Updated: December 5, 2018
Real estate remains popular as an investment among Filipinos. It is unique as an asset because it has good price appreciation while also being a viable source of passive income.
Moreover, unlike paper assets such as shares of stocks or mutual funds, real estate is a tangible asset that you can actually use for personal utility.
However, investing on real estate can be daunting if you’re just a beginner. Thus, you must first take time to study it before going off and buying your first property.
Recently, I’ve had the chance to talk to some of the country’s top real estate investing experts. I asked them about their thoughts and personal outlook on real estate investing in the Philippines. Below are my ten key takeaways.
Real estate is a long-term investment and not a short-term quick profit venture.
Many times, it’s the buyer’s short-term expectations that makes property investments to not perform as expected.
Quick flips to make money is a bonus and should not be an expectation. When you buy a property, be prepared to hold that property for many years.
2. No Bubble
There is no real estate bubble in the Philippines. The country’s real estate market has always been resilient.
It calmly went through the 2008 global subprime crisis, and it will do the same if and when the current POGO market slows down.
Moreover, the Philippine real estate industry is mostly about the local market. It is location-specific.
For example, there could be a “bubble” in a specific city or region, but good opportunities will be present in other cities and regions.
Real estate prices have inflated because of Philippine Online Gaming Operations (POGO). And it’s unknown when it will slow down or decline.
However, the inflation is mostly concentrated in Pasay, Mall of Asia area, and nearby cities such as Paranaque, Makati, Las Pinas, and Taguig.
If you want to take advantage of this ongoing opportunity, then learn to speak Mandarin or have a business partner who does.
4. Quick Profits
Those who have properties in and around Central Business Districts (CBD) can sell now for quick capital gains.
Otherwise, they can make fast money from AirBnB or transient stays. Just make sure that the Homeowners Association (HOA) and Property Management Office (PMO) allows short-term rentals.
As of September 2018, the occupancy rate of AirBnB in Metro Manila is 50% with an average revenue of P22,500 per month.
5. Unmet Market
There is a big and unmet demand in Metro Manila for affordable and decent housing. Buyers are mostly starter families and newly weds.
Thus, it still makes sense to invest in family homes, 1BR / 2BR condominiums, and multi-unit apartments.
6. Live, Work, Play
People are prioritizing convenience more than ever today, especially given Metro Manila’s traffic situation.
“Live, work, play” communities are expected to do well. There’s also good opportunities in regional growth centers and township projects.
Foreclosed property investing has become a bit tricky because banks and financing institutions now ask close to market rates.
It’s best to focus on one area and master the values there until you find a good deal.
If you want to maximize capital appreciation, buy properties at pre-pre-selling stage if you can.
Do your homework. High-end developers don’t always deliver high-end quality properties. Particularly research on delays in turnover of past projects.
Furnished properties sell faster and can fetch higher rates from end-users. This is good to remember for those planning to flip properties.
Getting approved for home or housing loans remains a challenge for many. Bank loan interest rates are currently high.
Thus, it’s best to look for projects with easy-to-own programs. And more importantly, simulate your cashflow to see if you can really afford to buy a property.
10. Due Diligence
Never buy a property based on speculation. Use actual data for sold properties in the area to determine its market value.
Moreover, use actual lease contracts of neighboring properties to determine rental rates of a specific area.
I’d like to thank Noli Alleje, Ronald Cagape, Jay Castillo, Eden Dayrit, Ron Oliver Dizon, and Carl Dy for the insights above, which they shared to me. Please visit their links and follow them online, especially if you want to learn more about real estate investing in Philippines.