Sihanoukville Case Study: Real ROI from Apartments and Condos – 2 Step-by-Step Simulations

Sihanoukville Case Study – Why Data-Driven ROI Calculation is Critical Here

Sihanoukville is a market where ROI can look fantastic in sales brochures, but can just as easily fall apart once you factor in real costs. This city has experienced a period of rapid boom, oversupply, and correction, which is why today mathematics wins over narrative.

In this case study, we walk through step by step two simulations:

• a conservative scenario (capital protection, stability),
• an aggressive scenario (income maximization, higher risk).

Both are based on real market rates, not promises of "guaranteed rental income."

Common Assumptions for Both Simulations (for Fair Comparison)

Before calculating ROI, we establish hard assumptions, identical for both scenarios.

• Market: Sihanoukville, urban location with beach access
• Type: condo in a managed building
• Currency: USD
• Strategy: short-term rental + business tenant rotation
• No loan financing (cash buyer)

Market averages we use as reference points:

• Condo purchase price: $1,200–$1,600/sqm
• Maintenance fee: $0.80–$1.50/sqm/month
• Rental management: 20–30% of gross revenue
• Rental tax: 10% (simplified tax regime)
• Vacancy and service reserve: 10–15% of revenue

CASE 1 – Conservative Scenario (Capital Protection)

This is the scenario for an investor who isn't chasing maximum ROI, but wants:

• predictable cash flow,
• low turnover,
• reduced property wear and tear.

Property Parameters – Conservative Scenario

• Size: 45 sqm (1 bedroom)
• Purchase price: $1,300/sqm
• Total price: $58,500

Entry costs:

• Transfer tax (4%): $2,340
• Notary, documentation, registration: $800
• Finishing and furnishing: $7,000

Total investment cost: ~$68,640

Rental Income – Conservative Scenario

We assume mixed rental:

• medium-term rental (1–3 months),
• business rental,
• limited seasonality.
• Average monthly rate: $850
• Annual gross revenue: $10,200

Operating Costs – Conservative Scenario

• Rental management (25%): $2,550
• Maintenance ($1.00/sqm): $540
• Utilities and internet: $720
• Service, repairs, reserve: $1,000
• Rental tax (10%): $1,020

Total annual costs: ~$5,830

Net Result – Conservative Scenario

• Net income: $4,370 annually
• Net ROI: ~6.4%

This is real, defensive ROI that:

• doesn't require high turnover,
• isn't dependent on mass tourism,
• protects property value.

CASE 2 – Aggressive Scenario (Income Maximization)

This scenario is for an investor who:

• accepts seasonality,
• actively manages pricing,
• expects greater property wear and tear.

Property Parameters – Aggressive Scenario

• Size: 32 sqm (premium studio)
• Purchase price: $1,500/sqm
• Total price: $48,000

Entry costs:

• 4% tax: $1,920
• Documentation and registration: $800
• Finishing + design for short stays: $9,000

Total investment cost: ~$59,720

Rental Income – Aggressive Scenario

Short-term rental:

• Average rate: $65/night
• Average occupancy: 55% (200 nights)
• Annual gross revenue: $13,000

Operating Costs – Aggressive Scenario

• Short-stay management (30%): $3,900
• Maintenance ($1.20/sqm): $460
• Utilities and internet: $780
• Cleaning and service: $1,200
• Rental tax (10%): $1,300
• Vacancy and wear reserve: $1,000

Total annual costs: ~$8,640

Net Result – Aggressive Scenario

• Net income: $4,360 annually
• Net ROI: ~7.3%

Higher ROI, but:

• greater volatility,
• greater dependence on operator,
• faster property wear and tear.

Where ROI "Disappears" in Sihanoukville Most Often

Most common investor mistakes:

• failing to account for full management costs,
• no vacancy reserve,
• overly optimistic occupancy projections,
• underestimating service costs.

Direct Comparison of Scenarios – Where the Real Difference Lies

On paper, both scenarios look similar in terms of final numbers, but the risk and stability profile is completely different.

Conservative scenario:

• lower operating costs,
• less dependence on operator,
• more stable cash flow,
• slower property degradation,
• better liquidity when reselling to local buyers or expats.

Aggressive scenario:

• higher gross revenue,
• greater monthly volatility,
• strong dependence on season and management quality,
• faster wear on furnishings,
• greater risk of "paper ROI."

In practice, a 1–1.5 percentage point ROI difference doesn't automatically compensate for higher risk if the investor doesn't operationally control the rental.

When the Aggressive Scenario Makes Sense in Sihanoukville

Short-term rental in Sihanoukville works only when specific conditions are met.

• The building must have active short-stay management (reception, cleaning, service).
• Location must be genuinely attractive for short-term rental (beach, center, marina).
• The project must have actual operating rental statistics, not just projections.
• The investor must accept monthly fluctuations of even 30–40%.

If any of these points aren't met, the aggressive scenario stops being aggressive and becomes risky.

When the Conservative Scenario Wins Mathematically

The conservative model in Sihanoukville wins in the long term when:

• the investor plans to hold the asset for 5–10 years,
• exit liquidity matters,
• the goal is stable cash flow, not income maximization,
• the secondary market matters (sale to another investor, expat, local buyer).

Contrary to appearances, most secondary transactions in Sihanoukville involve exactly these types of units, not "tourist hotels in condo form."

Why ROI from Sales Brochures Doesn't Matter

Most common marketing promises:

• "8–10% guaranteed ROI"
• "steady 70–80% occupancy"
• "hands-free investment"

In reality:

• guaranteed ROI is built into the purchase price,
• occupancy is calculated during high season,
• service costs are underestimated or omitted.

That's why every ROI must be calculated from net, after all costs, not from revenue.

Investor Checklist – Sihanoukville Case Study (5 Points)

1. Is ROI calculated from net income, not gross?
2. Are management costs written into the contract (20–30%)?
3. Is the maintenance fee fixed and known (USD/sqm)?
4. Does the project have real rental data, not simulations?
5. Is there a secondary market for this type of unit?

If the answer to any question is "I don't know" — ROI hasn't been calculated.

How Varsovia Estate Corrects ROI "Before It's Too Late"

At Varsovia Estate:

• we always calculate ROI in two scenarios (defensive and aggressive),
• we deduct full operating costs before presenting the offer,
• we verify real rental rates with operators,
• we filter out projects that only work on paper.

Thanks to this, 6–8% net ROI in Sihanoukville is achievable, but only with the right investment structure.

Data Sources and Regulations

• Cambodian Ministry of Economy and Finance – rental taxes
• https://www.mef.gov.kh
• Law on Foreign Ownership in Co-Owned Buildings (Cambodia)
• https://cdc.gov.kh/wp-content/uploads/2022/05/LAW-ON-PROVIDING-FOREIGNERS-WITH-OWNERSHIP-RIGHTS-IN-PRIVATE-UNITS-OF-CO-OWNED-BUILDINGS_100524-.pdf
• CBRE Cambodia – rental and condo market
• https://www.cbre.com.kh
• Knight Frank Cambodia – market reports
• https://www.knightfrank.com/cambodia