Land Valuation and Urban Real Estate Market in Cambodia

Abstract
Cambodia, in 1989, reintroduced property and ownership rights. However, no proper system and guidelines were developed to support the land market and establish a basis for land valuation and taxation, and this resulted in loss of revenue for the government. Due to the difficult political history and civil strife, the land market remained inefficient and inequitable. This impacts on the socio-economic progress of the Kingdom.

Recently, the Royal Government of Cambodia (RGC)/ the Ministry of Land Management, Urban Planning and Construction (MLMUPC)/ the Land Management and Administration Project (LMAP) in cooperation with the World Bank conducted a Land Valuation Study (in April and May 2005).

This study identified key issues that relate to the complete lack of a recognizable land valuation system or standards and lack of capacity and infrastructure in both the public and private sectors in Cambodia. This has impacted negatively on the land administration and management policies ranging from the transfer tax and the unused land tax to the ineffective management of public sector assets.

The general perception on the land valuation and tax collection system is one of distrust of the public sector which has resulted in an off-record negotiation process involving payment of informal fees rather than objective professional valuations. Also, the lack of any reliable transaction data and analyses on the property market as well as no formal valuer education and training capacity for valuers contributes to the problems.

Based on the assessment of the current situation, the author suggests a distinction between a short-term and a long-term approach. In the short run, a formula based valuation methodology should be developed and applied. For the long development, however, five basic methods of valuation should be introduced according to the needs and circumstances.