Business process outsourcing is one of the country’s fastest growing sectors, with call-center firms like Convergys among its largest foreign investors.

Third, the Philippines is friendly toward foreign investment. This is not only true in the case of foreigners being able to legally own property in the Philippines, but also in terms of buying stocks, owning a business, and having the ability to get a long-term visa.

The Philippines’ openness toward foreign investment gives them a major edge over neighbors in the region such as Indonesia, Myanmar, and Vietnam.

Of course, the Philippines isn’t without its problems too. Tons of inefficiency and corruption exists in some parts of government. Crime remains an issue in several cities, and it directly harms GDP growth.

None of this necessarily means investing in Philippines property is a bad idea. A rising population by itself means that, in the future, there will almost inevitably be more real estate demand in prime locations.

A robust Philippine economy is simply icing on top of a metaphorical cake filled with positive demographic trends and rising demand for homes.

Can Foreigners Invest in Philippines Real Estate?

Foreigners can own condominium units, apartments, or part of any multistory building in the Philippines. The only limit is that the total number of foreign owned units in a single building cannot exceed 40%.

You cannot truly own land in the Philippines as a foreigner though. Land ownership is reserved for local citizens only.

Foreigners can even buy houses and other buildings under their own name. However, the land any structure sits on must either be owned by a Philippine citizen or leased from one.

With all of that said, there are a few ways to get around these rules. Some methods are riskier than others. Land can be leased for up to 50 years, which is extendable for yet another 25. You can buy land in the Philippines through a corporation as well.

Companies that hold land can only be up to 40% foreign owned. Fortunately, you can structure a company and keep control in practice through different share classes and directors.

How Much are Property Taxes in the Philippines?

The Philippines has rather high taxes – especially for non-residents. This is one drawback to investing in the country’s real estate market.

Property is subject to an annual tax based on its appraised value. The amount of this tax varies based on the district. But the rate is capped at 1% for properties located within Metro Manila, and 2% for those outside the city.

Rental income is also subject to personal income tax for Philippine residents. The highest rate of 32% applies to those making more than 500,000PHP (around US$10,000).

If you have enough spare cash to buy offshore real estate, that 32% tax rate almost certainly applies to you.

Deductions for income tax are allowed if you’re a Philippine resident. These deductions can be taken from repairs, maintenance, depreciation, along with other taxes you’ve already paid. Tax allowances help substantially lower your income tax rate.

For non-residents, income is taxed at a flat rate of 25%. There are no deductions or allowances if you’re not living in the Philippines for most of the year.

A transfer tax of 6% on the property’s market value is also payable upon selling it. That fee is usually split between the buyer and seller.

Is Buying Property in the Philippines Safe?

Believe it or not, the Philippines has one of the best land registry systems in Southeast Asia. Real estate owners can even access their title deed and other information online.

As such, you’re unlikely to encounter any big problems when dealing with the government or land office.

Several established property developers exist in the Philippines. Businesses like Megaworld and SM Land have dozens of successful projects under their belts.

Construction and service quality is generally good from these type of firms. Manila even has internationally branded residences such as a Trump Tower and a Westin Residences. These brands don’t just let anyone build a project under their name.

Therefore, you shouldn’t have issues buying from top real estate developers in the Philippines. Delays and other problems will likely come from smaller developers.

It’s important to buy from a well-respected developer because of that. Ideally, a firm listed on the Philippine stock exchange with at least 10 complete projects.

Best Places to Invest in Philippines Property

There are over 7,000 islands in the Philippines. With a population of over 100 million people, it would be impossible to cover everywhere in the country.

Manila is obviously important as not only the nation’s capital, but one of the largest cities on earth with over 18 million living in the metro. The city has many different areas each with their own price ranges, vibes, pros, and cons.

Second tier cities like Cebu or Davao are also worth considering for investment. The former is easier to navigate, with Cebu having better access and more facilities wanted by foreigners. Meanwhile, Davao is the bigger of those two.

We won’t cover beach resorts or places which don’t yet have much supply of condo buildings. The fact is, most foreigners choose to buy condos in the Philippines.

The process involved in “buying” land is just too complicated for most – even though land is where the most potential for profit lies right now.

Plus, you should buy property in Malaysia if you want land. Asia boasts several better countries to own land as a foreigner than the Philippines.

Metro Manila

The Metro Manila area is more like a collection of different cities than a single one. Quezon City, Makati, and Taguig are the neighborhoods where most condominiums buildings tend to be.

They’re also three of Manila’s top areas where expats and upper-class locals live. Multinational companies normally base themselves in one of these few central business districts.

Since the 1990s, a prominent middle class has formed in Manila largely because of these tech giants, support providers, and other firms outsourcing to the Philippines. Their staff, along with retirees and practically everyone else, want to live in a condo closer to central Manila.

However, there are still condos in other less-prime parts of Manila. Quezon City is a vast areaand the second largest city in the Philippines after Manila itself. Likewise, skyscrapers are popping up in Taguig and several other neighborhoods in Manila.

Developers are now moving to places like Quezon City and Taguig, sometimes building lower and mid-range projects than what you’ll find in central Manila.