How Real Estate Investment Works in the PhilippinesIn the last few years, the Philippines has shown rapid economic growth and infrastructure development, making it one of the best countries to capitalize on. The "Pearl of the Orient Seas" has strong macroeconomic fundamentals, tourism, a booming construction industry, and a competitive investment climate. Hence, local and foreign investors and businesses are attracted to the country, especially those interested in investing in real estate properties.
But before venturing into this industry, learning about the fundamentals is crucial for first-time buyers and developers. With that said, we will discuss how real estate investment works in the Philippines. What is Real Estate Investment For novices, real estate pertains to any physical or tangible property, such as land, buildings, and other solid improvements, as well as natural resources, subsurface rights, air, and the rights of use, alterations, and enjoyment. There are four classifications of real estate property: residential, commercial, land, and industrial. Residential properties refer to all types of accommodation or places of habitation, like townhouses, apartments, condominiums, and other relevant properties. Institutional and business establishments include commercial properties, malls, shopping centers, offices, and health and education buildings. Meanwhile, industrial property refers to buildings, warehouses, and plots of land where products undergo research, manufacturing, distribution, and storage. Lastly, land refers to underdeveloped properties, including vacant lots, farms, and ranches. How Real Estate Investments WorksIn layman's terms, buying or owning a piece of land is a form of investment where the property generates a profit. For example, a family-owned farm or a condominium unit is a real estate investment when you sell or rent it. Some investors use the real estate strategy known as "flipping." It involves buying an old, dilapidated, or run-down property. Then, the buyer will renovate it and sell the renovated real estate property for profit. Investors can also generate profit by renting out the property. Aside from renting, selling, and flipping properties, investors can generate passive income with real estate investments in the Philippines through the following: Property Appreciation Real estate investors can also use the same principles used by collectors of art and antiques. This classic buy-and-sell strategy is one of the best ways to generate profit. Appreciation involves buying and holding the property. Once it appreciates, you can sell it to make a profit. Other investors also apply this strategy by purchasing a low-developed property. Afterward, it is renovated and sold higher than its original value. However, it is a long-term strategy since most properties will take a decade before their value appreciates five times. Also, it is applicable for properties located in areas with high real estate demand, tourism, or developing cities. Rental Cash Flow The Philippines is a highly centralized country, which means development is evident in Metro Manila and nearby cities that generate high revenue. Due to this system, many mid-income families in the country migrate to urban areas, seeking more opportunities, better lifestyles, and convenience. As a result, investing in multiple residential properties and renting them out can help you make a fortune. After completing the amortization payment, the rental income will offer long-term and lucrative rewards. Ancillary Revenue On the other hand, rental incomes and direct sales do not guarantee consistent and enough profit, especially for owned property. In this scenario, adding micro-business will be practical to increase your profit and minimize expenses relevant to maintaining and repairing your property. For instance, you can add vending machines, standalone commercial space, or operate a franchise within your property. Therefore, there are many ways to generate profits with real estate investments in the Philippines.
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Why are Tiny Houses Becoming Popular in the PhilippinesIn recent years, many have shifted to tiny houses, especially those with a minimalist lifestyle. This new trend has been gaining popularity worldwide, from Western to Asian countries. Since owning a home feels like an elusive dream for many Filipinos, tiny houses are also becoming more popular in the Philippines.
So, in this article, we will discuss this new trend in real estate in the Philippines, why live in tiny houses, and its advantages and disadvantages. Rising Trend in Tiny Houses Tiny house communities are starting to grow in the Philippines. This latest trend is a form of development with multiple tiny houses clustered in a communal environment. Those living in these communities practice a minimalist lifestyle, content with a compact yet functional space. They share amenities and common spaces, which helps promote a connection between their neighbors and the community. Furthermore, Filipinos are becoming more interested in tiny houses for their affordability, sustainability, and eco-friendly features. Unlike traditional Filipino homes, this compact dwelling idea is more affordable, making them sought-after by the new generation, professionals, retirees, and environmentalists. However, although it is legal to build a tiny house in the Philippines, there are regulations you should adhere to. Thus, check your area's zoning and building codes to ensure compliance. Why Live in Tiny Houses Affordability From 2024 to 2028, the Philippine real estate current housing market will grow by 2%. The country's capital, Manila, has experienced significant growth in residential homes with double market value. It shows that the housing sector in the national capital region has strong demand. While these figures will benefit investors, prospective buyers or homeowners will be affected, making it difficult for many Filipinos to buy their dream homes. As a result, many buyers will be out of the market, or they will look for more affordable alternative housing options, such as the tiny house. A tiny house in the Philippines costs about P500,000 to P1,000,000 on average. The prices may be higher or lower based on the size, location, and other features. A tiny house can have basic to luxurious amenities based on owners' preferences. Customization and Personalization Another reason to live in tiny houses is the ability to customize and personalize their features. Many Filipinos construct tiny houses, knowing they can design them based on their needs and preferences. They work with builders and designers to plan their specific requirements. Homeowners can also get creative to ensure functionality and maximize each space when designing their tiny homes. Eco-friendly and Sustainable With the effects of global warming becoming more evident, many are finding ways to reduce their carbon footprint. That’s why environmentally conscious individuals leaned towards the tiny house movement to counteract climate change. Tiny houses are known for their eco-friendly and sustainable features. It can have solar panels, rainwater harvesting systems, natural ventilation, composting toilets, and energy-efficient appliances. These features can help reduce humans' impact on the environment. It can also help homeowners save on utility expenses, nurturing a more sustainable lifestyle. Conclusion Overall, tiny houses will affect real estate in the Philippines. It offers more affordable and personalized housing to homeowners while benefiting the environment. On the other hand, a tiny house is not for everyone, especially if you're not up to downsizing your belongings or living in a constricted space. Moreover, check with local government units (LGUs) regarding building codes and zoning laws before building a tiny home. Lastly, always consider the security of your neighborhood when planning and designing tiny houses. |
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