on first mover advantage and the low property prices in Cambodia.
How I selected my investment property in Cambodia?
When I was doing my research about investing in properties in Cambodia, I learnt that many property developments were
badly hit during the global financial crisis and some of them remained uncompleted to date. While this did not scare me away from investing in Cambodia, it was clear that the selection of a trusted property developer is of utmost importance.
Looking at the list of property developments that are in the market, I shortlisted The Bridge Cambodia because it is jointly developed by two prominent property developers - Singapore-based Oxley and Cambodia-based Worldbridge Land. Oxley Holdings Pte Ltd has a strong track record as a property developer and is listed in Stock Exchange of Singapore.
I went for the cheapest unit available
Coming from a low income family, I didn't have a lot of capital in the bank. While I want to begin my first foray in the world of property investment, I don't want to lose everything in one go.
After examining the entire development, I decided on a SOHO unit that costs around 110,000 USD that is able to house a small room for the Director and 2-3 office tables for Executives. This set up is perfect for foreign companies who are coming in with a small footprint to establish their presence in Cambodia.
6% guaranteed rental yield is a good start
One of the reasons why I was interested in The Bridge Cambodia is because the developer offered a guaranteed rental yield of 6% for the first 3 years. While 6% rental yield is quite decent, the average rental yield in Cambodia is around 10%. It makes me wonder if I could get a higher rental income if I rented it myself or had a local property agent rent the property out on my behalf. That said, with no connections to trusted local property agents, I would play it safe and let the property developer manage the property for me.
How does this property investment change my investment strategy?
Previously, I have been making regular investments into the Nikko AM Singapore STI ETF with a good portion of my monthly income. With this property investment, I will stop making the regular investments in the equities market and hold on to the cash to meet the deferred payment required for the property.
My plan is to try to complete the property purchase with cash and try not to take a mortgage loan because the interest rates charged by Cambodian banks for mortgage loans are too high for my comfort.
Are you looking to invest in properties in Cambodia?
Are you also interested in investing in Cambodia properties and would like to get more information?
You're welcome to contact me with your questions and I'll try my best to answer them.