Topic: Encourage Foreigners to Invest in Philippine Real Estate Market Real estate business is a very lucrative and capital intensive venture. It is not for just any one, but only for those who have financial capacity and willingness to buy real properties. Real property may come in the form of buy and sell, or merely renting and make money out of it. Known as one of the most vibrant real estate markets in Asia, the Philippines growing economy consistently sustained its growth despite the global economic recession. The country’s real estate industry has been receiving positive remarks from various analysts across the globe.The reflection of its success, mainly rooted to the country’s excellent financing services, good capitalization and pro-business climate drives every real estate investors to provide the best real estate solutions for needs of the market.
The real estate industry has been increasing year on year and this is characterized by the dynamic growth and upsurge of condominium development across Metro Manila. This growth is fuelled by the increasing overseas Filipino workers remittances as well as new investors who take advantage of the benefits of the low interest rates in the housing market.The influx of condominium development across Metro Manila also validates the soaring demand for residential options, which is between renting an apartment and owning a home in the city. Various innovative unit designs and concepts are being offered in the market to suit current trends in housing and lifestyle preferences of today’s market.
This increasing realtors’ confidence to Philippine real estate industry is brought by the improving economy, implementation of good governance among private and public sectors, and the reform inspired government of the new administration.Presently, the real estate market is banking on two major components: (1) remittances of overseas Filipino workers and (2) continuous growth demand by the expanding business process outsourcing industry in the country. Aside from having an investment that never depreciate, investing in real estate in the Philippines would give foreigners additional investment portfolio in a much lower cost compared if they invest it in their own land. The cost of living in the Philippines is relatively lower compared to other nations, and therefore, foreigners can have more value for their money, which in turn increases their investment opportunities.That would be considered “hitting two birds with one stone”. The economic outlook on the Philippine real estate market is seen to be growing, and it will continue to grow in the next five to ten years brought by the ensuing business process outsourcing industry.
BPO is becoming one of the primary sources of income of the young working population in the country today. Owning/Investing Options for Foreigners Any foreigner can lease, buy and own with 100% ownership rights on condominium units only.As far as the law is concerned, every piece of land of the Philippines is for the Filipino only. For investment purposes, foreigners may also lease or buy building offices for business purposes, like those being rented out to others.
In as much as there are limitations being followed by foreigners when investing the Philippine real estate market, there are also ways on how they can easily own one. (1) Lease a property – foreigners can lease a property from short to long-term as long as both parties to contract mutually agree. Leased properties may be subleased to other tenants.
This form of business operation may be considered as legal operation and foreigners can take advantage of. (2) Be married to a Philippine citizen – once a foreigner is married to a Philippine citizen, the rights to own a land becomes a conjugal. It may seem to be the fastest and least cost among other options.
(3) Inherit the property from a deceased Philippine spouse – once married, but suddenly the Philippine citizen spouse died. In this situation, the foreigner spouse together with the other surviving heirs; will be the immediate heir and owner of the property left behind. 4) Purchase land as Balikbayan – some Filipinos who have stayed abroad and eventually availed of another citizenship, may still buy and own properties.
It is also possible to own property if the parents or relatives wanted to transfer their property ownership to a Balikbayan. (5) Buy condominium units – foreigners can buy condominium units, in the same way as a Philippine citizen acquires condominium unit. Some foreigners can also do trading of condominium units. They can do buy and sell business operation, wherein they will buy a barely finished unit, dress it up and fill with furnitures, and sell at a premium or lease it out. 6) Form a corporation – this option opens the opportunity for foreigners to invest in land, but, it is a must, that the corporation be composed of at least 60% Filipino and only 40% for foreigners. The majority stakeholder should still be Filipinos.
After enumerating the ways on how foreigners can invest in the Philippine real estate market, it is imperative for them to know the basic information and obligations when investing in real property. First thing is the preparation for tax obligations. Non-resident foreigners who acquire property may be assessed with 5% – 32% of taxes, depending on the nature of the transaction.Another consideration is the documentary requirements necessary for the processing of transferring of ownership to a foreign national. There are documents that need to be authenticated by the Philippine Consulate from their country. Overview of the Real Estate Investment Trust (REIT) The efforts of passing the REIT Law will open another medium for foreigners’ opportunity to invest in the Philippine real estate market.
REIT is defined as a corporation engaged in business whose income will be generated from owning or managing real estate.Through this REIT, the country will be given a better and bigger opportunity to join the global market of real estate investment markets, and foreigners can take their part in. Since it is not yet passed as law, the regulations, rules and limitations are still unknown. Another positive contributor to success of the real estate sector is the proliferation of establishment of special economic zones across the country.
The government provides incentives to companies who patronize economic zones, and this attracts more foreign corporate clients and brings their business process outsourcing facilities here.