Manila Property Market – To Buy or not to Buy

Referring to the property market as a whole misrepresents the options available to expats. It should probably read as the condo or apartment market. It is against the law for foreigners to purchase land in the Philippines unless married to a local. In any case the asset would be held in the partners name anyway… So it’s pretty much just illegal to purchase land.

On the surface, it appears the condo market is absolutely booming in Manila. Everywhere you look there are cranes in the sky atop new buildings, and you can barely walk down the street in some areas without being handed a flyer from a developer. Most buildings are sold out well in advance of their completion date, which is really quite amazing when you look at the sheer number of buildings underway. This all points to strong, and unsatisfied, demand from the market.

If you are settling in for a long stay in the Philippines then you may want the stability that comes with owning your own place. However, if the asset you buy does poorly it may make better financial sense to rent. So if we put sentiment aside, whether you want to occupy or invest the underlying value of the asset is what matters here. If you are going to spend p5-p20 million on an asset you would want to have some idea that it will appreciate over time, or at worst hold its value.

Being able to make some kind of prediction of price direction in the market requires a reliable source of sales data. The secondary property market is very scattered and as far as I am aware there is no centralized database collating sales information. If anyone reading this knows of one please get in contact. I would love to take a look at it! Without this you can only rely on anecdotal evidence and make a judgment call. The following points are not to be considered investment advice, but only my reasons for choosing not to invest in a condo in Manila.


The first issue to consider is who is buying all of these condos in the first place, and for what purpose? There is a big difference between building condos to meet investor demand, and housing demand. I have lived in four different buildings around the Makati area, and am now in one of the newer buildings. There are a lot of empty apartments here, and it is much less crowded than you would expect for a building of this size. From my balcony I can see two other buildings, which have been completed within the last 18 months. At night there are very few lights on. Again this is only anecdotal evidence but if these buildings have all been sold out, yet no one lives there. You can safely assume a lot of these are being held as investments.

With so many investors looking for tenants there is a flood of available rental stock. If the underlying demand for housing is not strong enough to meet this then rents are likely to fall as owners compete to secure tenants. I recently negotiated 33% off the asking rent for my current lease, and it really didn’t take much to do this. Can you imagine if you were holding an investment and the income was one third less than you were expecting, after a period of no income?

Again from just standing on my balcony I can see five more buildings under construction, adding another few thousand apartments into this market. Off in the distance is Circuit Makati where another cluster of buildings will from a mini condo city over the next few years. Again many of these have already been sold by the developers, but is there room for further price growth in the future? To me this looks unlikely in most areas.


The second issue to look at is the secondary market. In order to realize any profits you need to sell, and for the highest price you can. The secondary market is very fragmented in the Philippines. You can hire a broker, but they are expensive and from what I have seen do a pretty awful job of selling a property. Many of the online ads do not even have a photo of the apartment. When you are asking p10,000,000 for something you would think potential buyers would at least want to know what it looks like.

Many owners choose to sell themselves, and advertising through most of the same channels. If you head to website such as and type in rush sale you will see no shortage of owners just trying to off load their apartment. As a result, prices come down. In many cases apartments are not old, and are selling for millions below what they bought for from the developer.

All of this creates uncertainty for what price could be obtained, and which direction prices are trending.

Transaction Costs

Researching this aspect of buying a property is what turned me off the idea all together. When purchasing you will pay upwards of 2% of the purchase price in taxes, and document fees. Upon selling you are hit with a 6% Capital Gains Tax. This is calculated on the selling price, and not the capital gain actually made… If any. Add to that 2%-5% for a broker if you choose to use one and you are a long way in the red before you even get started.

(Disclaimer: these figures may be out of date so please check with a professional for clarification)

What initially attracted me to look at real estate investment in the Philippines was the rental yields on offer. It is not too difficult to find yields of 10%+ on gross rental income. However, after looking deeper it is my opinion that, on average, rents are unlikely to grow in the short term due to the massive supply coming onto the market in the years ahead. So if you choose to rent it is unlikely that your cost of living will be pushed up by skyrocketing rental costs. This will strangle capital values, and after fees it will be difficult to make a profit.

So while there is certainly a property boom happening in Manila, it is the developers that are cashing in on this. I do hope that the masses look deeper into what they are really buying if it is an investment they want, as is the case for thousands of OFWs. The dream being sold by the developers is not always going to be the reality.

Unfortunately for expats it is only condos for us. However, for Filipino nationals there are a huge number of opportunities elsewhere to make money in real estate. The middle class is growing at a rapid rate, and so is the demand for better quality housing. Buying with this target market in mind, and in areas where with good transport links and restraints on future supply is a strategy likely to bear fruit in the years to come. To everyone reading, all the best in your future investing endeavours.


  1. Thanks for sharing these comments.
    I think you are spot-on.
    However, the situation you are describing is not permanent. There are cycles in property, and we have recently gone past the peak of the long cycle – after about 14 years of rising prices.
    Maybe you know that there are about 22,000 condo units in Makati, and over 4,000 will be completed within 2017, if projects stay on schedule. Completions will drop to about 1,000 in 2018, and less than that the year after. The existing glut will be absorbed eventually. In fact, 2018 may be a good year to hunt for bargains, but not in the primary market (buying from developers). Instead, you will find them in the secondary market, where prices may be 30% cheaper, or even more than that.
    You want price data? I agree that it is not easy to find. Maybe the best source is a new website started about a year ago, called Makati Price .com. Have a look. I found a link to this blog, which is how I found you.

    1. Yeah that makes sense. I guess it depends on what you look for in an investment. If you are happy to buy and sit on it for a decade then you will ride out any fluctuations and probably do well… It is the probably part that gets me though. Too many unknowns.. My golden rule for investing in property now is that if i do not know exactly how much i expect to profit before i buy it, and in the next 12-24 months, then i wouldn’t buy it.

Leave a Reply

Your email address will not be published. Required fields are marked *