The number one factor is the Philippines has the second fastest growing economy in the world and due to its demographic sweet spot with the highest percentage possible of the economy working there is no reason for the economic growth not to continue for a good number of years.
Over the last few years the government of the Philippines has gone to great lengths to promote the Philippines. This has included many humorous promotions highlighting some of the odd things about the Philippines. Short video clips promoting the country have been shown on most international satellite channels always ending with the caption ‘It’s more fun in the Philippines’.
The adverts highlight how the Philippines is trying to now increase its share of global tourism and also business. The country after decades of being one of the poor cousins in Asia is now waking up and as a result business in Manila in particular is booming, as is the construction industry.
The Philippines is also trying to copy some of the successful policies of its Asian neighbours with a view to encouraging greater economic success. Like Malaysia, the Philippines is now trying to attract wealthy foreigners to view the country as a potential retirement destination. It is possible to now acquire a retirement visa for those foreign investors who are prepared to either buy property or shares in the local stock market.
The Philippines is surrounded by some of the most powerful economies and markets in the world most notably, China, Japan, Singapore, Hong Kong and Korea. These countries have all seen considerable growth over the past decade and their property markets have boomed. Now the nationals of these countries are looking to invest in other countries close to them where they see good potential.
The Philippines therefore has a number of strong tailwinds, which are helping its economy to expand strongly and the outlook is for this trend to continue for some time. As a result, the property market has risen strongly since the global financial crisis yet prices still offer great value and a good rental yield when compared with other similar capital cities.
The property market is also appealing to international investors as the language of business is English, which is widely spoken throughout the Philippines. The standard of construction is also very good and many of the main construction and design companies have worked on projects all over the world. Although Manila is seeing rapid growth it still faces massive challenges and in particular infrastructure.
Ultimately for the aggressive and long term investor, the property market in Manila and the Philippines offers the prospects for excellent capital appreciation plus rental yield. Perhaps the key driver, which will support this market both now and into the future, is the ‘Overseas foreign worker’ [OFW]. We all know Filipinos over the past few decades have had to leave the country in their millions to work as nurses, engineers, construction workers, shipping, oil industry as well as domestic service.
The OFW’s are the most significant contributor to the Filipino economy sending back their salaries every month to support their families and educate their children. They also represent the most significant buyers of new property in the Philippines, which underpins the market and will continue to do so.
Ultimately almost all OFW’s will eventually return to retire and live in the Philippines.
The Philippines is a great emerging market for an International Property Investor:
Excellent rental yields compared to property the price which offers the investor a very good return on their capital
Manila is a vibrant city with great growth, and while the government continues to spend money on improving infrastructure and looks to make the Philippines an appealing tourist and retirement destination, there is tremendous opportunity for investors.
The Philippines is also situated in one of the most dynamic areas in the world where the economies of its neighbours like China are thriving. As a result people from China and South Korea view the Philippines as a country where property can be purchased at far better rates than their own respective countries, however the Philippines has a similar climate and better standard of living.
The government also goes to great lengths to make sure that the property market doesn’t overheat and that demand doesn’t outstrip supply too much. An example of this is recent instructions to the banks to cut back on domestic mortgages from a loan to value of 80% to between 60% to 70%.
All in all the Philippines property market is a very stable market in which to invest.