Should You Invest?
The Philippines is striving to become a main player in the
global economy and if it continues to progress at its current rate,
may soon achieve this goal. The recently re-elected government is
more stable than it has been in many years and increased levels of
inward investment and tourism stand the country in good stead for
future growth. In addition, the amount of money and investment
brought in by Filipino ex-pats is further boosting the economy.
Overseas investors will need to consider the restrictions on
ownership if they wish to buy here, as non-nationals cannot own
property outright, apart from in certain circumstances. Though
there are ways of circumventing the law it may not suit all types
of investor.
For those who do decide to invest, prices are extremely low by
European standards and there is the opportunity to buy well in both
city and beach locations. The distance may make it too far as a
holiday-home destination for European investors without a base or
links to the region and so the main attraction would undoubtedly be
as a buy-to-let investment with a focus on long-term capital
growth. Overseas investors will, however, need to consider the
costs of owning and renting here. All income, including rental
returns, earned by non-residents is charged at 25% tax. Value added
tax of 12% is also added onto the overall costs if rent exceeds
10,000 PHP per month and charges associated with the employment of
a management firm to organize rentals may also be incurred.
- More stable government than previous years
- Growing inward investment and tourism
- Low prices compared with European standards
Rental Yields
Rental yields for condominiums located in Makati CBD, Rockwell,
Ortigas Centre and Fort Bonifacio, municipalities that make up the
Metro Manila are high. Smaller apartments yield at the
highest amount with studio apartments in prime areas of Metro
Manila earning 13 – 15% yields. The highest yields are achievable
on the smallest apartments approximately 30 square metres in size,
earning 15.1% yields. A larger studio approximately 40 square
metres in size is expected to achieve a lower return of 12.9%.
Price History
The Philippines suffered a big price drop during the 1997
economic downturn in Southeast Asia but prices have climbed overall
in the past five years by just under 27%. In 2006 there was around
a 4% average increase in the Philippines market with Manila seeing
luxury apartments increase in value by around 9.5%. Nevertheless,
prices in all areas of the Philippines are substantially cheaper
then in more developed markets. Square metre prices average around
68,600Php and apartments start at under 2mPhp but much of the
cheaper property will be in areas that are not necessarily
attractive to the better-off tenant or future buyer. Satisfactory
property in rentable locations starts at around 4mPhp for a
one-bedroom apartment in a complex with facilities such as a gym, a
swimming pool and 24-hour security. High-end, three- or
four-bedroom apartments in swanky Fort Bonifacio or the Greenbelt
area sell for around 20m to 30mPhp. The government is considering
relaxing restrictions on foreign ownership and if this happens
prices will probably climb at a faster rate.
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