Phnom Penh Condo Market Rationalizes: Europeans Favor Reputable Central Projects

As the Phnom Penh condominium market rationalizes, foreign investors, particularly Europeans, favor projects by recognized developers in central neighborhoods and shun speculative operations.

New Era for the Market

The Cambodian condominium market, boosted for a decade by massive foreign investments, long suffered from an imbalance between a sometimes speculative abundant supply and demanding demand. But according to the latest annual report from Realestate.com.kh, titled Cambodia Condo Investment Guide 2026, a profound transformation is underway. The time has come for a "flight to quality": better-informed and more cautious buyers now turn to buildings by reputable developers, in sought-after neighborhoods, with pricing aligned with market reality.

"Today's buyers are more attentive and much better informed. They know what really sells and what to avoid," explains Sotha Vatey, Sales Director at Realestate.com.kh, in the report. This shift is accompanied by a rise in local participation: Cambodians now represent 22.2% of buyers, compared to a share historically dominated by foreigners.

National Barometer: Phnom Penh, Sihanoukville, and Siem Reap

Phnom Penh remains the undisputed epicenter with 70.7% of recorded transactions, but other urban hubs are gaining ground. Sihanoukville, long hampered by an excess of unfinished constructions, is making a strong comeback. The coastal city accounts for 23.9% of purchases, boosted by the completion of the Phnom Penh–Sihanoukville highway and renewed interest in domestic tourism. In contrast, Siem Reap, with 5.4% of the market share, remains a niche market, limited by height restrictions related to the protection of Angkor heritage.

In the capital, prices per square meter vary greatly by neighborhood. Prestigious BKK1 (Boeung Keng Kang 1) shows values around $2,300 per square meter, followed by Tonle Bassac ($2,500) and Daun Penh ($2,000). At the opposite end, peripheral areas like Chbar Ampov or Sen Sok offer average prices below $1,500, attracting a broader clientele.

Foreign Investors: A Diversified Comeback

Contrary to popular belief, foreign investment is not weakening: it is redirecting. The share of international buyers remains overwhelmingly dominant (over 75%), but their origins have shifted. Transaction data from the last 24 months show strong growth from American investors (+2%), French (from 4.4% to 7.4%), Polish (from 4.1% to 9.1%), and Russian (from 6.2% to 9.6%) buyers. Conversely, the share of Chinese buyers has collapsed, dropping from over 15% to just 3.7%.

"Investors from Eastern Europe in particular seek to diversify their assets in an environment deemed stable, backed by the US dollar," notes Tom O’Sullivan, CEO of Realestate.com.kh. Another key insight: 61.1% of buyers are based abroad, a sign that Cambodia's appeal extends beyond resident expatriates.

Rentals: Demand Driven by Young Professionals and Expats

On the rental segment, the trend is equally telling. Cambodians have become the top tenant group (13.8%), ahead of Americans (10.6%), Chinese (9.8%), and French (9%). This figure illustrates a social transformation: the burgeoning local middle class increasingly favors the comfort of modern serviced residences over traditional housing.

One-bedroom apartments dominate demand overwhelmingly, both for purchase (61% share) and rental (72%). They are the favorite entry-level product, offering a good balance between purchase price, ease of rental management, and yield. Three-bedroom units, however, are scarce and highly sought after by expatriate families, creating a supply-demand imbalance in central neighborhoods.

New Dynamics for Developers and Investors

Faced with these changes, developers are adapting their strategies. The report identifies several key trends:

• Redesigned amenities: beyond pools and gyms, new projects integrate coworking spaces, specialized gyms, climbing walls, or shared gardens.

• Flexible payment plans: some developers now offer 50% of the price due only upon delivery, reducing buyer risk during construction.

• Measured upscale shift: after years focused on entry and mid-range, some high-end projects and "branded residences" (in partnership with international hotel brands) are resurfacing.

Additionally, a secondary market is gradually structuring. Early buyers of projects delivered 3–5 years ago are starting to resell, offering competitive-priced opportunities without construction risk.

Taxation and Legal Framework: A Stabilized Environment

The 2026 guide recalls the main tax elements governing rental investment and resale. The annual property tax (TOIP) is set at 0.1% of the property value (after a $25,000 deduction). Transfer duties on purchase amount to 4% of the property value.

The rental tax regime distinguishes residents (10% on gross rents) from non-residents (14%). Finally, the capital gains tax (CGT) at 20% on realized profit, initially planned, has been deferred until the end of 2026, providing relief for potential sellers.

Foreign acquisition remains governed by the 2010 Condominium Law (Strata Title), allowing full ownership in one's name for upper floors, except the ground floor. For land, trust solutions (fiducie) have proliferated: the number of registered trusts rose from 17 in 2021 to over 1,700 in 2025, with cumulative assets exceeding $2.46 billion.

2026-2027 Outlook: Correction and Maturity

The Cambodian condominium market is no longer the runaway growth of the 2010s. It is entering a maturity phase where quality, transparency, and developer reliability take precedence. The 64,000 existing units nationwide should continue to be absorbed, with acceleration expected for quality projects in Phnom Penh's central districts (BKK1, Tonle Bassac, Toul Tom Poung) and structured coastal areas of Sihanoukville.

For European investors seeking geographic diversification in a dollarized environment shielded from major regional currency fluctuations, Cambodia retains major assets: still accessible entry prices, a consolidating legal framework, and rental demand driven by a young population and growing urbanization. The key remains choosing the right developer, location, and seasoned local advice.