Former U.S. president Franklin D. Roosevelt was once famously quoted: “Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.”
While spoken decades ago and based on the real estate landscape of the United States, it doesn’t mean it is any less true today or does not apply to Philippine real estate. Indeed, real estate is still one of the best investments there is, and there are several reasons why it remains ideal in the Philippines.
Long-term Economic Stability
While the Philippines’ economic growth was at a lower-than-expected rate in 2015, the positive direction still allowed it to be Southeast Asia’s fastest growing economy. The country particularly picked up the pace in the fourth quarter of 2015 with a rate of 6.1 percent, which brought up the year’s overall rate to 5.8 percent.
The International Monetary Fund (IMF) now projects the country’s growth to be at a similar 5.8 percent for 2016. This foreseen long-term economic stability and growth is expected to ensure better conditions for increased real estate investments.
The Philippine population reached 100 million in 2014. Growing in the years since, there had been a continued need for the major urban centers in the Philippines to undergo renewal to better cope with the subsequently increasing living and real estate demands. With the lack of developable land in heavily built-up areas like Metro Manila, urban renewal has also expanded to previously not-so-common locales, with townships leading the way.
As detailed in the latest Real Estate Report by Lamudi Philippines, 2015 was the year of mixed-use townships, with several launched or completed throughout the year. The foreseeable future looks to be more of the same, with the rise of mixed-use developments in more places increasing real estate investment opportunities for both local and foreign buyers looking to cash in on the country’s continued growth.
The Large Housing Backlog
As mentioned, the Philippines’ population continues to increase, with huge demand for housing coming from the majority. With residential properties being geared more toward buyers in the middle-income bracket, which is an increasing demographic in the country, there are now more opportunity to invest on properties that otherwise would have been more difficult to secure if there were no backlog to cater to.
Apart from this, another key reason to invest on Philippine properties is the potential for renewable income. In the same report by Lamudi, Michael Mabutol, CEO and Managing Director of real estate consulting firm Pinnacle, said that the next big opportunity in real estate will come from income-generating assets. While commercial centers and office buildings lead the way, residential investors can also benefit as more people continue to seek residence near said malls and offices.
Increasing Foreign Buyers and Renters
Whether it is for retirement, to work or do business, or to simply enjoy the warm and laid-back atmosphere that the Philippines has to offer, many expatriates choose to live in the Philippines. While local real estate laws prevent them from the outright ownership of land, many expatriates still buy condominium units for the convenience, comfort, and location.
Many still choose to live in a larger home, and renting becomes the manner in which they reside in the country. Renting is also increasingly popular with the jet-setting types who tend to often move to different countries due to the demands of their careers or businesses. With the local economy being trite with foreign investments and companies, all types of property for rent continues to be a viable investment.
Strong and Well-Financed Developers Willing to Invest
In an article published on March 16 by Business World Online, research and consultancy manager at KMC MAG Group Antton Nordberg said local real estate firms could spend an all-time high of Php369 billion for 2016. He continued by explaining that, “end-user demand is so high and investors are tapping that by building more real estate.”
With the year’s capital expenditure budget of different developers anticipated to mostly fund the development of large-scale mixed-use communities, and combined with the overall strength of the Philippine economy, more global companies are finding it more appealing to transfer operations to the country. This in itself creates more demand for space, and those people these companies employ also tend to have the spending power and add to the demand for rental or residential space.