“More expats are buying luxury condos in the Philippines.”
This was the statement made by CBRE Philippines senior director for research and consultancy Jan Custodio in an interview with ABS-CBN. CBRE is an affiliate of CBRE Group, a Fortune 500 and S&P 500 company based in Los Angeles, and is the world’s largest and recognized commercial real estate services firm.“More expats are buying luxury condos in the Philippines.”
Custodio says that expats are taking advantage of the 60-40 ownership ruling under the Philippine Condominium Act in order to buy units, which is more cost-effective than renting. A significant number of expatriates spend many years in the country because of business — either working at a multinational or entering joint ventures with local firms. “By the time they have to leave, they sell their units and make a tidy profit as well,” explains the real estate expert.
Industry trends show that expats prefer luxury condos based within Makati or Taguig’s
Bonifacio Global City, which is touted as the country’s next business hub. Rental rates in these areas are very high, and can hit up to P250,000 a month. Expats compute the cost of staying there for several years, and see that buying a unit makes more financial sense.
Asian real estate investors also see that real estate prices in Manila are much better than those in other countries. Singapore, Hong Kong and Korea also have stricter rules and higher taxes for foreigners buying properties.
Bonifacio Global City, which is touted as the country’s next business hub.
Asian real estate investors are also becoming keen on the Philippines, as Hong Kong and Singapore have implemented tax measures to make it difficult for investors and speculators to buy properties there. “From an overseas perspective, the Philippines looks very cheap and cost-effective, from an investment standpoint, at a per square meter basis,” CBRE chairman Rick Santos said.
A separate report on the Global Property Guide website supports Santos’ observations. The article gives a chart on the costs and yields of different condo units. While capital gains taxes can be higher for foreigners, a 70 square meter unit can reach yields of 10 percent, and larger units of 250 square meters can reach yields of 9 percent.
Global Property Guide also gave a comparison of rental yields in premium units in 11 different Asian countries. The Philippines topped the chart with an average of 7.06 percent, more than double that of Hong Kong (3 percent), China (2.66 percent), and Singapore (2.41 percent).
In an article by Rappler republished by Megaworld, the CBRE chairman predicted that by 2016, the total demand for housing from the luxury condominium segment would reach 7.5 million. “This is the best property market we have had in 20 years,” he said.
The Philippines topped the chart with an average of 7.06 percent, more than double that of Hong Kong, China and Singapore.
These figures show a huge interest in premium real estate condominiums — though the decision is not wholly driven by rental economics alone. James C., an expatriate who recently invested in a luxury unit from Megaworld at the Fort, says that he was impressed by the amenities, the global, cosmopolitan design, and the township approach where residents could enjoy a “total lifestyle”. Though James has lived in many countries, he sees himself retiring in Manila.
“Quite frankly, a unit like this would be incredibly expensive back home. I would not be able to afford it, or maintain the cost of living in a big city without a full-time job,” he says. For him, Manila has the city vibe that he loves, cost of living is cheaper, and the Megaworld residents have, in his words, “a life fit for a king.” The real estate company has infused billions of pesos into its Fort Bonifacio project, which will have residential units within walking distance of premiere shopping centers, dining establishments, recreational facilities, and offices.
“It would be like living in New York but at a fraction of the price, and I really feel that Manila culture and climate is ideal for living out your golden years. I initially bought the unit as a financial investment, but It has become a lifestyle choice… It really is more fun in the Philippines!” quips the expat, quoting the Department of Tourism’s slogan.
The global real estate figures, local industry trends, and personal anecdotes from expats living in the Philippines do indicate that there is no better time or reason for expats to buy a premium condo unit. “It proves the point that the luxury segment is one of the segments to watch out for in the coming years,” Custodio said.