Manila Property Market Investor Report May 2019
In this report we will analyze the Metro Manila property market, the different types of property investments, the different types of investor strategies and the different areas you can invest in within Metro Manila
One important note as Exclusive Hot Properties is focused on helping Ex-Pats and International clients. The focus of this report is based on providing information to help them understand the market here in Manila.
If your Filipino we hope you find the article interesting but the investment strategies, we recommend might not be the best for you. We would suggest you discuss that with your local Licensed Real Estate Broker. If you would like recommendations for such a person we would be happy to give you our views of those people we find to be the most professional.
Different Types of Manila Property Investments
This article is mainly focused on property assets that are classed under condominium status because Land, Houses and Townhouses are not available to international buyers without a Filipino Spouse or Filipino Corporation of which you can only own 40% of.
Saying that the Manila property market is probably one of the most diverse in the world in that there are at least 5 different classes of Condos you can buy into.
All have different price levels from true luxury at 10,000 Dollars a square meter to the very lowest basic units at under 1000 Dollars a Square meter. The other factor is the location of the unit with Makati and Bonifacio Global City being at the very top and places such as Malate, Quezon City and Cubao being at the bottom end of the market. We will go into the different areas later in this report.
Ayala Land the Philippines biggest and number one developer offers 5 brands at different price points with Ayala Land Premier being at the top and Bellavita at the bottom all brands catering for different price levels and different requirements.
What you will see in with these different types of Condos is the lower price per unit you buy the higher the yield is but the more difficult it is to find a buyer for the unit. Secondly the harder it is to collect and manage the rent. This is normal in any country in the world not just limited to Manila.
There is a balance to find for those who don’t want to be in the top end of the market and this would best be demonstrated by Cityland. A Developer who build basic condos in good location at least 50% below the higher valued condominiums but not 50% below the market rent.
The very top end of the market would best be represented by Ayala Land Premier, Rockwell Land, Shang Properties and some Alveo Land projects. There will be some branded projects like Grand Hyatt Residences in BGC that don’t come from these Developers. The second level is then best represented by Alveo land, Century Properties, Megaworld, Fillinvest and Federal Land. On Level three we would have Developers such as Avida, Empire East, DMCI, SMDC, Robinson and Vistaland. This is just to give you a flavor with many more developers. At Exclusive Hot Properties we tend to focus on a maximum of 10 Developers.
Different Ways to Invest and Investor Strategies
Let’s take a look at the different ways to buy a property here in the Philippines and the reasons you might choose to do that. The number one question here is what is your strategy, are you investing for capital growth or income? Also what type of unit do you want to buy and what is your exit strategy.
So if you invested in 2015 at the top end of the market you would have made a 150% profit on what you paid for your unit. Rental values have more or less stayed the same. This tells you that the Philippines market has been a market best for Capital Growth rather than income.
Resale Properties – For International clients and cash buyers buying for medium to long term this is the best and preferred option. However, for Ex-Pats there is no finance available generally in the Philippines. The process of buying a resale property in quite easy. Very simply you agree a price normally below market value sign a deed of absolute sale and take possession of the property. Our buyers guide will take you through this process.
Ready for Occupancy and Rent to Own – In essence these are similar to resale properties accept they are key ready properties of a finished development that were not sold prior to completion. The Developer is now looking to dispose of these to either cash buyers or people with no money. So the rent to own option is not really available to Ex-Pats unless one of them is Filipino but simply they will rent for a year and then get finance and pay the full asking price of the developer with no negotiation, not really something of interest to Investors. However, for cash buyers you can get a discounted rate off the Developers price. Some developers are prepared to discount more than others. For example, your always likely to get a far better deal with Century Properties than you are with Megaworld Corporation.
Pre-Selling Off Plan Condos – Very simply this is the sector which has been driving the Philippines property market where you can buy for no money down pay 50% of the purchase price over the 4 years of the construction period and then either pay the balance and take ownership of the unit or find a buyer to take you out. Normally the unit at the time of completion will be selling from the developer at double what you paid if you had gone into the project at Day One. So finding a buyer below the Developers price but much more than you paid is relatively easy. if you have bought at the top end of the market. So let’s say you bought a unit for 200,000 USD and have paid 100,000 USD to the Developer and now the Developer price is 400,000 USD and you sell at 300,000 USD, because you are not greedy and want a quick profit. In essence you make 100,000 USD for 100,000 USD that’s 100% over 4 years at 25% a year ROI. You can see why this has stimulated the property market here especially in a housing market that keeps rising by at least 20% PA in the luxury sector.
Pre-Selling Contract Resales – Very simply this is the other end of the pre-selling market rather than buying a ready for occupancy unit direct from the developer you can buy the contract from someone who bought a unit off plan and is now due to complete on the transaction. You can normally buy from that person under the price of the Developer like the example we gave above as they bought a very low price and are happy to make a profit. With Contract Resales both Buyers and Sellers win and Developers lose.
So now you know the different ways to invest now you need to think about what strategy works for you and you should be aware about the maximum rent achievable per unit. Most luxury top high end condos are renting at $20 USD per square meter a month and some special units at $24 USD per month. So that tells you a 2 bed 100 Square Meter apartment has a realistic maximum rental value of $2400.00 USD per month. From this you can work your likely yield backwards.
Another thing you would want to think about is how are you going to manage your asset. Are you based in the Philippines yourself or will you need a local Licensed Broker to manage it for you? In this case you would need to budget a month’s rent in commission for them finding you a tenant. You also need to budget for association condo fees at approx. $2 dollars a month per square meter and real estate property tax which is based on the zonal value of your property.
Taking that into consideration you should then start to decide on expected yields, exit strategy and location for your property investment.
The Best Property Locations in Manila
Quezon City – The Government capital of Manila and a very serious business center but also some distance from the airport and the main business capital of Makati City. Not a choice of Expats unless they are stationed here for work. The positive about this area is great property opportunities with Century properties currently selling their units off at $19,000 USD per square meter and maybe further negotiation. Also Megaworld have a successful Township called Eastwood for resale properties located just outside QC.
Oritgas Centre & Paisg City – the next major location heading South from Quezon City and a major business hub which is the home of Asian Development Bank ADB with massive headquarters and is an up and coming area in relation to rental yields and pre-selling prices as BGC and Makati City starts to price people out of that market, here you will find some very nice pre-selling projects from under $4000 dollars per square meter and some resale unit at half that price.
Mandaluyong City – Mandaluyong stretches from Makati City to Ortigas Centre and one of the biggest Cities in Metro Manila and therefore you will see different condos at different prices with the most desirable area of Wack golf course being the prime area followed by Hulo which is just the other side of the Pasig River from Makati and offers condos such as Tivoli Gardens and Acqua Private Residences. Prices here vary from as little as $1000 USD per square meter to over $4000 USD per Square Meter.
Makati City & BGC – Even though they are very different and are separated by the 30 Million Dollar houses in Dasmarinas Villages and Forbes Park along the Mckinley Road both are the two most desired locations in Manila and new projects are selling form $7000 to $10,000 USD per square meter and include the landmark projects such as Grand Hyatt Private Residences. Aurelia, The Estate and Park Central Towers. These two locations together are home to world’s number one BPO center and is responsible for 50% of the Philippines GDP. Saying all of that it’s possible to find a good resale opportunity at under $2500 USD per square meter. This is the preferred location for 80% of Exclusive Hot Properties clients.
Pasay City & Mall of Asia – For Expats there is a large area of Pasay City you would want to stay clear of just like Quezon City in that respect but the area of Mall of Asia and Macapagal by Manila Bay has become a boom area for property developments mostly built by SMDC and Federal Land as they own all the building land in this area. Located next to Aseana City the home of all the casinos make it very attractive to the Chinese who have been driving up prices so much so now new projects are in excess of $6000 USD per square meter. However, a word of warning should the Chinese pull out of the Philippines this is where you could lose almost everything. This is not the case in BGC or Makati City.
Paranaque City – A bit like Mandaluyong City covers a huge area and huge difference in property prices. Paranaque is home to the big sub-division BF Home of houses and townhouse for Filipino property owners. It is also home to some very low priced condos and project from DMCI Homes as well as home to all the major Casinos and the Aseana City area where starting prices are now in excess of $6000 Dollars a square meter and massive expansion. Again a word of caution should the Chinese pullout expect prices to go down not up. You can buy very nice projects in Paranaque for $2000 Dollars per square meter.
Alabang – The home of the very upmarket Ayala Alabang and Fillinvest City this area heading South from Paranaque and the airport has somewhat boomed fueled by the China invasion with the relocation of the online gaming companies known a POGOs so much so prices are no longer cheap and it’s hard to buy under $3000 USD per square meter and actually a lot higher. A lot of clients like to live in this area as its away from hustle and bustle of the main Manila and Makati.
Manila, Malate and Intramuros – The Historical capital of Metro Manila and many wonderful tourist destination and with Roxas Boulevard as the main catchment point it should have a lot more going for it as a property market but alas for Expats whilst not a no-go area it doesn’t offer what BGC or Makati City does. However, if you want to invest here you can probably find some condos as low as $1000 USD per square meter which should give high yields.
If you’re not an investor, then you should always buy in Makati City or BGC as that will be the easiest property to sell should you need to.
As an Investor however you need to decide on three factors Capital Growth, Yield and Exit strategy. Now everyone will have a different set of goals and priorities but again if exit strategy and Capital Growth is your watch words then you will be like 80% of our clients and invest in BGC or Makati. However, if Rental Yield is overriding factor then some other Location and maybe a level 3 or level 4 Developer like Cityland might be better suited to your needs
I hope you have found this article interesting and helpful and if you would like an independent overview and help and advice on the Philippines property market please feel free to reach out to me or one of my team.