Cambodia Rent Guarantee Schemes Warning for Buyers 2026
A guaranteed yield is a promise from a company, not an insurance product. This is how to read the annex, price the counterparty, and model the deal without it.
Quick answer: A Cambodian rent guarantee is an unsecured promise from a company, not insurance. Schemes commonly promise 8% to 12% gross for 12 to 24 months against realistic market yields of 5.22% to 7.4%, which means the difference is being funded out of your own purchase price.
A rent guarantee looks like risk transfer and is usually price manipulation. The developer is not insuring your income; they are returning part of your purchase price to you in instalments and calling it yield.
That is not automatically a scandal. It becomes one when the buyer pays a premium for the guarantee, then discovers the annex excludes most of the costs, terminates on resale, and is signed by an entity with nothing behind it.
The arithmetic is the fastest way to see what is happening. A guarantee promising 10% gross for 24 months on a $100,000 unit pays out $20,000. Realistic Phnom Penh gross yields run 5.22% to 7.4%, so market rent over the same period is roughly $10,440 to $14,800. The developer is therefore funding $5,200 to $9,560 of the promise from somewhere other than rental demand, and the only available source is the price you paid. Our analysis treats any guaranteed yield above the market band as a discount presented as an income stream, and prices the unit by asking what it would sell for with no guarantee attached at all. That question has a number behind it, and the number rarely matches the asking price.
What are Cambodian rent guarantee schemes?
A rent guarantee is a contractual undertaking, usually in an annex to the sale agreement, that the developer or an associated company will pay a stated return for a fixed period. Offers commonly run 8% to 12% gross over 12 to 24 months on off-plan or newly completed stock.
| Scheme type | Typical promise | The real exposure |
|---|---|---|
| Developer yield guarantee | 8% to 12% gross for 12 to 24 months | Developer cash position in an 8.9% NPL environment |
| Broker fixed net rent | A stated dollar figure per month | Vacancy and fee exclusions in the small print |
| Hotel or serviced leaseback | Revenue share on operator performance | Operator failure and seasonality |
| Management floor rent | A minimum below which rent will not fall | Thinly capitalised management company |
| Buyback undertaking | Repurchase at a set price after a term | Same counterparty problem, larger sum |
None of the five is regulated as an insurance or investment product, which is the structural point a buyer needs to hold on to. There is no prudential supervisor checking that the guarantor can meet its obligations, no compensation scheme behind it, and no requirement to reserve against the liability. Our underwriting therefore assesses a guarantee exactly as a lender would assess an unsecured loan to the guarantor, and the checklist is short: who signs, what do they own, and what happens to the promise if the project stalls. In a market carrying an 8.9% banking NPL ratio, the third question is not academic.
- No guarantee here is a regulated insurance or investment product.
- Assess the guarantor the way a lender assesses an unsecured borrower.
- Developer stress signals sit in the unfinished projects warning.
- Wider developer checks are in the due diligence red flags guide.
- The full document list is in the scam checklist.
What does the annex actually exclude?
The guarantee annex is where the promised gross becomes a much smaller net. Standard exclusions cover service charge at about $1.50 per sqm per month, sinking fund contributions, management fees of 8% to 12%, and rental income tax at 10% for a resident owner or 14% for a non-resident.
| Cost line | Usually excluded from the guarantee | Typical size |
|---|---|---|
| Service charge | Yes | About $1.50 per sqm per month |
| Sinking fund contribution | Yes | Building dependent |
| Management fee | Yes | 8% to 12% of rent |
| Rental income tax, resident | Yes | 10% of gross rent |
| Rental income tax, non-resident | Yes | 14% of gross rent |
| Furnishing and reinstatement | Yes | $3,500 to $12,000 package |
Working an example through makes the gap concrete rather than theoretical. A 42 sqm unit on a 10% gross guarantee at a $100,000 price receives $10,000 a year on paper. Deduct $756 of service charge, $1,000 to $1,200 of management, and 14% tax on the gross for a non-resident owner at $1,400, and the figure lands near $6,600 before any furnishing capital is recovered. Our analysis has found that buyers rarely dispute these deductions once they are itemised, and almost never see them itemised before signing, which is why a red flag on any guarantee offer is a brochure that quotes a percentage without a worked net example beside it.
- A 10% gross guarantee commonly nets closer to 6.6% after standard exclusions.
- Demand a worked net example before signing, not a percentage.
- Tax treatment sits in the rental income tax guide.
- Fee mechanics are in the sinking fund and HOA guide.
- Net modelling is covered in the net versus gross yield guide.
Who is actually signing the guarantee?
The identity of the guarantor decides everything, and it is frequently not the entity that owns the project. A guarantee signed by a special purpose vehicle with no assets carries no more value than the paper, regardless of the 8% to 12% figure printed on it.
| Question to ask | Why it matters |
|---|---|
| Which legal entity signs the annex? | It may not be the project owner |
| Does that entity hold the development licence? | Licensed entities are traceable and regulated |
| What assets does the guarantor hold? | An unsecured promise needs a balance sheet |
| Is there a bank guarantee behind it? | A bank instrument is a different product entirely |
| What happens if the project stalls? | Guarantees commonly lapse on default |
| Does the guarantee survive assignment? | Frequently not, which affects your exit |
Insider tip: ask whether the guarantee is backed by a bank guarantee letter from a licensed Cambodian bank, in the same way the development licence deposit can be. Under the licensing regime a developer may satisfy the regulator’s 2% construction-cost deposit with a bank guarantee letter rather than cash, so the mechanism is familiar to serious developers and easy for them to arrange if they intend to honour the promise. Our methodology treats a refusal to provide any bank backing as the single most informative answer in the whole conversation, because a developer confident of paying has an inexpensive way to prove it.
- Ask for a bank guarantee letter, a mechanism developers already use.
- A refusal to provide bank backing is itself the answer.
- Licensing documents are listed in the scam checklist.
- Default scenarios are covered in the developer default guide.
- Contract review sits in the SPA review guide.
How do you model a unit without the guarantee?
Model the unit on market comparables and treat any guarantee payment as an unbudgeted bonus. Take rent for the same building or tower class, deduct one to two months of vacancy, 8% to 12% management, service charge at about $1.50 per sqm and tax, and buy only if the resulting net justifies the price paid.
| Modelling step | Treatment |
|---|---|
| Starting rent | Market comparables, not the guaranteed figure |
| Vacancy allowance | One to two months a year |
| Management | 8% to 12% of collected rent |
| Service charge | About $1.50 per sqm per month |
| Tax provision | 10% resident, 14% non-resident on gross |
| Guarantee income | Excluded from the base case entirely |
Excluding the guarantee from the base case is not pessimism, it is the only way to see what you are buying. If the unit works at market rent, the guarantee is a genuine bonus and you have lost nothing by ignoring it. If the unit only works with the guarantee, you are buying a 24-month income stream attached to an asset you have valued incorrectly, and the day the guarantee expires the yield reverts to whatever the market pays. Our underwriting has never approved a purchase that failed on market rent and passed on guaranteed rent, and the buyer scenario it protects against is the owner who reaches month 25 holding a unit priced for an income it no longer earns. At that point the only options are accepting a yield of 5.22% to 7.4% on an inflated basis, or selling to a buyer who will price it correctly.
- If the unit works at market rent, the guarantee costs you nothing.
- If it only works with the guarantee, you have valued the asset wrongly.
- Comparable yields sit in the Phnom Penh yield guide.
- District variation is in the district yield comparison.
- Occupancy data sits in the occupancy guide.
Advantages and disadvantages
A guarantee is not worthless. It is worth exactly the creditworthiness of whoever signs it, minus everything the annex excludes.
| Advantage | Disadvantage |
|---|---|
| Income while a new building fills up | Funded from your own purchase price |
| Useful in a genuinely soft letting market | Excludes service charge, management and tax |
| Signals a developer wanting to move stock | Signals a developer needing to move stock |
| A bank-backed guarantee is genuinely valuable | Most are unsecured company promises |
| Predictable cash flow for 12 to 24 months | Reverts to market rent at expiry |
| May be negotiable into a price cut instead | Frequently terminates on assignment |
The most useful thing a buyer can do with a guarantee offer is convert it. Ask the developer to replace the 24-month guarantee with an equivalent discount on the purchase price, and watch what happens. A developer with a genuine letting expectation will often decline, because they expect never to pay the full guarantee. A developer using the guarantee as a disguised discount will frequently accept, at which point you have the money certainly rather than conditionally, and you own the unit at a lower basis for the whole of your hold.
Buyer scenarios and red flags
Three scenarios cover most guaranteed-yield offers reaching foreign buyers.
| Scenario | The offer | What we would recommend |
|---|---|---|
| Off-plan tower, 10% for 24 months | $20,000 on a $100,000 unit | Ask for the equivalent price cut instead |
| Handover stock, 8% for 12 months | Bridge while the building fills | Reasonable if the unit works at market rent |
| SPV guarantor, 12% for 24 months | Highest headline in the building | Decline; there is no balance sheet behind it |
The failure pattern is a purchase priced on guaranteed income. A buyer compares a 10% guaranteed unit against a 6% market unit, concludes the first is better value, and pays a premium that the guarantee then repays to them over 24 months. At expiry they hold an asset bought above market carrying a yield at market, and the resale buyer will not pay the premium because the guarantee did not transfer. Our underwriting values every unit at market rent before any guarantee is discussed, and a red flag on any offer is a developer unwilling to quote a price without the guarantee attached.
- Ask for the price without the guarantee before discussing the guarantee.
- Ask which entity signs and what it owns.
- Request a bank guarantee letter from a licensed Cambodian bank.
- Read the assignment clause before assuming the guarantee transfers.
- Model the unit on market rent with the guarantee set to zero.
Send us the guarantee annex and the price. We will tell you what the unit is worth without it, and whether the entity signing has anything behind the promise.
Talk to our Cambodia deskWhat questions end the conversation quickly?
Six, and a developer offering a genuine guarantee answers all of them without difficulty. A developer offering a disguised discount usually stops at the second.
| Question | What the answer tells you |
|---|---|
| Which legal entity signs the guarantee? | Whether it is the project owner or a shell |
| What assets does that entity hold? | Whether the promise has a balance sheet |
| Will a licensed Cambodian bank stand behind it? | Whether they expect to pay |
| What does the annex exclude? | The gap between gross promised and net received |
| Does the guarantee survive assignment or resale? | Whether it supports your exit price |
| What is the price without the guarantee? | The real discount, stated as a number |
Our underwriting treats the last question as the most useful one on the page, because it converts a yield story back into a price negotiation where a buyer can actually assess value. A developer who will not quote a price without the guarantee attached is telling you the guarantee is the discount, which is worth knowing before you pay for it twice.
- Ask for the price without the guarantee. That is the real number.
- A bank guarantee letter is cheap for a developer who intends to pay.
- Developer checks sit in the due diligence red flags guide.
- The document list is in the scam checklist.
- Yield reality is in the net versus gross yield guide.
Frequently Asked Questions
A guarantee is an unsecured promise from a company, not insurance and not a bank instrument. Its value equals the guarantor's ability to pay.
Commonly 8% to 12% gross for 12 to 24 months, against realistic Phnom Penh gross yields of 5.22% to 7.4%. The difference comes from your purchase price.
Almost always gross. Annexes routinely exclude service charge at about $1.50 per sqm per month, sinking fund, management at 8% to 12%, and rental income tax.
Frequently not. Many annexes terminate on assignment, so the guarantee cannot be passed to your buyer or support your asking price.
As though the guarantee does not exist. Market comparables, one to two months vacancy, 8% to 12% management, service charge and tax.
To move stock without cutting the headline price. A guarantee spreads a discount over 24 months and may never be paid in full.
A guarantee signed by a special purpose vehicle with no assets. If the signing entity is not the project owner and holds no balance sheet, the promise is marketing copy.
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