7 Reasons Why You Should Invest in Philippine Real Estate and Disadvantages

What kind of country is the Philippines in a minute?

In fact, 90% of Filipinos are Christians.

Basic Information on the Philippines in 1 minute
CountryRepublic of the Philippines
Population112.5 million (2022 World Population White Paper)
Area298,170 square kilometers
LanguagesMore than 170 indigenous languages including Filipino, English, and other Visayan languages
CurrencyPhilippine peso (peso, PHP, ₱)
Religion83% Catholic, 10% other Christian, 5% Muslim
Nominal GDP approx394 billion US dollars (estimated for 2021)
Nominal GDP per capita approx3,572 US$ (estimated in 2021)
Current account balance approx150 billion US$ (estimated in 2021)

The Philippines is a nation consisting of 7,500 islands in Southeast Asia. From Japan, it takes about 4.5 hours to get there by plane. Briefly, the characteristics of the Philippines can be summarized as “friendly,” “English-speaking,” and “hot”. The national character is calm, friendly, and values family and interpersonal relationships. The temperature is around 20 to 30 degrees Celsius all year round, and you can wear a T-shirt all year round.

Most Filipinos have never seen snow. I have had over 100 Filipinos tell me that they dream of seeing snow someday.

Advantages of Investing in Philippine Real Estate

Why Philippine Real Estate is Hot Right Now

In discussing the appeal of Philippine real estate property, the three key words are “economic growth,” “ease of investment,” and “cost performance.

Population will continue to grow until 2062 (domestic domestic demand is expected to increase)

According to the United Nations Population Fund’s (UNFPA) World Population White Paper 2022, the Philippines has a population of 112.5 million. It ranks 13th in the world population ranking by country. Japan’s population is 125,522,000 (11th in the world), which is about the same population size as Japan. It boasts a higher population than Vietnam (98.52 million), Thailand (69.95 million), and Malaysia (32.7 million), which are often compared as the same ASEAN countries. The large population means that the domestic market is large and the demand for real estate in the Philippines is expected to be sufficient.

The Philippines has the world’s largest population bonus

The Philippines already boasts a population of 112.5 million, but the population actually crossed the 100 million mark in 2014. The Philippines is said to be the country with the longest-lasting population bonus in the world, and is projected to exceed 150 million by 2050, with population growth continuing to increase until 2062.

Population bonus is a situation in which the working-age population (those who can work) aged 15-64 exceeds the rest of the population (those who cannot work, such as children and elderly people) by more than twice.

In addition to its already large population and large domestic market, the Philippine economy is assured of market expansion through population growth in the future.

Manila is the fourth largest metropolitan area in the world

According to the Demographia, the fourth most populous metropolitan area in the world in 2019, Manila is the largest metropolitan area in the Philippines. According to 2018 data from the Philippine Statistics Authority, Metro Manila accounts for nearly 40% of the country’s nominal GDP.

Within the Philippines, Manila is becoming unipolar. The more unipolar a large metropolitan area becomes, the easier it is for real estate prices to rise because supply cannot keep up with demand.

Global rating agencies recognize the Philippines as an investment grade country

Sovereign ratings (government bond ratings) are said to be the first indicator that investors around the world look for when investing overseas.

In a sovereign bond rating, a specialized agency called a rating agency ranks a country’s ability to pay principal and interest on bonds and debt, and its creditworthiness, from the perspective of its political system, economy, finances, financial evaluation, and position in the international economy. Some banks and securities companies have a rule that they will not deal in financial products from countries below a certain rank.

Rating agencies are scattered around the world, but S&P Global Ratings, the world’s largest rating agency, assigns the Philippines a “BBB+” rating. This rating is higher than those of Indonesia, Mexico, and Italy (BBB).

Sovereign Ratings by Institution

S&P “BBB+”
Moody’s “Baa2”
Fitich “BBB”
Japan Credit Rating Agency “A-“

All of these agencies have rated the Philippines as an investment grade country, which means that it is an easy environment for low-risk investments compared to other emerging markets.

Easy access to information because English is the official language

Adapted from worldpopulationreview.com

English is the official language of the Philippines, and the Philippines is considered the fifth most English-speaking country in the world. (*Population speaking English as a native or common language, 2021 data)

Many Filipinos take classes in English from elementary school onward, with the exception of some subjects. In everyday life, the relationship between Filipinos and English is so close that not a day goes by when they do not come into contact with English, whether it is through street signs, restaurant menus, or the media.

Since all official documents such as licenses, ID cards, contracts, and financial statements are written in English, it is very attractive for Filipinos to have no language barriers when making investments.

Low unit price of properties, allowing you to start investing in real estate from a low amount.

One of the major advantages of Philippine real estate is that there are many properties with good cost performance. In terms of price range, there are inexpensive properties in neighboring countries such as Malaysia and Thailand, and the further you go to developing countries, the lower the price can be, but in the case of the Philippines, there is an abundance of properties that can be purchased at a reasonable price for the grade and brand power of the property.

For example, a condominium with swimming pool, sauna, and karaoke can be purchased for 13 million yen at Shangri-La in the middle of the capital city. (The Rise: 40 square meter studio type).

If this is your first time investing in overseas real estate, a safe bet is to invest in a brand-name condominium that is located in a metropolitan area with complete infrastructure and a certain level of guaranteed value.

Less volatile exchange rates

The biggest risk when investing in emerging markets is currency risk. It is not uncommon to hear that when you make a foreign currency deposit, your money seems to have increased in that currency alone, but when you convert it back to Japanese yen, it has decreased.

In this respect, the rate of fluctuation of the Philippine peso against the Japanese yen over the past 10 years has been stable compared to the US dollar and the euro, and at least according to the data, the risk of currency fluctuation is low.

In Southeast Asian real estate, countries such as Thailand, Malaysia, and Singapore are often compared, but the Philippines is by far the country with the lowest rate of currency fluctuation.

Sovereign Ratings by Institution

English Speaking Countries 2022

Trading Economics Sovereign ratings

Japan Credit Rating Agency, Ltd.

Philippine Statistics Authority

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