Philippines Tax Authority

World Bank Philippines page

Philippines residential property market is showing signs of improvement since its real estate market freeze in 2009. Following are some points to help you determine whether the Philippines residential property market can help to fulfill your investment objectives:

According to the Global Property Guide the Philippines has one of the highest rental yields for markets across Asia. For luxury condominiums in prime areas the medium sized units enjoy extremely high rental yields, this is the culmination of four prosperous years for the real estate market.

Supply injections will be from five projects expected to finish this year including the upscale Raffles Residences. Bonifacio Global is an area that will contribute significantly to the supply over the next four years with 25 projects adding over 12,000 units by 2012.

Residential condominiums in Makati CBD recorded better occupancy rates in the first quarter of 2010. Overall, Makati CBD condominiums posted a decline in vacancy at 6.9% from 7.5% last quarter in 2009. This may be caused by lack of new projects coupled with an increase in demand from expatriates. New supply of new residential condominiums in the rental and secondary market is expected to push vacancy levels back to 8% - 9% in the next 18 months.

3.

For the first quarter of 2010, average rents for luxury 3BR units of 250 sq m in Makati CBD are priced at P540/sq m. On the other hand, Rockwell Center is priced at the rental rate of P680/sq m for a 225 sq m unit and Bonifacio Global City are leased at P177, 000 per month for a 290 sq m unit. Demand for smaller units in these locations remain low but rent rates are much more expensive per sq m basis.

4.

Foreigners are not able to buy land in the Philippines. However, foreigners can invest in the Philippines residential property market. Methods of property ownership for foreigners are: i) having a Filipino spouse, ii) as a Philippine corporation, and iii) property without land such as a condominium.

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Advantages of the Philippines residential property market include i) the 11 million Filipinos working overseas who remit billions of dollars to the Philippine economy, ii) a strong banking system with tight lending criteria, and iii) the market’s conscious move to put money in property as a fixed asset.

The Philippines residential property sector has been assisted by the governments decisoin to delay the implementation of a new law until 2012. The new law will record buyer payments as a liability rather than revenue until the stage that the condominium is complete. Real estate developer groups believe this delay will help maintain confidence in developers and investors during the economic downturn.

After the 1997 financial crisis, it has become increasingly difficult to obtain finance to support Philippines residential property market investment. Healy Consultants assists clients obtain International mortgages to finance for their investment, working with international banks such as HSBC, ANZ Bank, DBS Bank and OCBC Bank.

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While the Philippines residential property market remains a cost-effective investment option, capital values of luxury condominiums are not expected to increase significantly as new supply becomes available and the general buyer sentiment causes demand to dampen.

For more information on the Philippines residential property market, call our Singapore office at (+65) 67350120 or contact us at email@healyconsultants.com