Why are more foreigners buying condos in Manila?
MANILA, Philippines - More and more foreigners are buying residential condominiums in Metro Manila, according to real estate service company Jones Lang LaSalle.
David Leechiu, country head of Jones Lang LaSalle, said many Hong Kong, Singapore and US citizens are buying condominiums here.
"Interestingly, in the last 12 months, we have been getting clients coming to the Philippines and many of them are on business but they come here and like what they see and are now starting to be property owners for condos. (They are) mainly coming from Hong Kong, Singapore, those are our two big markets, and the US," he said in a press briefing in Makati on Tuesday.
He noted many foreigners are interested in the high yields they can get for these properties. "They're saying, 'wow, the yield at 5, 7, 8 percent is four times higher than what you can get in the US or in Singapore or Hong Kong.' So they're looking at putting their money down here and just sit on the property and enjoy high yield for the asset," he said.
To illustrate his point, Leechiu said 500 Singaporeans have bought units at a condominium development near De La Salle University in Taft Avenue, Manila.
"There's a cluster of buildings there where 500 indvidual Singaporeans have bought property 18 months ago. They made installments and all they're looking to do is get higher returns on their money...That's probably the most interesting trend we're seeing," he said.
While foreigners are not allowed to own land in the Philippines, they can own condominium units but subject to conditions of the Condominium Act.
Even "boring" businesses are attracting foreign interest. "We are starting to see more traction in the very unsexy and boring businesses. For example, we have heard that there's a new player that's looking to enter the Philippines in the poultry sector. They're not here to grow chickens and export. They're going to grow chickens, import chickens and address the growing demand here," he said.
Healthy demand seen
With Southeast Asia expected to continue growing in the next 24 months, Jones Lang LaSalle sees healthy demand in the region's real estate market.
"Strong growth in the economy means healthy demand for infrastructure and part of that is the real estate market. Rarely do we have a situation where there is a strong economic growth and real estate markets fall backwards," Christopher Fossick, Jones Lang LaSalle managing director for Singapore and South East Asia, said in a press briefing.
However, interests rates are likely to rise in most Southeast Asian economies through 2016, save for the Philippines which is expected to have a stable interest rate.
The young population and low dependency ratio in Southeast Asia is also seen as a factor in supporting growth.
"When you have an affluent economy, young people move out of the family home earlier, creating more demand for the housing market," Fossick said.
In the Philippines, Jones Lang LaSalle expects continued growth in the outsourcing and offshoring industry, as well as investor demand for high-end residential properties.
"The overall economy in the Philippines is growing, which will mean certainly more demand for office space on a broader base, across business sectors and BPOs," Fossick said. In the office sector in Manila, there is a 18.7% projected addition to office stock this year 2013.
Jones Lang LaSalle also noted there is a projected 47.2% addition to the residential supply in Manila this year.
Antonio Sabarre, Jones Lang LaSalle associate director for markets, said that there are 149,000 residential condo units coming on line in the next five years (2013 to 2018). This is more than the 135,650 existing condo units built from 1999 to 2012.
Majority of the condos are priced between P1.5 million to P3 million and are located in Quezon City, Ortigas, Pasig and Mandaluyong areas.
The more expensive units, ranging from P3 million to P10 million, are mostly in Makati and Bonifacio Global City in Taguig.