Develop Your Own Properties or Invest in Bulk Properties?

• 25 September 2018
• Local News
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Buy-to-let property in Koh Pich satellite city

Wealthy individuals are keen to enter the property development business. They can build various projects for sale or for rental. To develop a new project today, one must consider land costs while prices have skyrocketed in prime locations. On the other hand, construction costs are also on the rise. Most importantly, the time and effort of project management during construction and afterward can be very complicated. Individuals must also consider whether it’s worthwhile when it comes to the construction costs –everything from construction to design, management, sales and marketing etc. They must have an estimate on the approximate costs when it comes to all these expenses.

Building up a portfolio of buy-to-let properties seems to be a wish for many real estate investors. In Cambodia, particularly for overseas investors, they are buying properties (either condominium units or office units) in bulk for rental. It gives the investor the negotiating power to secure these units at attractive prices.

For these buy-to-let properties, individual investors are looking to yield both rental income and capital appreciation but without the time and effort required to build a development.

There are opportunities to buy units in bulk in the soon-to-be-completed residential developments at an attractive price. Unfortunately, selling a building or a multiple number of units is also more challenging and time consuming because potential buyers are limited to medium- to large-scale investors.

However, with the oversupply of condominium units, these individual investors have stop buying units in bulk. These days, residential units available in projects in prime locations for less than US$100,000 are ideal for rental with reasonable rental yields. Furthermore, individual investors also need to take into account the property taxes upon resale.

When it comes to buying condominium or office units in bulk, there are many hassles such as decorating and renovating the units. On the other hand, tenancy management such as collecting rent and securing tenants also requires a lot of time and effort, unless the investors are willing to appoint a property manager to oversee and deal with these day-to-day issues.

Buying properties in bulk also allow the units to be disposed to individual investors or end-users. To ensure maximum capital gain, these individual investors can choose to sell at the time of high market value. In addition, investors are allowing flexibility in their portfolios because they own multiple units. For example, they can sell their older units instead and buy ones in newer developments, to take advantage of the higher yields offered in the newer developments – newer buildings always have clear advantages over older buildings, except selected old developments that are located in very prime locations. The development should offer extensive common facilities that cater to everyone, such as gym, swimming pool, sauna, steam rooms, recreational areas etc. to draw more potential tenants into the property.

Most importantly as an investor, you must buy the right properties, at the right prices and at the right time. A well-established, well-located property can generate up to decent gross yield in addition to capital appreciation.

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