Philippines Property GuidePhilippine’s economy has significantly improved over time. Hence, real estate market has become more prevalent compared in the past. There are quite some real estate projects from different parts of the country as the demands have increased continuously. Even foreign investors have been eyeing for possible chances to open up brokerage firm and develop projects in the country.
So, how do we know what are the best deals and the current status and pricing of property listings in the country?
To respond all your queries, we have listed below some necessary information for a complete property guide. Also, we have listed some of the best communities as a start to your search for properties.
Makati CityOne of the richest city and is famous for being the “financial center of the country” is the City of Makati. This prosperous city houses almost all the different lifestyle establishments as well as business districts. Some of these establishments are
There are different residential projects situated in the area that
Makati houses one of the best major establishments and its location is accessible to students as well as employees. There are also modern commercial spaces that are perfect for a businessman who wants to start up their business.
Cebu CityThe booming city in the south, Cebu City, is one of the famous cities in the country. With all its business centers, commercial areas and beautiful tourists spots, the city are one of the most visited.
Major investors and developers have started their way to building more infrastructures in the city. It is why there are lots of people who wanted to buy retirements houses in the area, as well as a businessman who wants to expand their business. Cebu City is one of the best cities to expand and invest your business.
Davao CityThe business and trading center of the Mindanao region, Davao City, continue to grow with its tourist spots and lots of infrastructures to watch out for. The prosperous city is not only known for its peace and order, but also to its booming business.
Major shopping malls and residential projects are now taking over the city, bringing more tourist and other business investors to the area.
Sq. M. Prices
One of the points you need to consider when checking out properties is the current price on the market. It is your basis on how low or high the demand for a particular property and how far it will grow for the next year.
The average price per square meter depends on the location of the property. In Metro Manila, the average price in US dollars for a 120 sq. m. is $3,952. The price range of condominiums per square meter starts from $2,800 to $4, 200.These properties are from well-known condominiums in the city.
Take note that average price may also differ from properties that are newly built or under pre-selling period.
Rental YieldsAnother thing that you have to consider when buying property is the rental yields. Your real estate agents might tell you about it. But, it would be better to know it beforehand. It helps you determine the property’s investment potential – whether or not the property has a good return on investment.
There are two types of rental yields that you need to consider – the gross and net rental yields. Gross Rental Yields is the rate you will expect as the return of your investment without the deductions from expenses. Net Rental Yields, on the other hand, is the rate minus the deductions from all the annual expenses.
When calculating for the gross rental yields, you need to gather and add all the property costs, including all the necessary fees upon purchasing the property. When done, get the amount of the annual rent and divide it with the property costs. To get the rate, you have to multiply the number by 100.
To get the net rental yield, you need to gather and add all the annual expenses, including property maintenance, taxes, and fees. Next, subtract the accumulated amount of annual fees from the annual rent and divide it by the property costs. Then, the same goes for getting the percentage, multiply it by 100.
Just to give you a glimpse of the current status on the rental yields in Metro Manila, the highest rental yield percentage went up to almost 9% that indicates a good result.
RentsDue to the continuous growth of our country’s economy, the percentage properties on rent have increased tremendously. Aside from some parts of Metro Manila, other places in the country have increased their residential price index.
Rental fees may differ too when it comes to different types of residential projects. For instance, condominium units have priced rose by 12.9%. For single detached houses, it went up to 8.1%, while for duplex homes; it went up by 6.7%. On the other hand, townhouses rose by 8.5%. This information was gathered last 2016.
Although some parts of Metro Manila have surprisingly raised its price at a slower pace, other parts of the country are expected to continue to grow.
Price/Rent RatioThis ratio is important in real estate evaluation. To determine the ratio, you need to calculate it by dividing the rental yield gross by 100. It is said that the higher the yield, the lower will be the ratio.
Price/GDP per CapTo determine the house price to income ratio, you need to calculate the price per square meter/GDP per capita. Then, multiply it by 100. It is the price cost of upscale house units of a 100 square meters. For low-income countries, the results will normally be much higher compared to the high-income countries.
Buy/Sell CostsWhen it comes to purchasing or selling properties in the country, you need to consider all the costs. For example, you need to check if the property is situated in the major city or whether a foreigner owns it. These factors will affect some of the pricing, and there are some additional costs it may involve.
There are other factors to be considered as well, like registration fees, agent fees, paperwork fees and other documents like sale transfer. The buy and sell costs may vary from different properties and clients.
Rental Income TaxWhen it comes to rental income tax, it is imposed on the average annual income of the rental property. There are assumptions to be considered, for example, if the property jointly owned by both husband and wife, if it is the only source of income or if the owners are foreigners as well. The current rental income tax percentage in the country is at 24.09%.
Capital Gains TaxA capital gains tax is also called a transaction tax. It is levied at a flat rate of 6% on the property’s gross market value. The assumptions for the Capital Gains Tax are as follows: if the property is owned for at least ten years, it is not their residence, if the property is jointly owned by husband and wife and more. The capital gains tax, by percentage, in the country, is at 32.00%
Price Change 1 yearFor the Philippines, the annual house price index is at 0.26%. Although, there are some parts of the country where there are slow price changes, particularly in Metro Manila. Other areas of the country, like the National Capital Region (NCR) and Outside NCR has great percentage when it comes to housing price changes.
Landlords and Tenant LawIn the country, some basis terms need to be followed when it comes to renting a property. There are some conditions that owners provide for its tenants. For example, are their amounts limited when it comes to collecting security and rental deposits? Others may ask if they are allowed to extend or terminate the contract early.
The country’s law is more on Pro-Landlord, although that may also depend on the situation. Tenants and landlords can freely agree to their terms, just as long as both parties agreed to it. There are different terms applicable to other landlords and tenants, which others don’t. Some may require higher deposits and others may not.
It will also depend on the assets on a lease. Whether it is residential or commercial, the terms might be a little strict and must be meet accordingly compared to the residential. It is important to come to legal terms if problems arise. Also, as tenants, it is important to communicate with your landlords to avoid any miscommunications.
GDP Per CapitaGDP or the Gross Domestic Product per capita is the total output of a particular country, which then divided by its total population. The GPD per capita is essential especially when it comes to comparing one country to another, as it determines each of its performance.
In the Philippines, the GDP per capita (expressed in US dollars) is at $2,863. The Gross Domestic Product percentage change from the latest year is at 0.66%. However, for the last five years, the percentage change is at 21.11%.
Economic FreedomThe economic freedom rate help determine if the country is conducive to growth. The lower the percentage rate, the less will be the economic freedom. As for the Philippines, the economic freedom rating is at 63.10, which classifies as moderately free.
In the economic freedom index, for five years, the country went up to 10.51%. It means that the country has considerably improved.
CompetitivenessFor the economic growth competitiveness index, the country has 4.39 rating, which falls to moderately high. The higher the competitiveness, the more desirable is the result.
Property Rights IndexThis type of index measures how the country protects the right of the private properties. The higher the rate of the index, the more desirable it would mean. In our country, the property rights index is at 30.
Currency +/- ValueThis value indicates the cost of living in the country. For the Philippines, the cost of living is at $0.39 (in US Dollars).
Taxes on ResidentsThe percentage of the tax burden on the people is at 0.66%. It is the proportion of the gross earnings that went up in tax. It also includes social security contributions. The data is gathered by calculating it from a single worker with no children and is earning 100% of the average payment.
Visa RequirementsIf you are a non-resident and is interested in owning a property in the Philippines, as specified by the law, a person needs to acquire a Special Resident Retirement Visa. Although, you need to have this if you are planning to stay longer or permanently in the Philippines. Only then can you be allowed to purchase a property in the Philippines, unless other factors like being married to a Filipino citizen, is one of the choices.
Living CostWhat the living costs in the country will depend on where is the property located. Naturally, the living cost will be higher in the main cities compared to the ones living in rural areas. Although, some luxurious properties are being developed now in rural places that costs greater than the regular condominiums in the city.
Living costs have some factors you need to consider. Aside from the location, the quality of the residential property is another thing. The accessibility of the place has to be considered as well, as the more accessible it is, the higher it will cost. Even if it is not settled in the city, as long as it is surrounded by commercial centers and is nearby public transportations that would cost a little more.
Edge of Doing BusinessIf you are interested in owning property, it will be a plus if you have an existing business with you. Business can be added to your income as a person and would help you when it comes to payment schemes. For example, banks offer loans much easier to people who have assets and business than those who don't have.
Also, if you have a business with you, it will also help build your identity as an individual. Real Estate Company may not require many requirements from you, as business permits might be enough supporting documents.
Philippines Property Buying GuideJust like in other countries, when it comes to buying property, you need to check first some relevant information. You need to determine if the property is up to the market and how much it will cost you. If you are thinking to sell it after, make sure you that the property is profitable for you. These are just some information you need to gather before buying.
Real Estate Company will help you more with the process and will also assist you with the things you need, like completing the requirements and acquiring significant legal actions to purchase the property. Make sure that all legal documents, like the certificate of ownership or the mother title, are present.
Upcoming Infrastructure ProjectsUnder a new administration, the country has yet more infrastructures to expect. These projects not only involved significant residential and commercial buildings but also include transportation and railway projects.
Some real estate developers have also expressed their desired projects and started to expect more of quality business centers, commercial and residences not only in Metro Manila but also in some areas in the country.
These are the things that are important to know when acquiring properties in the Philippines. All data are subject to change for another year as the economy continued to grow in the country.