What you very rarely hear in this industry is any of the experts saying if I was going to make an investment it would be “here”, though I have read one expert saying he wouldn’t invest in Dubai. So I am going to take a rare step here and say:

If I was going to make a property investment it would be in the Philippines, where I could get a really promising off-plan apartment for under 30k and where I would be in for a tidy profit.

The Philippines has its troubles outside of Manila but the EU has pledged millions of dollars to the Philippino government to try and assist them in bringing in health service reforms and reforms to try and reduce corruption, and for better distribution of wealth.

Manila is booming, primarily it is benefiting from its new attractiveness to big business who can set up outfits there relatively cheaply, and to be honest in my book, businesses coming in is better to base a fledgling emerging market’s growth on than tourism. As it gives the population jobs, and ups the possibility of resale from within the country if the foreign interest dies down because of changes in the global economy.

Having said that regional tourism to the Philippines is growing really quickly, apartment rental yields are already around the 8% mark and will rise to more like twelve when holiday lettings become more readily available, especially from western tourists. With the Philippines of course, being so attractive to big business there is of course the potential for high yield residential lets from imported execs or even young and newly promoted local workers looking for a swanky luxury apartment.

Because of Manila’s across the board growth, and as a part of Asia its potential for sustained growth for at least the next 5-10 years also make it a safe investment. But my reason for investing in the Philippines is because it would be short-term, I would be selling my Manila property in about 4 years at which point I would expect to be selling for at least twice what I paid.

We [David Stanley Redfern Ltd] have apartments in Manila, unfurnished £28000, with furniture packs available at reasonable rates. Buying a furnished one would make these apartments instant earners. The good thing about these is that it is a two tower development and the first tower is complete, so I am able to send out shots of the finished products to prospective buyers.

Liam Bailey
Head of International Research
www[dot]davidstanleyredfern[dot]com
media[at]davidstanleyredfern[dot]com

What sort of size are those appartments in Manila, and what are the prices like in any of the up and coming tourist locations is there much development going on in these locations? which areas do you think are best ?

i) Studios range from 28m2 to 32m2 and cost circa 27,000 GBP
ii) 1 beds range from 44m2 to 62m2 and cost circa 40,000 GBP
iii) 2 beds range from 74m2 to 76m2 and cost circa 69,000 GBP
iv) 3 beds are 106m2 and cost circa 97,000 GBP

The apartments are in the Makati financial district, growing into a bustling industrial/financial/services hub within economically growing Manila.

From Global Property Guide

Rental Income: Gross rental income of of foreigners is taxed at a flat rate of 25%. There is also a Value Added Tax (VAT) on rents above PHP10,000 (US$232) per month at 12% of gross rent.

Capital Gains: Nonresident foreigners not engaged in trade or business in the country are subject to income tax on the gains they realize when selling properties, which is 25% without any deductions.

Inheritance: Nonresident aliens pay estate (inheritance) tax only on property located in the Philippines, at rates from 5% to 20%.

So, okay if you are looking at a holiday home inBorocay, but a bit weak as an investment.

AK2

Based on the world's capital cities with similar economic growth patterns, 25% is a safe bet for capital appreciation in Manila for the next few years.

I worked out that prices in Panama city have grown by 50%, since early 2006 putting capital apreciation at 25% per year for the past two years, in Cambodia, I know of multiple examples where people have bought and sold 6 months later for 12% more than they paid, and bought and sold in a year for 24% more than they paid. That again puts capital appteciation in Cambodia at 24-25% year on year. Manila is showing similar economic growth, and attracting similar new businesses and development as both those cities did at the start of their growth cycles.

Look at apartment prices in Bangkok, they are going for twice what they were four years ago. Based on those things, and indicators for Manila, if I bought now and sold in four years time I would be left with almost 100% profit even after paying taxes.

The Philippines looks good but the buying and selling cost are high.
Total round Trip costs for buying and selling are between 16 % and 23 % .
I fear that if the government does not change this that it may put buyers off in the future and it may be hard to sell ?

I can't argue it you there, buying and selling costs are high but the property is currently very cheap for the quality you are getting, I have the pictures of the finished first tower and it is well swanky.

I don't think I can change your beliefs by mere argument, as I could be viewed as biased. However my post was originally stating that I would be there, and I would because I generally feel value for money and growth potential generally rule when selling property and the Manila Atrium apartments have oodles of both.

You just mark my words, someone who has bought in the first tower will no doubt sell in about six months for about a 12% profit. Don't forget the high CGT is a percentage of the profit, not a percentage of the price, and a buyers transaction costs are levied on the buyer not the seller. I genuinely believe there is money to be made in Manila.

To be honest I do think you are right as long as there is Dual Taxation in your country for th Philippines.
Is there a way to soften the blow if there isn't dual taxation ?