Rental Yields in Cambodia: Reading the Numbers Honestly

Few numbers are quoted as confidently, or as misleadingly, as the rental yield on a Cambodian condominium. Marketing material routinely advertises gross yields of 6 to 8 percent, and sometimes more, often alongside a guaranteed rental promise. Those figures are not invented, but they describe a best case before costs — and the gap between gross and net is where investor expectations most often come apart.

This article is about reading the yield honestly: what the headline number includes, what it conveniently leaves out, and how to arrive at a figure you could actually bank.

For the current gross yields we track by city and segment, see our live Cambodia Price & Yield Index.

Gross yield is the marketing number

Gross yield is simply annual rent divided by purchase price. If a unit costs 120,000 dollars and rents for 700 dollars a month — 8,400 a year — the gross yield is 7 percent. It is the number on the brochure because it is the largest number that can be honestly attached to the property.

The problem is that gross yield assumes you are rented every month of the year, pay nothing to run the property, and lose nothing to tax. None of those hold.

The deductions the brochure omits

To get from gross to net, subtract the costs of actually being a landlord in Cambodia:

• Service charge and sinking fund. Most condo buildings charge a monthly fee per square metre for maintenance, security, and common areas, plus contributions to a sinking fund for major works. On a smaller unit this can absorb a meaningful slice of rent.
• Vacancy. In an oversupplied market, units do not re-let instantly. Assuming even one to two months vacant per year materially lowers the realised yield.
• Rental income tax. Letting income is taxable — withholding is commonly around 10 percent for residents and higher for non-residents.
• Letting and management fees. An agent finding and managing a tenant typically takes a fee, often equivalent to a month or more of rent per year, plus ongoing management if you are not in the country.
• Furnishing and wear. The expat and corporate tenants who pay the best rents expect furnished, well-kept units, which means upfront furnishing and periodic replacement.

Run a realistic example. Take that 7 percent gross unit, assume one month vacant, a 10 percent service-and-management drag, 10 percent rental tax on collected rent, and modest furnishing amortisation, and the net yield commonly lands somewhere around 3.5 to 5 percent. Still a return — but a markedly different proposition from 7 percent, and one that has to compete with a US-dollar bank deposit that carries far less risk.

The guaranteed-rental trap

A common sweetener on off-plan and new units is a guaranteed rental return — the developer promises, say, 7 percent a year for two or three years. Treat these with care. The guarantee is only as good as the developer’s solvency, and the cost of the guarantee is frequently built into an inflated purchase price. In other words, you may be paying upfront, in the price, for the income you are being “promised” later. When the guarantee period ends, the unit often re-rents at the genuine market rate, which can be well below the guaranteed figure — and the resale value adjusts to match.

Why yields look high in the first place

Cambodian gross yields look high relative to mature markets for a reason: the risk is higher. Oversupply in the Phnom Penh condo segment has pressured both rents and capital values, the tenant pool is concentrated among expatriates and corporates and is sensitive to economic cycles, and resale liquidity is thinner than buyers expect. A high gross yield is, in part, the market’s compensation for those risks. It is not a free lunch.

How to assess a yield properly

Step	What to do
Start	Annual rent divided by all-in purchase cost, not just price
Subtract	Service charge, sinking fund, vacancy allowance
Subtract	Rental income tax and letting/management fees
Subtract	Annualised furnishing and maintenance
Result	A net yield you can compare to lower-risk alternatives

The discipline is simple: never accept a gross number, always build the net, and always ask what a guaranteed return is really costing you in the purchase price. A Cambodian condo can still produce a respectable, dollar-denominated income — but only once you have stripped the optimism out of the headline and looked at what genuinely reaches your account.