If you’re like most folks, then you consider owning a home as a prized possession, the icing on your personal balance sheet. With the Global economy fluctuating, the Philippine real estate market is increasingly looking attractive for its resilience.
Here is everything everyone should understand about investing in real estate in the Philippines.
Real Estate in the Philippines
There is a lot of feel-good talk regarding the value proposition presented by emerging economies in Southeast Asia. This kind of talk is justified for two reasons; the region is adding jobs at a slow but steady rate, coupled with a growing, predominantly younger population. That means high demand for rentals. More precisely, you should avoid markets that are already overpriced; there won’t be enough renters for high-end properties.
The Philippines real estate market is one that doesn’t stray away from these characteristics. Here, you will find one of the largest concentration of renters. An important consideration to make if you’re to do a buy-to-let, the Philippines’ residential property market is now two-tiered. While the Metro Manila CBD area is still subject to significant real estate investment, all signs point to losing steam. On the contrary, the rest of the country is booming. For wide exposure, check out AXE real estate, where they can assist you in finding a perfect fit.
Crunching the Numbers
Real Estate Investors in the Philippines have a good thing going for them. First off, the local economy is doing great, which means a good price for luxury condominium units. For instance, a 3-bedroom luxury condo in Makati Central Business District went up by 0.87% from 2019 to PHP 232,000 (US$ 4,488) per square meter on average. The data from Colliers International reveals a quarterly basis price increase of 9.43% (8.27% inflation-adjusted) in Q4 2019.
An inside look at housing prices shows that the growth rate was even greater from 2010 to 2018. During this period, the demand for housing had been good, thereby pushing price by almost 132% within Makati CBD. This real estate boom hit a wall with a slowing domestic economy, which was coupled with the unfortunate timing of the US-China trade war. As a result, the real estate market slowed sharply.
Despite these drawbacks, the average price of house seats will within a desirable target rent range. That means you can defensively position yourself in this market and buy into properties in and around the Makati CBD area. In any case, the market across the country is showing strong house price growth. With prices increasing slowly, you’ll want to move quickly as your best strategy.
Real Estate in the Philippines is not high growth, but the stable growth rate is just as important in the long run. In the Q3 of 2019, the nationwide residential real estate price index rose by 10.4%. The data offered by Bangko Sentralng Pilipinas (BSP), the central bank, crunches the figures to 10% inflation-adjusted, but still, you have to consider special vulnerabilities and opportunities.
The Philippine economy is caught up in the Chinese web. China is an incredible suitor for Filipino assets, which could trigger a large influx of Chinese workers migrating to work on Chinese-funded infrastructure projects.
Homeownership is something millions of people dread, but it’s not the right financial move for everyone. Real Estate in the Philippines is increasing, offering the kind of value proposition that could see investment materialize.