Phnom Penh: The Fourth Most Expensive City in ASEAN — What This Means for Locals, Travelers, and Investors? Is Phnom Penh Really That Expensive to Live In?
Overview of Phnom Penh City
History of Phnom Penh
Phnom Penh, the vibrant capital of Cambodia, is a city steeped in history and resilience. It became the capital in 1865 during the reign of King Norodom and was once referred to as the “Pearl of Asia” due to its beautiful colonial architecture and scenic location at the confluence of the Mekong and Tonlé Sap rivers. The city faced a dark chapter during the Khmer Rouge regime in the 1970s, but since the 1990s, Phnom Penh has undergone a remarkable transformation.
Today, it represents a dynamic fusion of tradition and modernity — from golden temples and royal palaces to high-rise buildings and international franchises.
Population
As of 2025, Phnom Penh’s population is estimated to be over 2.5 million, making it the most populous city in Cambodia. This rapid urban growth is driven by internal migration from provinces, foreign expatriates, and investors seeking opportunities in Cambodia’s growing economy.
The urban landscape is expanding with new satellite cities such as Koh Pich (Diamond Island), Chroy Changvar, and the under-construction Techo Takhmao International Airport zone, promising further urban sprawl and economic activity.
Lifestyle in Phnom Penh
Phnom Penh offers a compelling mix of traditional Cambodian life and modern urban living.
- Travel and Tourism: Popular destinations include the Royal Palace, National Museum, Wat Phnom, and the Tuol Sleng Genocide Museum. The bustling riverside promenade and river cruises offer relaxation in the heart of the city.
- Shopping and Dining: Phnom Penh’s shopping scene has evolved with the introduction of luxury malls like AEON Mall, Chip Mong 271 Mega Mall, and Olympia Mall. Meanwhile, traditional markets like Central Market and Russian Market remain favorite spots for locals and tourists alike.
- Entertainment: The city has a growing nightlife with rooftop bars, clubs, karaoke lounges, cinemas, and cultural performances at venues like the Cambodian Living Arts Center.
- Connectivity in Cambodia: Phnom Penh is well-connected to other parts of Cambodia via National Roads and rail lines. It serves as a hub to Siem Reap (Angkor Wat), Sihanoukville (beach and port), Kampot (eco-tourism), and the upcoming international airport is set to enhance global access further.
Phnom Penh – The Fourth Most Expensive City in ASEAN
In 2025, Phnom Penh ranked as the fourth most expensive city in Southeast Asia according to Numbeo’s Cost of Living Index. The index measures cost-related metrics such as rent, groceries, restaurant prices, and purchasing power.
Also read: Why Are Small Malls in Phnom Penh Shutting Down?
ASEAN Cost of Living Rankings (2025)
- Singapore – Index: 79.1
- Phuket – Index: 38.1
- Bangkok – Index: 37.1
- Phnom Penh – Index: 36.9
- Manila – Index: 34.3
- Pattaya – Index: 33.6
- Kuala Lumpur – Index: 33.3
- Ho Chi Minh City – Index: 28.5
- Jakarta – Index: 28.4
- Hanoi – Index: 27.7
Key Index Metrics for Phnom Penh:
- Rent Index: 11.6
- Groceries Index: 43.9
- Restaurant Index: 27.1
- Local Purchasing Power Index: 26.6
These numbers highlight that although rent remains relatively affordable compared to Singapore or Bangkok, groceries and dining out are becoming pricier, creating a squeeze for local residents, especially those on lower wages.
Also read: First Day in Cambodia! Warned NOT to Visit Phnom Penh?
A one-bedroom apartment in the city center can cost around $400/month, and an average local meal costs about $3. While this may seem affordable to foreigners, for many Cambodians — especially garment workers or informal laborers — these prices are steep.
Experts attribute this high cost to:
- High import dependency for consumer goods
- Limited local manufacturing
- Urban migration increasing demand for housing
- Tourism and foreign investments inflating service prices
Moreover, the income gap between city workers and provincial laborers is widening, intensifying economic disparities within Cambodia.
Travel Safety in Phnom Penh
Phnom Penh is generally safe for tourists, but like any growing metropolis, there are areas of caution:
Safety Tips for Travelers:
- Petty Theft: Watch out for bag snatching, especially on motorbikes. Use cross-body bags and stay alert in crowded markets or during tuk-tuk rides.
- Traffic Hazards: Traffic in Phnom Penh is chaotic. Pedestrians should be cautious when crossing streets. Many drivers do not follow traffic lights or lane rules.
- Scams: Be wary of overpriced taxis or currency exchange frauds. Use trusted ride-hailing apps and official money exchangers.
- Health and Hygiene: Drink bottled water, avoid street food unless it looks freshly cooked, and carry hand sanitizer.
- Police Assistance: In case of emergency, contact tourist police. Some officers speak English and are trained to assist foreigners.
Despite minor risks, many expats and tourists live and travel comfortably in Phnom Penh. Following common-sense safety precautions ensures a smooth visit.
Also read: Why Phnom Penh Urgently Needs Its Own MRT System?
Why You Should Visit Phnom Penh?
Despite being one of the most expensive cities in ASEAN, Phnom Penh continues to attract thousands of visitors each month for several compelling reasons:
1. Rich Cultural Heritage
From Angkorian history to French colonial architecture and Buddhist spirituality, Phnom Penh offers a deep cultural experience.
2. Vibrant Local Life
Whether it’s sunrise at Wat Phnom or bustling nightlife at Bassac Lane, Phnom Penh pulses with life and character.
3. Affordable Luxury
Compared to Western standards, Phnom Penh offers luxury on a budget — 4-star hotels at $60 per night, massages for $10, and gourmet meals for under $20.
4. Booming Café and Art Scene
Cambodia’s young generation is fueling a creative wave. Phnom Penh is now home to dozens of stylish cafés, art galleries, and boutique studios.
5. Great Base for Exploring Cambodia
Phnom Penh is centrally located, making it an ideal launching pad to visit Angkor Wat, coastal towns, and national parks.
The Expat and Digital Nomad Life
Phnom Penh is increasingly a destination for expats, digital nomads, and remote workers. With a relatively low cost of living (for foreigners), vibrant community, and growing infrastructure, the city offers:
- Co-working spaces like The Desk and Workspace 1
- Affordable rent and utilities
- Access to gyms, pools, international schools, and healthcare
- Visa flexibility (30-day tourist visas and business visa extensions)
English is widely spoken in central districts, and many foreigners find the local population friendly and eager to engage.
Economic Growth and the Real Estate Boom
The city’s rapid rise in cost of living is partly due to its economic transformation:
- Infrastructure projects like new expressways, airport, and city expansion zones
- Real estate investments by Chinese, Korean, and Japanese companies
- Construction of luxury condos, shopping malls, and entertainment hubs
Phnom Penh’s real estate market is among the fastest-growing in ASEAN, but also contributes to gentrification and housing unaffordability for lower-income locals.
A City of Opportunity and Contrast
Phnom Penh’s status as the fourth most expensive city in ASEAN paints a picture of growth and ambition, but also rising inequality and cost pressures. For tourists and foreign workers, the city offers excitement, convenience, and modern lifestyle options at competitive prices. For locals, the balance between income and expenses is more delicate.
Phnom Penh remains a city of opportunity — for business, for travel, for cultural exploration — but also a city that must manage its growth wisely.
Have you visited Phnom Penh recently? What was your experience with the cost of living and lifestyle? Share your thoughts in the comments below.
