Friday, October 17, 2008

Philippine Rental yields emerge as vital for hard pressed UK buy-to-let investor market options

In the current UK economic climate buy-to-let overseas is emerging as a good prospect for those seeking an income and there is always a lot of discussion on this topic in property forums.

UK property investors looking to have an income from their investments are often advised to buy in locations with a strong tourist industry, but there are markets where good rental yields can be obtained that don't rely on tourists. The Philippines is one such area.

Philippine Condo Hotel Properties are being snapped up by agile UK investment funds as rents soar in the country. UK Investment Fund Managers and Private Investor Clubs tap their deep pockets to purchase real estate investments in the Philippine Condo Hotel market amid a marked shortage of Hotel rooms driving expected ROI through rental returns upwards of 14% per annum

"Rents which we thought we would get in two years we're getting now," said Beth Collingz, a managing director in Metro Manila of the Condotel Marketing arm PLC Global Pinoy, the International marketing partner of Pacific Concord Properties’ Lancaster Brand of Condo Hotels in the Philippines.

Collingz expects rental income to rise 12.5 percent in the coming 6 months after gains of as much as 30 percent since June 2007. UK Private equity units of banks and investment clubs, driven in part by the current strength of the Pound Sterling in international trading, are being attracted by returns in the Philippines as much as double those in the United States and Europe, are purchasing significant blocks of real estate for investment trusts for Asian commercial property.

"There are large amounts of capital now chasing increasingly limited investment-grade real-estate opportunities in Asia," said Collingz. "We are in the closing stages of packaging the investment of some $20M in private-equity real estate funds for Condo Hotel developments in Manila and Cebu, with expected rental returns which continue to grow at a rapid pace."

With funds raised for commercial property deals in Asia having doubled in each of the past five years, Collingz sees the market value of Condotel investments in the Philippines reaching new heights in 2008/9 as more developments come on line. Rising demand for homes, hotels, short and medium term rental accommodation, offices and shopping malls in the Philippines, home to a population of almost 80 million and with a significant number of the more than 10 million returning overseas Filipino ‘Baby Boomers’, is fueling rents.

Residential rents in Metro Manila rose 26 percent in six months to June 2008, their highest quarter-on-quarter increase in more than a decade, as more and more IT companies set up shop in the Philippines. Companies like Texas Instruments are investing $1B in expanded operations in the Philippines. High-end rents rose some 15 percent from a year earlier, said Collingz.

As property prices soar, Collingz projects that Rents in the region are set to effectively jump 12.5 percent per annum over the next five years, compared with 5.3 percent in the United States and 4.7 percent in Europe. Yields from 8 percent to as high as 14 percent ROI on rental income property contrast with the 4 percent to 5 percent that private equity firms get in the United States and Europe.

"People are in general looking to shift fund flows relatively towards Asia," Collingz said. "It already has had a profound impact in markets where there's a lot of this money chasing the same assets." As the Singapore, Japan and Hong Kong markets become saturated, the Philippines will be the next real estate market to attract substantial overseas investments. Lower prices and retirees’ spending money are also directing foreign attention to residential condominium hotels in the Philippines, which in turn is driving up more construction.

“A lot of this interest is being driven by the relatively cheap market prices here compared to Europe – especially UK housing prices – and the easy payment options available for condominium hotel developments” Collingz said. “The buyers gain rental incomes that on today’s purchase prices give a projected ROI of some 8 percent to 14 percent depending on the mode of payment for the unit” she said.

For further info on Philippine Condo Hotel Investment opportunities please do not hesitate to contact us:

Beth Collingz
PLC International Marketing Networks
Pacific Concord Properties Inc., Manila Head Office
Shaw Boulevard, Mandaluyong City. Metro Manila. Philippines
Phone: Manila [632] 717 1958
Fax: Manila [632] 718 1828

Pacific Concord Properties Inc., Cebu Office
Lapu-Lapu City, Mactan. Cebu. Philippines
Phone: Cebu [6332] 340 0721
Fax: [6332] 495 4938
Web: [Lancaster Condotels]
Web: [Lancaster Suites]
Web: [Lancaster Atrium]

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