How to Buy Property in Philippines as a Foreigner

Who can buy property in the Philippines?

Foreigners have the opportunity to purchase property in the Philippines, although there are limitations on foreign property ownership. According to Philippine laws, foreigners are prohibited from owning land but can own buildings or condominium units.

Establishing a local corporation offers a route for land ownership. However, it is essential for the corporation to adhere to the 40% foreign ownership rule, ensuring that Filipinos maintain majority ownership with at least a 60% stake in the corporation.

The most straightforward approach to property ownership is acquiring a condominium unit within a multi-condo project. As per the Condominium Act of the Philippines or Republic Act (RA) 4726, foreign citizens have the right to purchase condo units in any condominium project, provided that foreign ownership does not surpass 40%.

Do the research

Investing in real estate in the Philippines presents appealing opportunities driven by several factors. The country´s vibrant economic expansion, fueled by a youthful and expanding population, rising consumer expenditure, and governmental infrastructure initiatives, generates robust demand across diverse sectors. The flourishing real estate market in pivotal urban hubs such as Metro Manila, Cebu, and Davao offers prospects for residential, commercial, and industrial ventures. Furthermore, remittances from overseas Filipino workers (OFWs) stimulate real estate demand, while governmental initiatives like the Real Estate Investment Trust (REIT) Act and Special Economic Zones (SEZs) provide incentives for investors. The Philippines´ tourism prospects, varied natural landscapes, and rich cultural heritage also contribute to real estate prospects, particularly in the hospitality sector. Overall, investing in Philippine real estate can yield enticing returns through rental revenue, asset appreciation, and well-planned development endeavors, rendering it an attractive option for investors seeking growth and portfolio diversification.

Here are a few desirable locations for real estate investment:

  • Metro Manila - The capital region is a prime real estate hub, with areas like Makati, Bonifacio Global City (BGC) in Taguig, Quezon City, and Ortigas Center being particularly sought after due to their commercial, residential, and business opportunities.
  • Cebu - Cebu City, the Queen City of the South, is a major economic center outside Metro Manila. It offers a mix of urban conveniences, historical sites, and beachfront properties, making it attractive for both residential and tourism-related real estate investments.
  • Davao City - Davao, located in Mindanao, is known for its economic growth, good governance, and business-friendly environment. The city´s real estate market has been thriving, particularly in residential developments and commercial spaces.
  • Tagaytay - Tagaytay is a popular tourist destination known for its cool climate, scenic views of Taal Volcano, and proximity to Metro Manila. It´s a favored location for vacation homes, retirement communities, and boutique resorts.
  • Boracay - Boracay Island is renowned for its white sandy beaches and vibrant nightlife. Despite environmental regulations limiting development, there are still opportunities for high-end resorts, hotels, and luxury villas.
  • Subic Bay - Subic Bay Freeport Zone, located in Zambales, offers a mix of industrial, commercial, and leisure developments. Its strategic location, infrastructure, and special economic zone status make it attractive for real estate investment.
  • Batangas - Batangas province, particularly areas like Lipa City and Batangas City, offers a balance of urban amenities and natural beauty. It´s popular for residential subdivisions, beach resorts, and industrial estates.
  • Angeles City - Angeles City in Pampanga is known for its proximity to the Clark Freeport Zone and the Clark International Airport. It´s a hub for business process outsourcing (BPO) companies and has a growing real estate market catering to both residential and commercial sectors.

Where to find properties online:

Financing

Foreigners are entitled to apply for property loans in the Philippines, subject to specific conditions and prerequisites. To secure a property loan in the Philippines as a foreigner, you would generally require an Alien Certificate of Registration (ACR), evidence of lawful residency in the Philippines, proof of income, and copies of your personal identification documents.

Due Diligence and Sales Contract 

Conducting real estate due diligence in the Philippines is vital to safeguard buyers against scams and fraudulent dealings. To achieve this, standard procedures include verifying the authenticity of the seller´s ownership, acquiring a certified true copy of the land title, confirming the accuracy of the tax declaration provided by the seller, and obtaining a tax clearance. Although buyers typically oversee the due diligence process, it´s advisable for foreigners to enlist the services of professionals such as real estate lawyers or agents well-versed in Philippine property law to minimize potential risks.

In Philippine real estate transactions, a pivotal document is often known as the "Deed of Absolute Sale" (DOAS). This document serves as a legally binding agreement between the buyer and the seller, outlining the terms and conditions of the property sale. The process typically initiates when the buyer expresses interest in a property. Initially, a Reservation Agreement may be signed along with the payment of a reservation fee. While not the final purchase agreement, this signifies the buyer´s intention to purchase and temporarily removes the property from the market. Subsequently, a Deed of Absolute Sale is drafted.

Property Buying Costs and Taxes in the Philippines

Transaction Costs
    Who Pays?
Transfer Tax 0.50% - 0.75% buyer
Notary Fee 1.00% - 2.00% buyer
Registration Fee 1.00% buyer
Stamp Tax 1.50% seller
Capital Gains Tax 6.00% seller
Real Estate Agent´s Fee 3.00% - 5.00% seller
Costs paid by buyer 2.50% - 3.75%  
Costs paid by seller 10.50% - 12.50%
ROUNDTRIP TRANSACTION COSTS 13.00% - 16.25%
Source: Global Property Guide

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