CAMBODIA - International investors in Asian real estate are looking beyond the rapidly saturating Vietnamese market to Cambodia in search of macro-driven investment opportunities.

Eric Ooi, chairman of Knight Frank's recently-opened office in Phnom Penh, told IPE Real Estate Cambodia represented "the region's latest emerging economy".

Like Vietnam, Cambodia's economy is anchored in agriculture, garment manufacturing, and tourism.

But a spokeswoman for Knight Frank said the new office was a response to the scale of international investment in Cambodia.

According to Ooi, demand for commercial and high-end residential is coming from regional investors, "as well as well-to-do locals, although last week, we got a call from Israeli investors who felt they have missed out on Vietnam and do not want to do the same in Cambodia".

He pointed out Korean investors have been major investors in the market in recent years, notably in the development of the 42-storey Gold Tower and Camko city: a US$1bn commercial and residential project.

Korean pension funds - previously focused on their domestic market - have regionally diversified their real estate allocations since investment restrictions were lifted in 2006. The Korean National Pension Service, for instance, plans to allocate 10% of its portfolio - around US$43bn (€28bn) - to alternative investments by 2012. Overseas investments currently make up around 2.8% of its assets, against a target of 6.8%.

Ooi expressed optimism over the pace of investor-friendly Cambodian government reform as he said: "A lot still needs to be done but the government seems determined to open up its economy," adding a planned stock market launch in 2009—2010 would provide "a major boost" to the reform process.

That said, Ooi indicated the local real estate sector had much work to do to meet international standards, stressing the consultancy's new office would "set a much higher bar for local real estate firms".

More specifically, he identified there is demand from international investors for independent valuations.