The Trust Regulator (TR) is making a significant contribution to stabilising the real estate sector in Cambodia, aiding its gradual recovery from the adverse effects of the current global economic crisis.
Sok Dara, director-general of the TR, made the remarks at the “Let’s Talk Trust” training programme, themed, “Trust: A Trusted Mechanism for Real Estate Investment”.
The November 14 event was organised by the TR in collaboration with the Housing Development Association of Cambodia (HDAC) at HDAC headquarters.
Dara stated November 15 that trust in the real estate sector has seen substantial growth, particularly in recent months.
As of the second week of November, trust registrations increased to 683 cases, with investments totalling $1.223 billion. Before 2021, the sector had only 17 legal listings, with investments around $156 million, according to the TR.
Out of the cases, 605 involve trust investment in the real estate sector. Foreigners registered 552 of these, contributing capital of $580 million. Among foreign registrations, 541 cases pertain to investment trusts in the real estate sector and 11 others involve real estate investment-related trusts using the escrow services system.
“Under the 2019 trust law, foreigners are permitted to purchase land in Cambodia via a trust company. This current method is well-received and in high demand, particularly for indirect investments in various sectors, notably in property,” he explained.
Dara highlighted the approach’s important role in national economic development. Firstly, he said it fosters a trusted platform among stakeholders, including property owners, trustees and investment beneficiaries in various economic activities, particularly in real estate. Secondly, it serves as a legitimate mechanism promoting transparency, efficiency and accountability.
“The trust sector’s remarkable growth is attributed to investors’ confidence and understanding, especially among foreign investors, and the industry’s necessity in supporting their investments, particularly in real estate,” he said.
According to Dara, the TR has licensed 9 trust companies and permitted 13 commercial banks to operate as trust operators to date. It has also provided escrow services, accredited 12 assessment services providers in the field and issued licenses to 48 individuals to act as natural person trusts.
Addressing the 19th Government-Private Sector Forum (G-SPF) on November 13, Prime Minister Hun Manet highlighted that the government has implemented mechanisms allowing the purchase of property by foreigners.
“The private sector has requested that the government allow foreigners to lawfully purchase and own housing, including both land and [structures],” he noted.
He made it clear that, according to the Constitution and relevant legal documents, foreigners, whether individuals or legal entities, are not permitted to own land. Only natural persons or legal entities with Cambodian citizenship are entitled to ownership.
However, he mentioned that after reviewing existing legal documents, the government established mechanisms enabling foreigners to purchase and own property, granting them rights similar to those of a property owner through different methods.
One of these allows a foreigner to buy land in Cambodia through a trust company, which must be registered with the Ministry of Economy and Finance. Under the arrangement, a foreigner can own real estate, with the company acting as the property manager. However, the company is not authorised to sell the holdings without the consent of the foreign owner.
Ly Hour, president of the HDAC, mentioned that trust ensures foreign investors’ confidence, facilitating their real estate purchases in the country, where foreigners may own property from the first floor upwards. He added that trust has granted foreigners long-term legitimacy in holding real estate in the country, contributing to the sector’s stabilisation and recovery.
He identified the main challenges to the country’s real estate sector as the Covid-19 crisis, the Russian-Ukrainian war and the conflict between Israel and Hamas. However, he remains optimistic that past policies and resolutions of the government, particularly during the recent G-PSF, will soon enhance the development of the country’s real estate and construction sectors.
According to TR, “trust” entails the control and management of assets provided by the trust settler for the beneficiary’s advantage, in line with the trust deed or prevailing regulations. The term “beneficiary” refers to the individual profiting from the trust.