The Philippines has long been considered by a lot of foreigners as their second home. And why not? The people here are very hospitable. The cost of living in the country is very low. It is also undeniable that the Philippines is blessed with natural attractions that you won’t run out of nice places to see here should you decide to settle in the country.
Perhaps, if you are a foreigner who has looked into these factors as an advantage, it has come across your mind to own a home in the Philippines. While it may seem simple, you should know that the process isn’t as easy as you might have thought.
Read on to be guided if you are a foreigner who’s interested in real estate investing in the Philippines.
A Foreigner’s Quick Guide to Investing in Real Estate in the Philippines
First of all, it is important to know that there is a strict regulation that governs land ownership in the Philippines. Basically, only people or entities with legal designations as Filipino citizens can be entitled to acquiring land in the Philippines.
If you belong to a corporation, property acquisition can only be possible if 60% of the board is composed of Filipino nationals.
There are also exceptions that allow the purchase of real estate properties in the Philippines among foreigners.
Land Ownership in the Philippines: Exceptions for Foreigners
Foreigners interested in land ownership in the Philippines can purchase real estate properties without rights to land such as condominiums, villas, and commercial buildings under the following conditions:
- The property was acquired before 1935.
- The property has been inherited by a foreigner through natural succession or legal heirship.
- The property will be acquired by a Filipino citizen who has been married to a foreigner.
- The property will be acquired by a foreigner who is formerly a natural-born Filipino citizen.
- The property, in cases of projects like condominiums, has no less than 60% Filipino ownership.
Other Real Estate Options for Foreigners in the Philippines
Long-term Lease
Foreigners who want to live in the Philippines can settle for a long-term lease of a specific property. This means, a 50-year lease period will be allowed and a renewable lease agreement will be in place for another 50-year period.
Limited-Size Properties
For former Filipinos who have already sworn citizenship to another country may still acquire real estate properties in the Philippines. However, there will be size limitations on the types of properties that will be acquired.
- For residential properties, up to 1,000 square meters will only be allowed
- For agricultural lands, the one-hectare limitation will be applied.
Now that you have already been presented the facts that you need to know about real estate investing in the Philippines, you should now know the essential details to proceed with your real estate venture.
Steps to Real Estate Investing in the Philippines for Foreigners
1. Seek the Help of Real Estate Experts
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If you are a foreigner who wants to make property acquisition a hassle-free process, it is best to seek the help of trusted real estate professionals.
These experts can guide you in finding the property that suits your preferences, lifestyle, or goals. Find a trusted realtor that can provide the assistance you need in the process of acquiring the property. Some of the important things that your real estate agent can do on your behalf are as follows:
- Professional Advice – Experienced professionals like real estate agents can offer useful advice when it comes to choosing the best property to buy, understanding market trends, and legal requirements.
- Contract Reviews – The contracts that you’ll sign need to be reviewed by an industry professional. With the help of a real estate agent, you can avoid the loopholes that may cause you trouble in the long run.
- Documentation – The essential paper trail you’ll need to complete for property acquisition can be easily taken cared of by a licensed real estate agent and property developer.
- Deed of Sale – This is a pertinent and irrevocable legal document that can be accomplished, signed and notarized for you by a trusted agent.
- Tax Clearance – A professional real estate agent can process the payment of transfer taxes as well as other fees for you to secure a tax clearance.
2. Know the Cost of Properties in the Philippines
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There are lots of key cities that you can choose from if you are looking for great value real estate investments in the Philippines. In Metro Manila, the most popular cities for real estate are Makati, Quezon City, and Manila.
However, as these are also some of the busiest and most in-demand districts in the metro, the cost of properties in these locations may be higher as compared with others.
Here’s an overview of the property costs in those key locations:
- Makati City – the cost of an apartment in this business district ranges from Php 200,000 to Php 250,000 per square meter.
- Quezon City – another booming business district, an apartment in this part of Metro Manila ranges from Php 20,000 to Php 110,000 per square meter.
- Manila – in the country’s capital, apartments are priced from Php 100,000 to Php 150,000 per square meter.
If you are interested in owning property outside of Metro Manila, it is also best to get an overview of how much it may cost you. Listed below are the prices of apartments in the city center of other key locations in the Philippines.
- Tagaytay City centre: Php 269,000 per square meter
- Puerto Princesa City centre: Php 51,000 per square meter
- Cebu City centre: Php 70,000 to 200,000 per square meter
- Davao City centre: Php 120,000 to 150,000 per square meter
SOURCE: Numbeo.com
3. Determine the Type of Property that’s Right for You
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Once you’re oriented with the types of real estate investments that you can embark on in the Philippines, you should be able to determine the type of property that’s best for you.
Below are some of the types of property that may be presented to you by your real estate agent as your top options:
- Condominiums/Condotels
If you want to keep property acquisition simple, the best option would be to purchase a condominium unit. As mentioned earlier, you can do this in condominiums with Filipinos comprising 60% of its ownership.
For this type of property acquisition, you will be responsible for the payment of the utilities, maintenance, repairs, association fees, furnishing, among others. While there are lots of condominiums in Metro Manila, there are also developments in other provinces that are worth checking out. For example, a Palawan condotel for sale may just be as good as a condominium in Quezon city in terms of value, amenities, and additional benefits.
- Houses
The Investor’s Lease Act of the Philippines states that foreigners are permitted to enter into long-term leases with land-owners. Buying a house in the Philippines is also allowed but rights to the land on which it stands is not included.
There are different types of houses that foreigners can invest in. The most popular ones include single-detached homes, bungalows, multi-level homes, villas, and others.
When choosing the house to buy, you also have to be particular about its structure, resale value, quality of construction, safety, neighborhood, and its accessibility. Ideally, choose properties that are near establishments that you might frequent from time to time like hospitals, schools, markets, shopping malls, etc.
- Corporation-Owned Properties
Another way for foreigners to acquire real estate in the Philippines is by owning a property through a corporation. This option is possible provided that 60% of the corporation is owned by Filipino citizens. The remaining 40% of the corporation may already be owned by foreigners.
You only have to make sure that the corporation is registered with the Board of Investment. They should also have the necessary requirements to buy/sell properties, or negotiate in the real estate transaction.
NOTE: Foreigners are allowed to own up to 1000 square meters in cities and up to 2.5 acres of land in provincial areas.
- REITs
REITs, or real estate investment trusts, present another opportunity for foreigners as it is an alternative to direct ownership of real estate in the Philippines.
This type of property refers to companies that own or finance income-generating real estate in a wide range of property sectors. There are also 3 types of REITs that you need to know.
- Equity REITs – income generated from rentals
- Mortgage REITs – income generated from interest
- Hybrid REITs – income generated from both rentals and interest
ALSO READ: 7 Biggest Real Estate Investing Mistakes to Avoid When Buying Properties
For a foreigner who is interested in real estate investing in the Philippines, it pays to do some research to get your facts straight. Factors like the location of the property, cost of ownership, accessibility and other important details should be looked into. Choosing a trusted real estate expert can help make the process of property ownership in the Philippines simple and hassle-free.
Are you a foreigner in search of leisure investment properties? Citi Global offers opportunities to secure your investment.