The Government Takes Steps To Solve Cambodian Real Estate Supply Issues And Targets Affordable Housing
At the beginning of 2025, the Cambodian government issued measures to address the lingering real estate and construction downturn that has persisted since COVID-19, marked by decreased construction projects and excessive supply. Affordable housing is also being targeted with the formation of a working group.
In January, the Ministry of Economy and Finance (MEF) confirmed the 2025 tax incentives for first-time homebuyers and established a Technical Working Group to support the implementation of affordable housing development projects.
The Ministry of Land Management, Urban Planning and Construction (MLUPC) and the National Bank of Cambodia (NBC) also discussed ways to transfer debt from real estate buyers to banks.
New Working Group For Cambodian Affordable Housing Projects
The MEF established a Technical Working Group to promote affordable housing for low- and middle-income citizens, particularly civil servants. The group is chaired by Om Maktherith, Director-General of the General Department of Public-Private Partnerships (PPP), and comprises senior officials from several key departments within the ministry.
According to the MEF, the working group will coordinate tax exemptions and reductions, assess the fiscal impact on state revenue, and expedite approval processes for these exemptions. Additionally, the group will monitor the implementation of tax relief measures to ensure transparency and accountability.
The working group will also evaluate requests for infrastructure support such as roads, utilities, and public services from development companies. It will oversee the construction of these state-funded facilities and explore financial strategies to support affordable housing initiatives, ensuring accessibility for low- and middle-income families.
Industry experts emphasise the need for affordable housing, noting that current market conditions, including high construction costs and land prices, hinder private developers from offering lower-priced homes.
Say Samal, Deputy Prime Minister and Minister of Land Management, Urban Planning, and Construction (MLMUPC), stated that the demand for housing remains high; however, most developers are focusing on high-value properties that are beyond the means of many citizens, resulting in a surplus of high-value housing.
Sam Soknoeun, Chairman of SAM SN Group and a former head of Cambodia’s Global Real Estate Association, stated that factory workers, construction workers, teachers, soldiers, private company staff, as well as various other workers cannot afford to buy high-priced homes.
He said, “There is really high demand for affordable housing in Cambodia right now, and too many houses and condo units are being built by developers when there are no buyers.”
Soknoeun added that the new working group could play a critical role in supporting developers through what is expected to be a challenging market for the next few years and encourage them to provide more affordable housing.
From a developer’s perspective however, it should be noted that for affordable housing in countries that wish to promote their development, governments entice property with incentives and shared ownership schemes - there needs to be a partnered approach to tackle the issue.
Tax Incentives For First-Time Cambodian Homebuyers
This technical working group was formed following the introduction of tax incentives, including exemptions and preferential rates on stamp duty, aimed at assisting first-time homebuyers, which were announced in 2024 to be implemented in 2025 and have since been updated for the 2025 calendar year.
The tax relief measures will apply until the end of 2025; however, properties must be purchased from registered residential developers. These incentives will benefit first-time buyers of properties priced up to USD 210,000, specifically targeting gated communities (borey) and condominiums.
The housing market is currently facing a surplus of high-priced homes, with many property owners reluctant to sell due to the tax on ownership transfers, said Soknoeun. He predicts it may take five years for the housing market to stabilise post-COVID. “We need time to bring supply and demand into balance,” he stated.
It had previously been previously announced that the implementation of the capital gains tax had already been again delayed until the end of 2025.
Transferring Borrowers’ Debts To Banking And Financial Institutions
On January 3, 2025, MLMUPC and NBC held a meeting to jointly address the financial congestion in the housing and construction market by transferring borrowers’ debts to banks or financial institutions instead.
According to NBC Governor Chea Serey on a Facebook post, the recent joint meeting aimed to coordinate with relevant parties so that customers who borrowed from borey property owners at high interest rates can transfer this debt to a banking institution at a lower interest rate.
“This means that the bank will repay the money to the borey owners on behalf of the customer, but the customer continues to repay the debt to the bank under more favourable terms,” she emphasised.
Serey added that this coordination will help borey owners who are facing cash flow issues to recover their funds and continue their development. It will also assist customers in obtaining home loans from banking institutions, which generally offer lower interest rates and longer terms of up to 25 or 30 years. Home loans are generally only available to Cambodian citizens and not foreigners.
There has been some pushback in the market as to whether these incentives will help solve the market conditions or increase sales.
Kim Kinkesa, Managing Director of CBRE Cambodia, was quoted by Kiripost as saying that this is a good incentive for both developers and customers, but she does not expect a significant increase in house sales. “Because it only improves the liquidity for both the person who has already purchased a house and the borey owners who have already sold but have not received their money back.”
Cambodia Construction And Real Estate Industry 2024-2025
The MEF anticipated that the overall construction sector was projected to grow by 1.1 per cent, and the real estate sector by 1.2 per cent in 2024.
The global market research agency Research and Markets stated that Cambodia’s construction industry will record a growth of 5.8 per cent in real terms in 2024 and 6.8 per cent in 2025, fueled by massive government spending on major infrastructure projects.
The Council for Development of Cambodia (CDC) reported that in the first ten months of 2024, Cambodia registered a total of 346 investment projects valued at over USD 5 billion, compared to 227 projects registered, worth over USD 4 billion in the same period in 2023.
As one of the main pillars of Cambodia’s economy, the construction and real estate industry accounts for approximately 10 per cent of the country's GDP. By October 2024, NBC reported that credit to the sector had increased to 54 trillion riel or USD 13.51 billion.