Real estate investments in the Philippines have continued to rise over the years. Despite of the economy’s ups and downs in 1997, real estate industry began to stabilize in 1999 because foreign investors have seen the country as a pleasing tourist destination. In fact, according to Fitch Ratings and Standards & Poor’s evaluation, Philippines’ Gross Domestic Product (GDP) last year (2012) increased by 6.6 percent, which was the highest in Southeast Asia. With all of these being said, Asian Development Bank (ADB) Director Neeraj Jain claims that the GDP has normalized this year, but it is expected to go up by 5.9 percent next year. With the on-going construction of condominiums, hotels, townhouses in Metro Manila, the real estate developments have started to take shape and stabilize, indicating that the probability for growth in the said industry is becoming higher than ever. Even modern facilities are built in some parts of the rural area to make way for the new concept of innovation, leading to the benefits of investing in real estate properties.
The continuous expansion is attributed to the Information Technology Business Process Outsourcing (IT-BPO). It’s when foreign clients decide to put up different businesses in the Metropolis that includes those who work for them, to renting or buy properties in areas that will make them closer to work. The accumulated income by both parties in turn gave way to the increase in the number of commercial spaces that is deemed to be profitable. Furthermore, IT-BPO companies also contributed to this so-called economic boom by buying or renting properties for their expatriate employees (displaced OFWS).
Speaking of Overseas Filipino Workers (OFW), the remittance that the country receives from them also sustains the economy. In 2012, about 22-billion dollar worth of money has been collected from OFWs. 30 percent of which went to either buying a brand new house, paying a leased property or simply renovating a residential area. Even Century Properties, a developer, states that 50 percent of its generated number of sales depends on the money given by these people.
Because of such a high demand in the real estate industry, Global Property Guide reported that the rental yields (payments) for larger condominiums in the Metro Manila area were up by 8.72 percent in October 2011. This is probably to accommodate a bigger volume of tenants during the busy Christmas season.
According to Colliers, the residential market will continue to look strong in 2013 due to the anticipated economic growth in 2013 and sustained occupational demand from expatriates employed in the IT-BPO industry and remittance from overseas Filipinos. However, as there will be 2,800 new units coming into the market in 2013, prospective growth and prices are expected to slow to 9.5 and 6.2 percent, respectively.
Jones Lang LaSalle even adds that, “The boom is fueled by genuine demand from end-users rather than from speculative buyers. Moreover, the demand is supported by low interest rates, a higher value-added tax exemption ceiling, and flexible payment terms. Intense competition in the market also prevents property prices from drastically shooting up.”
With all these insights, it’s possible that the real estate industry will later on make the Philippines as one of the leading advertizing sectors in Asia, a good place to establish international businesses where progress is imminent.