Guide To Investing In Real Estate In The Philippines

Updated on Sep 02, 2020

The Philippines real estate market is resilient and thriving. The demand for real estate is only going to rise thanks to its robust economy, increasing urbanization, a growing population, and an ever-expanding middle class. Add to this, the growth of the BPO industry, OFW remittances, the influx of foreign investors, the establishment of technology companies, and multinational corporations, the vibrant labor market, and flexible workspaces will further boost the country?s real estate market.??

Real estate investing is generally a safe option, even for first-time investors. There are enough opportunities for big or small capitals. Despite the COVID-19 pandemic, real estate markets might weather the global economic meltdown and give good returns of investment. Also, unlike stocks, the value of the land and the properties will only increase over the long term.??

Real Estate Investing in the Philippines?

Investing in real estate in the Philippines is promising as there are several well-financed developers. The market is accommodating to both licensed and non-licensed investors. For real estate brokers without a license, the pre-selling option of buying and selling residential apartments for sale is an alternate route. A good rental income can be earned this way.

Do keep in mind that foreigners are not allowed to own land in the Philippines. Buying a condo or even residential properties under their name is permissible but the land where the buildings are built must be owned by residents or leased (up to 50 years, which is extendable for 25 years more). They can own condominium units, apartments but should not exceed 40% of the total ownership.?

Now coming to the investment options in the real estate in the Philippines, there are mainly four categories to choose from: residential, commercial, industrial, and land.

Residential as the name states include condominiums, condotels, apartments, townhouses, and residences. Hotels, malls, business centers, and restaurants come under commercial real estate. Industrial real estate includes warehouses, manufacturing buildings, research centers, cold storage buildings. Lastly, land real estate has farms, vacant land, and ranches.?

Many people earned well in the real estate sector from buying a property at a low price and selling or renting them out at marked-up rates. They even seek out run-down properties and do a makeover to increase the value, most often in attractive neighborhoods for flipping or wholesaling. Some people even rent out their vacation homes to tourists to earn quick money. Others may go for ancillary profits by doing micro-businesses near a property like food stalls at cinemas, in-flight snacks, or car wash at gas stations.

Based on the types of properties that are in demand and your investment goals, you will have to decide your investment options. If you are an OFW, make sure you understand the tax implications of sending money to the Philippines for any purposes.?

Following are some of the best investment options in the Philippines Property that will generate profit:?

There has been a substantial rise in the number of residential condominium units owing to its convenience and cost-effectiveness among the workforces who prefer to live close to their workplaces and young families who are just starting. They are popular among professionals traveling to business districts who need a place to stay for a few days. The majority of the increased units are concentrated in Quezon city, Makati, and Taguig City.?

• Apartment Complexes

Investing in families home, multiple-dwelling units that are in demand among newlyweds is another good option. Ideally, people go for living spaces where they can live, go to work and play without sitting in the traffic for long hours.?

• Warehouses

The growth in the logistics and eCommerce industry has increased the need for storage units and warehouses, especially due to the success of online shopping platforms. The Philippines? eCommerce market is projected to have an annual growth rate of [18.3% ](https://www.statista.com/outlook/243/123/ecommerce/philippines#:~:text=Revenue%20in%20the%20eCommerce%20market,US%246%2C610m%20by%202024.)(CAGR 2020-2024). It is expected to reach $3,370 million this year and $6,610 by 2024.

• Dorms

Ideal for students looking for a safe, affordable, and accessible, dormitories are often in high demand. Many young professionals in the central business districts also prefer to stay in dorms. It helps if the dorms are near to the schools, colleges, or workplaces and there are markets or convenience stores nearby.?

• Vacation Homes

Vacation homes, especially in tourist destinations, are a major attraction. Millions of travelers both domestic and international flock to popular destinations in the Philippines and they need a place to stay.

• Low-rise Commercial Buildings

Such buildings consist of a string of commercial units rented out by mini-marts, a selection of food stalls, money transfer service centers, laundry shops, even a bank or two. It is a profitable investment that provides a steady income for a long time. The rental contracts can last from 5 to 10 years. It can also be leased as office spaces as flexible workplaces become trendy. The Philippine Online Gaming Operations (POGO) taking up a large chunk of the available office spaces made the real estate prices go up in some areas.?

• Empty Lots in Strategic Areas

Empty lots are often found in between commercial buildings or residential properties. Finding out which type of investment suits the location and considering the price and safety, you might get it cheaply and turn it into a profitable investment.

Types of Real Estate Documents

1. Contract to Sell (CTS)-Document stating the developer?s agreement to transfer ownership of a property to its buyer once the terms of sale are fulfilled

2. Deed of Sale- Legal document reflecting the agreement between buyer and seller on the sale or purchase of the property

3. Condominium Certificate of Title- Proof of ownership issued by the Registry of Deeds

4. Declaration of Real Property (Tax Declaration)- Document showing the market and assessed value of the property which is used to calculate real estate tax

Legal Steps Involved in Transfer of Ownership for Lands and Apartments

1. The buyer and seller agree on a property sale

2. A lawyer creates and notarizes a Deed of Absolute Sale (SoAS)

3. Both parties get a Land Tax Declaration from the BIR and submit it to the office of the Municipal Assessor

4. The buyer pays Real Estate tax at the Municipal Treasurer Office

5. The Assessor determines the property?s market value

6. The buyer pays the transfer taxes to the Assessor?s office

7. At the BIR?s office, the Documentary Stamp and Capital Gains Taxes are paid

8. The Registry of Deeds cancels the old title and awards a new one to the buyer

9. The buyer gets a photocopy of the new title and visits the Assessor?s office to request a tax declaration

The whole process usually takes about a month.

Before going ahead with your investment, always research the market and work with a credible real estate agent that can help you navigate the field with the technical know-how and valuable insights on the various investment options that you are interested in.

Real estate growth is seen not only in Metro-Manila, but many upcoming cities like Davao, Cebu, Bacolod, Baguio, Tagaytay, Iloilo and others are also experiencing the demand for real estate. With many potential hotspots for investment, it is the perfect time to put your money in the Philippines real estate market.

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Source: https://www.compareremit.com/money-transfer-guide/guide-to-investing-in-real-estate-in-the-philippines/