Why Investing in Rental Property Is Hot in PH

Why Investing in Rental Property Is Hot in PH

In the Philippines, more and more people invest in residential condominium units for passive income. Ask any broker or landlord, and they’ll tell you that condo leasing is indeed a lucrative business.

In fact, the country is currently experiencing an influx of both local and foreign tenants. Because the tourism industry is booming, more people looking for short-term accommodations throughout the country are expected to come.

Learn why purchasing rental property is a great investment and start looking around for condos for sale.

High Demand for Condos for Rent

The Philippines is a rental nation according to a study conducted by Lamudi. In fact, over 60% of Filipinos who are currently renting claim that the reason they rent is that they cannot afford to buy a home. The same study showed that a condo unit near business districts is the most popular property for tenants.

This is not a surprise since most young, working Filipinos are looking for halfway homes or a place to live that is close to their work. For the younger market, renting allows for more flexibility, less commitment, and fewer expenses.

The Rise of Business Centers

Business centers and urban townships will be developed. We have the ever-growing BPO industry to thank for the increased demand in rental properties in the country. More BPO workers are looking to rent condominium units or halfway houses near their place of work. More foreign investors also mean more expats looking for high-end or luxury condominiums. In fact, according to CBRE, the real estate market in the Philippines is expected to stay strong until the end of this year.

Condominiums are sprouting left and right in the major cities as the Philippine economy gets better each year. The next CBDs include the Vertis North, Circuit Makati, Bonifacio Global City, and Arca South. This is something we can definitely look forward to.

Bonifacio Global City

(almville)

Affordable Property Price

According to CBRE, the prices for low-end to mid-range condos are at PHP 1.3 to PHP 4.9 million, depending on location. Despite the numerous residential condominium projects that are currently ongoing, it can be predicted that “by 2020, supply will catch up with demand, and that’s why the market remains very secure,” according to Alexandra Katindig of CBRE.

Some developers are also offering pre-selling condos, a condominium unit being sold before it is actually completed, while under construction, or even during its early planning process. During this time, condos are sold at approximately 30% cheaper with very flexible payment terms.

Better options are also available when you buy pre-selling condo units. You can choose your preferred unit location, floor plan, and even which view you want. Because you got your condo unit at a discounted rate, you can allot a budget for renovations and improvements. You can lease your condo unit at a much higher rate if it’s fully furnished and if it has a beautiful view.

All of these only mean higher rental yield, giving you a faster return on investment (ROI). With affordable property prices, real estate investors can expect bigger and faster returns.

Avida Towers Atria

Competitive Rental Rates

Rental rates remain competitive due to the high demand for condo units for rent, especially in CBDs like Makati, Mandaluyong, and Bonifacio Global City.

In Makati CBD, for instance, rental rates for a premium 3-bedroom unit average at PHP 847 per square meter. These rental rates can serve as a guide to real estate investors when looking for a rental property to buy.

What’s important to consider is location and the potential for a new business center to rise in that specific area. Business districts and urban townships raise the rental rates and lower the vacancy rates.

Final Thoughts

Getting a rental property at an affordable price and renting them out to working Filipinos, expats, or even tourists will turn you into a passive income earner. With the Philippine economy getting better each year, more businesses will open up, and more workers will be looking for rental units. What does this mean for you? The time to buy is now!