Why invest in Philippine real estate?

With the high property prices in Singapore, many investors are looking overseas to find attractive investment opportunities. Besides the developed markets such as the US, London and Australia, there has also been interest in looking at fast-growing emerging markets such as the Philippines. In this article we’ll take a look at the Philippines real estate market, the type of properties you can invest in, what investors should look out for, and how to invest in it.

Given the difficulties in the developed economies of the world, you might wonder why foreigners would want to purchase a property in the Philippines. The main reasons they have started to do so at an accelerating pace include:

1. The rapidly growing Philippine economy sets the context for rising property prices. The Gross Domestic Product (GDP) of the Philippines rose by 7.8% in the first quarter of 2013, with expectations for strong growth for the rest of the year. From 2002 to 2012 the average annual GDP growth rate of the Philippines was 5%. It also got an investment grade from the BIG-3 creditors (S&P, Fitch and Moody's) with a positive outlook.

2. Property prices in the Philippines are one of the lowest in Asia, up to 80% lower than Singapore for premier city centre properties (US$2,807 per square meter versus $16,350 in Singapore)

Property prices in the Philippines are one of the lowest in Asia

3. Rental yields in the Philippines are one of the highest in Asia, at around 7%, versus just 3% in Singapore.

Rental yields in the Philippines are one of the highest in Asia

4. The stable and strong growth of Business Process Outsourcing (BPO) and Information Technology Outsourcing (ITO) industries in the Philippines increases both the income of the locals and also the number of expats, which creates demand for apartment rentals.

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