Market Watch 

Colonial Cambodia: Southeast Asia’s Best-Kept Secret

Serendipity Beach: Just one of the five beaches around the town of Sihanoukville, Cambodia. ©Hans Gruber/iStock.

I’m five minutes out of town on the beautiful white sands of Sokha Beach, contemplating the glass-flat turquoise waters of the Gulf of Thailand. Small islands dot the horizon. Some have overnight accommodation. On others you can bring your tent. With only four other people on this beach, it’s quiet here and leaving won’t be easy. But, with the opportunities I’ve discovered, I have a big excuse to come back.

The stretch of Cambodia’s coast from the border with Vietnam to north of Sihanoukville is set to explode. This is where, a century ago, the wealthy French-colonial types came to vacation and escape the city. They ate crabs and danced in giant ballrooms under elaborate chandeliers. Theirs was a life of privilege and luxury.

Of course, what we recall of Cambodia is a more recent – and more difficult – history of civil war and dictatorship. But now the country’s making a comeback. Tourist numbers are growing at a strong double-digit rate. Road improvements have made this coast more accessible. And (bar Myanmar) this is Southeast Asia’s last big secret.

In the jungles overlooking the Gulf of Thailand, abandoned French-colonial mansions wait for someone to bring them new life as renovated homes, boutique hotels, or apartments. In the town of Sihanoukville right now, $60,000 buys you a comfortable 1,500-square-foot apartment.

Sokha beach, where I’m staying, is just one of Sihanoukville’s five beaches. (The most popular, Ochheuteal beach, is lined with bars and restaurants. Vendors peddle their wares and Australian expats sip ice-cold beer.)

I drove to Sihanoukville from the capital, Phnom Penh, in just over three hours. For the first two hours, the excellent road passes through a landscape that’s green, flat, organized, and tidy. Only the brightly-colored Buddhist monasteries told me I was in Southeast Asia. The last hour of the drive is different… stunning. Giant chunks of jungle-clad rock rise almost vertically from luminous green paddy fields. Steep, dark-green hills rise from the coast. It is uncannily like Costa Rica’s Southern Zone. It feels surreal to see temples rise from a jungle canopy that looks so familiar to me.

Ninety miles south of Sihanoukville, the small town of Kep, in the province of the same name, was founded as a beach resort in 1908. Originally named Kep-sur-Mer, the town has French influences everywhere in the ocean road architecture and cuisine. It’s like the Côte d’Azur in the tropics.

Côte d’Azur in the tropcs.”

Around Kep the coast is rocky and the beaches stony. Today’s border with Vietnam is just a few miles away. This border is disputed, as is the sovereignty of the islands off Kep, which are Vietnamese territory. Travel by boat from this stretch of Cambodia’s coast to these Vietnamese islands isn’t permitted. Among them, just off this coast, is Vietnam’s popular and flourishing resort island of Phu Quoc, well established on the tourist trail.

The first half of the 20th century played host to Kep’s golden era. But the war and hunger that followed put an end to that. The elites left for France and Saigon in Vietnam. Locals stripped the villas of their valuable interiors and took much of the booty across the border to Vietnam, where it was exchanged for rice or money. Some of the ostentatious French pieces never left Kep, however. In town you can eat crab and drink 50-cent beer in a ramshackle bar that’s home to a grand French-colonial chandelier. On this coast you begin to expect the surreal and unexpected.

Sugar-white sands meet turquoise waters and ancient temples rise through jungle foliage. Smells of spicy cooking fill the air in beach villages so relaxed that foreigners who intended to pass through a decade ago never left. This is Southeast Asia. Condos in beach towns here can change hands for as little as $25,000. The hurdle? Foreign ownership is restricted or flat-out forbidden. Let’s take a quick tour:

Thailand is the most established tourism and second-home destination in the region. Foreigners can’t own title to land. They are, however, permitted to lease land and homes. Thirty years is the maximum permitted term of such a lease, with an option to renew for another 30 years. Foreigners are allowed to buy condos so long as foreigners don’t own more than 49% of the building or development. Companies registered in Thailand with a majority Thai ownership are permitted to buy land. Foreigners can legally hold a minority stake in such companies.

Marry a Thai spouse and you are also permitted to buy land (although you may have to make a declaration stating that this is the sole property of the Thai spouse)… and for big investors, the government makes some dispensations.

So you can own a condo in Thailand. Or you can own a leasehold interest in land/home and lot for 30 years with an option to extend for 30 years.

Lots of folks will tell you ways around these restrictions. Some lawyers even peddle solutions. They establish a local entity on your behalf. You are the minority shareholder but retain an option to buy out the silent appointees (nominated by your lawyer) for a nominal amount at any time in the future. While Thai courts have been slow to nullify such contracts. it’s my understanding that they are illegal and the rights you think you have cleverly secured can be taken away.

In Vietnam locals receive land-use rights, not ownership. The law doesn’t recognize any private land ownership. The best a Vietnamese can hope for today is a leasehold interest (although the leases are considered as good as title by the locals I met). From 2009, foreigners resident in Vietnam can buy condos in certain developments on a 50-year lease. Interestingly, real estate transactions are frequently handled in gold here.

Laos also only grants its citizens land-use rights rather than ownership. Foreigners can lease land for 30 years. Extending the lease is a possibility. Land for business or investment purposes can be leased for 50 years… again with an extension possibility.

You should use your own lawyer and other advisors if you are considering buying or leasing in any of these countries.

Cobblestone sidewalks and large statues line Kep’s ocean boulevard. King Sihanouk built himself a villa here – unoccupied today. The road continues to snake along the coast to Sihanoukville, and you can imagine French playboys of an age gone by driving along it in their Italian sports cars.

Perched above the ocean here, choking in the jungle, are those French mansions I mentioned, in varying stages of decay. Some have squatters. Other have been left to the jungle, monkeys, and bats. You might think this would be an eyesore, but not so. They add to the enchantment of the place, and many are in better shape than you might expect.

No one seems to pay attention to these dilapidated mansions. I heard reports of $100,000-price-tags to be treated with caution. There are no real estate agents or listings. As you drive, you see hand-written for sale signs with phone numbers on them. This is the type of anomaly that creates opportunity. But it’s also the type of situation where a trusting foreigner and his money can be easily parted. Tread carefully. Do your due diligence.

In Cambodia, land ownership is restricted to locals. Here foreigners can lease land and homes for up to 99 years. (Remember, when you buy a home you also need to control the land the home sits on.) In recent years the laws have changed to allow foreigners to own condos, but not on the ground floor of a building.

Foreign-ownership laws are consistent with those in Thailand (see box page X). In Cambodia, though, if you make a donation to the government, you can get citizenship and the ownership rights that go with it.

Further along the coast road, an almost vertical escarpment rises from the paddy fields and coastal plain. The views are jaw-dropping. On the rim of this ridge there’s an abandoned casino and town where 10,000 people once lived. A major new casino resort is under construction here. The developer has rebuilt the nearby airport, but it has yet to open. He’ll fly guests directly in and out from China, and talk is that regular flights will also connect this airport with Siem Reap. (Siem Reap is the gateway town to Cambodia’s biggest tourist attraction, the ruined Angkorian archaeological complex.)

The owner of this resort is rumored to be close to getting permission to run a ferry service to the Vietnamese island of Pho Quoc. If—and best to assume it’s a big “if”—he succeeds in doing this, it will put this stretch of coast on the route western vacationers take through this region. This coast will then quickly catch up with more-developed Vietnam.

Editor’s Note: This article was taken from a past issue of International Living’s monthly magazine. To get full access to all past and future articles and to receive the magazine in the mail or online each month, simply click on the below button to subscribe to International Living magazine at the special introductory price of $49. You will get instant access to the current issue of the magazine as well 10 years of back issues. As an added bonus, we will also send you a FREE report – How to Retire in Paradise on $30 a Day. (You can cancel your subscription at any time.)

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