Philippines Tax Authority

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Philippines residential property market is showing signs of downturn due to the global financial market turmoil and economic problems of markets around the world. Despite strict banking policies, the Philippines residential property market is slowing in real terms. Following are some points to help you determine whether the Philippines residential property market can help to fulfill your investment objectives:

After four years of strong residential price growth, the Philippines property market is entering a period of price stabilization as new condominium developments are completed, particularly in Manila. According to the chart from the Colliers International Q3 2008 report new supply is expected to outstrip the take-up of units during 2009.

2.

Supply of residential condominium units in the Makati Central Business District (CBD) is at 11,705 as at the end of September 2008. 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.

3.

While rents for luxury 3-BR units in Makati CBD area have escalated by 8.5% in the year-to-date, recent indications are that prices are flattening and are expected to remain that way for the rest of the year. While the luxury segment has the lowest vacancy rates, the Colliers report shows that the Makati CBD residential vacancy rate for luxury apartments changed from 2.7% in Q2 to 4.1% in Q3 2008.

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 high rental yields.

5.

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.

6.

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. Asia Property 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.

9.

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