Investment involves taking risks because one is required to produce capital in order to generate income. Trends will share a lot of data on supply and demand, which produces the best opportunities. Philippine Real Estate has been relevant for more than a decade now, thanks to the interest from different sectors that fuel the demand for properties.

PROS AND CONS OF INVESTMENT

So is it worth the venture? Depending on what you choose, you need to see if the benefits outweigh the drawbacks.

PROS	CONS
Having direct control as owner and investor	Risky because it is a non-liquid asset
Regular cash flow from monthly rentals	Time-consuming to maintain and operate
Long-term investment that funds retirement	Lack of system for screening tenants
Real estate is always part of market trends	Property Management can be a burden
Rise of real estate technology	Legal issues as owner incur liabilities

TYPES OF INVESTORS

Distinguishing the types of investors can be identified through their motives of purchasing or acquiring real estate. All investors spend money on properties, but for different reasons. This is why they can be classified into 2 main categories: end-users or long-term investors.

End-users are referred to investors who are commonly known as homebuyers. They purchase real estate for the sake of personal use. It doesn’t necessarily apply to residential real estate alone, of course, but also land, offices or industrial spaces. As opposed to a financial choice, they invested in real estate as part of their lifestyle. The way they choose properties are based on their personal benefit and future plans.

On the other hand, long-term investors are the book definition of what are considered to be actual investors because they make decisions and take risks to meet their expectations of profiting or generating returns. They pay closer attention to market trends, types of properties in demand, the shift in prices and available supply. This category can be divided further into active and passive investors, where the active prefer to manage their assets personally and the passive prefer to hire others to do the managing and maintenance on their behalf.

REAL ESTATE INVESTMENT FACTORS TO CONSIDER

In order to minimize loss and maximize profits, there’s a need to understand how real estate works. Considering the type of investor you are or want to become, there are a few aspects that affect investment that will determine whether it would be the right venture for you or not.

They are as follows:

• Financial Stage - there’s a difference between investing when you’re only starting out on your savings with growing your current net worth. 

• Down-payment Ability - the rule of thumb is to give 20% down payment of the property you’re buying. The more down payment you give, the less amount that you have to pay on loans.

• State of the Economy - calculate returns (rewards) and interests (risks) on your property investment against the current inflation rate in the country of a particular year

• Location - investors should be aware of prime locations with high population growth, low price-to-rent ratio, development rate and positive communities. You can also consider the urbanizing provinces as potential locations for investment, along with Metro Manila. 

• Project Developer - popularity and reputation for companies are highly critical when being considered for investment.

• Target Market - as an investor, you need a particular niche that contributes to the high demand for you to benefit most from your property investment. Which industries demand office spaces and residential properties at a particular location and period of time.
• Real Estate Trends - reading the latest  news can show you the right time and place to invest in real estate, and as you will read in this article, Philippine Real Estate is a developing market for investment.

CURRENT STATE OF PHILIPPINE REAL ESTATE

Within the range of 6-6.5 percent this year, the Philippine economy is growing in the midst of easing inflation but slower growth in external trade. Thanks to government initiatives, like the BBB (Build, Build, Build) program launched by the current administration, the current metropolitan area continues to develop; together with the rise of secondary cities, provincial areas in CALABARZON, Cebu, Iloilo, Pampanga and Davao are also undergoing urbanization.

The economic growth correlates with the current value of real estate, due to high demand and limited supply. So property appreciation also means increase in prices, but despite this, vacancy rates are still low. Because of this year's inflation level, interest rates have been lowered to 4.25%; so applying for loans is more competitive and allows you the ability to afford the minimum down payment of 20%.

DRIVERS OF PROPERTY DEMAND

Investment patterns in real estate depend mostly on purchasing activity over a given period of time. From time to time, patterns vary, so be careful which industries, communities or demographics are most responsible for the trend. Focus on a smaller market to narrow the choice down to a specific field that creates high demand for better chances of making the right purchase.

• Philippine Offshore Gaming Operator (POGO), Offshore and Outsourcing (O&O), Business Process Outsourcing (BPOs), Finance Technology (Fintech) and Information Technology Business Process Management (IT-BPMs) - Flexible office spaces in both urban and rural areas

• Pharmaceutical Companies - Expansion units in commercial centers and inside townships/villages.

• E-commerce Companies - Storage and logistics provider warehouses

• Overseas Filipino Workers - Vacation homes and rental apartments

• Retirees - House and lot located in the countryside

• Tourists - Hotels and resorts

• Millennials - Condominiums and co-living properties

CONCLUSION

Investment is based on making the most intelligent decisions for your time and money at the end of the day. At SQFT Global Properties Philippines Inc., our real estate professionals are knowledgeable with the latest trends in real estate investment. Send your inquiries so we can discuss the best property for your needs.