In the 1960s, the Philippines was more advanced than Korea and large swathes of war ravaged Japan, but years of corruption and mismanagement took their toll on this beautiful archipelago and it became known as the ‘sick man of Southeast Asia.’
Today this once sleepy tiger is in the midst of cleaning up its act and is remembering how to roar. Singaporean investors are flocking to Manila in droves as the market looks undervalued in comparison to Singapore and Hong Kong.
In Singapore alone, there were over a dozen Philippines property events in July 2014. Manila now has an average square foot price of under USD$350 and stellar rental yields of more than 7.5%, making it worth taking a hard look at – capital growth has also been a compelling 8-10% annually for the last three years.
In Manila’s Makati, Avala’s Greenbelt and Rockwell are still tops with investors and the newish Bonifacio Global City is hot on their heels. Manila Bay is set to host several large casinos and integrated resorts which is expected to attract the gambling community and raise prices significantly.
Outlying parts of Metro Manila, such as Quezon City, are also worth considering for buy-to-let as this is home to a large percentage of Manila’s workforce.
Manila is now the business process outsourcing capital of Southeast Asia and is home to thousands of international call centres. “BPO growth is accelerating and it’s a trend that shows no sign of abating. It’s helping to push up the salaries of hundreds of thousands of people who work in them,” says Angel Dimaano, Operations Director at SPOKIYO – a Makati-based consulting and BPO firm.
With costs in developed countries on the rise and a frequent lack of English-speaking talent available, the middle class will continue to benefit from the increase in outsourcing, which will support sustained and solid demand for property.
The idyllic island of Cebu – home to the Philippine’s second city - is now home to approximately 20,000 Koreans. This has had a dramatic effect on property prices, with an average price of a Cebuano beach house costing more than twice what it was only few years ago.
There are few restrictions on foreigners owning condominiums – and there is a great deal of choice across this country of 100 million people, where the average salary is less than USD$475 per month. Car ownership is relatively high, although costly and the traffic must always be taken into consideration when travelling even a few blocks.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Singapore Business Review. The author was not remunerated for this article.
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Alexander Knight is a Singapore-based property commentator.