Enjoy your Phil

As an archipelagic nation comprising 7,107 islands, the Philippines offers diversity in both its scenery and real estate offerings.

From quiet beachside homes and mountainous retreats to beautiful colonial Spanish townhouses, the many different faces of the country make it a great place to buy property, whether for investment purposes or as a holiday getaway.

Not without its share of troubles in the past, the Philippines went through a period of stability in the early 1990s, following the fall of the dictator President Ferdinand Marcos and the liberalisation policies of President Fidel Ramos. Although the country was affected by the Asian Financial Crisis of 1997, GDP growth has since hovered at about 5%.

In 2007, the country's real GDP growth leapt to 7%, the highest in three decades, although this dropped to 4.5% in 2008 as a result of the global financial crisis.

According to the CIA World Factbook, the economy has been relatively cushioned from the downturn due to "high government spending, a relatively small trade sector, a resilient service sector, and large remittances from the four to five-million Filipinos who work abroad".

Market situation

In terms of prices, real estate in the Philippines is cheaper than in neighbouring Malaysia and Indonesia, yet not as cheap as in Thailand and Cambodia, according to Colliers International.

With about 11% of its population working abroad, the Philippine realty market is driven mainly by overseas Filipinos or 'balikbayans'. In recent times, however, demand has slowed due to exchange rate movements and economic slowdown.

According to Global Property Guide, high-end property prices in the Philippines are expected to suffer the most. Christian Cruz, a senior economist at Global Property Guide, says prices of luxury units in Manila could be affected as Filipino expats return to their home country because of ongoing job cutbacks.

Colliers International's research manager Ramon Aguirre told Global Property Guide, "Prices are still flat. Developers are holding on to current high prices. But when demand dries up during the latter part of the year because of the slowing economy, they will have to drop."

But the shift in the market also comes with its silver lining. Miriam Daway, of Sta. Lucia Realty, predicts that the shift in the market will favour buyers.

"With the global recession, my feeling is that the Philippines will experience an oversupply of condominiums. That is why in most cases, the payment period has been stretched and is made more affordable."

As buyers take advantage of low prices, the market will also see a shift in demand. "Mostly, only the end-user market is moving," says Miriam.

"The middle-end housing sector is currently selling, with demand predominantly coming from expats who have either lived or worked in Southeast Asia. We are also seeing more interest from eco-minded investors."

Foreign territory

While the country's selling points include low prices and beautiful landscapes, the process of buying in the Philippines can be tedious for those who do not know their way around the system.

The complicated process of land registration and classification can make any investor think twice. Foreigners are not permitted to own land in the Philippines, but leases for up to 50 years, renewable for another 25 years, are available.

"Ownership is usually leasehold. This also restricts finance options," explains Ben Jefferis, sourcing manager for Property Frontiers.

Another option is to acquire land through a corporation which is no more than 40% foreign-owned. "If people want to own land, they will have to set up a company and share ownership with a local. This requires a very good lawyer," says Ben.

When buying new property, it is important to look for properties backed by established developers and licensed real estate agents/brokers, especially for off-plan property.

"The most important thing is to check the land title and holding structure with a good lawyer," Ben advises. "The yields in the Philippines are some of the highest in the world, however, I would stay away from some of the cheaper developments."

Urban hotspots

The overwhelming majority of the archipelago's population is concentrated on just 11 of the islands. Property hotspots can be narrowed down even further. As the country's capital, Manila offers a wide range of current and upcoming residential developments.

Located in the heart of Manila's financial district, The Raffles Residences in Makati will occupy the top 20 floors of the Raffles Hotel with a selection of one- to three- bedroom apartments and four-bedroom penthouses. One-bedroom flats are going for $290,000 (about Dh1 million).

Cecile Lowe, a London-based university lecturer, bought an apartment a few years ago in a condominium building two blocks back from Manila's waterfront. Cecile says the legal requirements for purchasing a flat in the Philippines were not complicated.

"Foreigners can buy apartments in the country. Property purchase taxes are very modest and the process is quick and straightforward." She adds that other pluses are the low service charges for apartment owners and the low costs of utilities. "The monthly service charge I pay for my flat in London is more than a whole year's charges for the flat in Manila."

Getaways

For those who prefer nature and the beach, Palawan is a popular choice. Located in the southwest of the Philippines, this area of 1,700 islands, dominated by one long island, is less susceptible to typhoons than other parts of the Philippines.

Cacao Pearl is a bespoke residential development located on the secluded Cacao Pearl Island. It features 100 one- and two-bedroom fully furnished villas, going at $260,000 (Dh954,000) and $345,000 respectively (Dh1.26 million).

Only two hours south of Manila, Batangas, known as a key growth area, offers attractive beaches and good diving. A one hectare farm here will set you back about Dh180,000 while a four-bedroom modern house close to amenities will start from around Dh300,000.

Land plots within 525m of the beach with views of the South China Sea are available from Dh500 to Dh620/m², according to Propertyfrontiers.com.

Located an hour's flight south of Manila, the island of Cebu is a major tourist destination and is another favourite for holiday homes.

A two-bedroom house can start from P500,000 (about Dh40,000) and a luxurious five-bedroom house in Cebu City from P15 million (about Dh1.1 million). Rental yields on some developments are expected to be in the region of 8%, according to Propertyfrontiers.com.

Get informed

While the Philippines does not publish official house price statistics, Colliers International publishes a quarterly report of the capital values in the Makati-CBD district in Manila. Economics statistics are available from government agencies Bangko Sentral ng Pilipinas, National Statistical Coordination Board and National Economic Development Authority.

Address book

Global Property Guide www.globalpropertyguide.com
Sta Lucia realty www.staluciarealty.com tel +681 5461-69 Property Frontiers www.propertyfrontiers.com tel +44 1865 268 561