Laos tipped to be the ‘next Cambodia’ as relaxed rules for foreign homebuyers can make it a property investment hotspot

Amended laws allowing foreigners a leasehold of up to 50 year may spur demand from countries like mainland China, Hong Kong, Japan and Korea

The legislation also opens the possibility for foreign companies to develop property projects, but ambiguities and risk remain

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Workers on a construction site in Borikhamxay Province, Laos, August 19, 2020. Photo: Xinhua

Published: 1:30pm, 2 Mar 2021Updated: 1:30pm, 2 Mar 2021

With foreign home ownership rules being eased, Laos, one of the least developed countries in Southeast Asia, has the potential to become an investment hotspot and be the “new Cambodia”, according to analysts.

In August, the government formally rolled out revisions to a new law allowing foreign ownership of flats for the first time in the country, giving foreigners a leasehold of up to 50 years. The legislation also opens the possibility for foreign companies to develop property projects, but as the law has yet to be fully fleshed out, ambiguities and risk remain for foreign investors.

The new legislation comes amid a downturn in the economy, which was estimated to have contracted 4.5 per cent in 2020 owing to the coronavirus pandemic, according to the Asian Development Bank. Before the pandemic Laos had a steady annual growth of about 6.5 per cent. Real estate transactions were also estimated to have dropped between 15 and 20 per cent last year, according to a report by the Vientiane Times. Laos has so far reported 45 Covid-19 infections and has received vaccine supplies from Russia and China.

“These new developments will create demand from mainland China, Hong Kong, Japan and Korea,” said Georg Chmiel, chairman at Juwai IQI Group, a Kuala Lumpur-based real estate technology group that specialises in serving Asian buyers. “Some investors think of Laos as the new Cambodia, the next can’t-miss investment that will inevitably bloom in value as the economy grows, more Chinese buyers rush in, and infrastructure is built.”

Cambodia is a foreign investment darling in Southeast Asia, with investment hitting US$3.66 billion in 2019, double the US$1.82 billion in 2015, according to the World Bank.

In Laos, the growing foreign investment, mostly in special economic zones, is likely to usher in more investment in the residential sector as foreign executives look for suitable accommodation.

Five special economic zones, which are fully controlled by foreign investors – three from China, one from Vietnam, and one from Malaysia – include significant residential components and have projected investment worth US$3.2 billion, according to government data.

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