Guide to Real Estate Investment in the Philippines
The year 2014 is seen by many investment analysts as a particularly opportune time for investing in real estate in the Philippines. Although the country has been hit by an enormous disaster last year with such an impact that has initially been thought to cause some economic slowdown, it has nevertheless breezed through it with ease and the country’s economic fundamentals is sound in all aspects. On the political aspect, economic growth has also been largely unaffected by the pork barrel scandal.
The country’s robust economy has been particularly favorable for the real estate industry, and growth and investment in this sector has seen an upward trend of steady growth in the past few years, with research and surveys indicating that it is one of the topmost locations in the Asia-Pacific region for the property market this 2014. The market is also relatively stable owing to factors such as strong capital inflows from overseas Filipino workers, the steady growth of the BPO industry, positive demography, as well as the country’s cultural similarity with the West, which is seen to have an impact with its workforce. Overall, property investment prospects is rosy for the Philippines. The following factors should be considered by those who want to take an opportunity to make profit from property investment in the Philippines.
In Metro Manila, property investors obtain profit primarily out of rentals. In fact, the trend in condominium property ownership nowadays is to initially provide for the initial down payment required to obtain a unit, and then lease the unit to renters to provide for the succeeding amortization payments for the property. Whatever is left of the rent proceeds after amortization and condominium dues payments translates into an income for the unit owner. It should be noted, however, that income generation from this set-up is highly dependent on the target market of the investor, as well as the location. For investors targeting primarily university students, properties along Manila’s university belt area will be a good choice. Before investing, however, sustainability should also be examined. An area that is already highly saturated, for example, can not be at all profitable.
Creating a financial growth plan is one effective means of gauging one’s investment priorities. For example, how do you see your investment making a good profit for you in a span of five years? Being able to determine the investment’s profitability will help in making a sound business and investment decision. On the other hand, if you are not able to have a clear idea of the profit you are going to make in a particular investment, chances are that it is not a good idea after all.
All investment carries with it an attendant risk. In real estate, risk includes the cost that is associated with amortizations and interest rate payments. In the Philippine setting, however, analysts agree that interest rate is one of the factors that is highly favorable for investment. Other risk factors include short and long-term changes that can have an adverse impact on a particular investment. Conducting a research before deciding on an investment can help determine what short and long-term changes might accrue in the future, and can help you prepare for such eventualities.
Another important factor affecting a property investment’s profitability are the features that add value to it and the lifestyle of its target market. A real estate development project that offers complete and sensible amenities, for example, will be preferred more by buyers and renters alike over one that offers amenities that are of no use at all. For residential condominium towers, amenity needs may, however, vary depending on the target market. On the other hand, there are projects that offer not only the standard amenities but also add component projects within the development that may not be necessary but fully complementary with each other as a whole. For example, a development may consist of residential towers, office towers, malls, hotels, gardens, and other features that would make the project a whole community by itself once completed. It is also commonly referred to as a mixed-use development. In Metro Manila, a good example of such a project is the South Park District.