The Philippines has achieved remarkable economic growth in recent years, with an average GDP growth rate of 6.7% from 2010-2018. It has a young population structure and one of the highest population densities globally. Manila, its capital city, has huge housing demand with supply falling far short. Housing prices have kept rising for 8 straight years at 6.9% annually. Rental yields are topping Asia at 8-10%. With strong fundamentals, the Philippines, especially Manila, presents lucrative real estate investment opportunities.
Philippines has high and steady GDP growth
The Philippines economy has been growing rapidly in recent years. Its GDP expanded at an average annual rate of 6.7% from 2010-2018, making it one of the best performing economies in Southeast Asia. It has a young demographic structure that will continue to fuel growth. The world bank also points to its growing working-age population as a key advantage.
Manila has severe housing shortage amid rising prices
Manila has an effective demand of at least 660,000 housing units at end-2019 but a supply of less than 200,000 units. Housing prices have kept rising for 8 straight years from 2011-2019 at 6.9% per year on average. Rents in Manila central business district jumped 7.19% in 2018 Q4 alone. With insufficient supply amid steady population intake, housing shortage and price pressure will persist.
Philippine properties generate Asia’s highest rental yields
According to statistics, Philippine properties offer Asia’s highest rental yields. Yields in Manila can reach as high as 8-10%, even substantially higher than other major Asian cities. For instance, a 21.15 sqm apartment in Manila can fetch monthly rent of USD350-400, translating to a stunning yield of over 8.5%. Such lucrative yields are hugely attractive to real estate investors.
Philippines relaxes taxes to attract foreign investment
To attract foreign investment, Philippines has relaxed taxes on property investment. Properties valued below 3.2 million pesos (USD62,000) are exempted from the 12% value-added tax (VAT). Investors also enjoy flexible payment options, with 50% down payment being split over 3-4 years. There is strong government support for foreign investment into the country.
In conclusion, the Philippines, centered on Manila, has strong economic expansion, supporting demographic trends, severe supply shortage and skyrocketing housing prices, Asia-topping rental yields, together with favourable investment policies. It presents enormous potential as the next big real estate investment destination for global investors.