Philippine Apart-Hotel or Condotel Properties
Below is a MRR and PLR article in category Finance -> subcategory Investing.
Philippine Apart-Hotel and Condotel Investments
Summary
Investment fund managers and private investors from the UK are increasingly investing in Philippine condotel properties, drawn by compelling returns that may reach up to 14% annually. This trend is fueled by a shortage of hotel rooms in the country.
Article
"Incomes we expected in a couple of years are happening now," remarked Beth Collingz, managing director in Metro Manila for PLC Global Pinoy, the international marketing arm of Pacific Concord Properties' Lancaster brand of condo hotels in the Philippines.
Collingz anticipates a 15% increase in rental income over the next year, building on gains of up to 30% since January 2006. This surge coincides with Pacific Concord Properties' launch of Lancaster Suites in Metro Manila's Ortigas district.
Private equity units from UK banks and investor clubs are eager to capitalize on lucrative returns?"potentially double those in the US and Europe?"prompted by the strong Pound Sterling. Large real estate investments for Asian commercial properties are underway.
"There’s significant capital targeting increasingly scarce, investment-grade real estate in Asia," said Collingz. "We’re finalizing $20 million in private-equity real estate funds for Lancaster condo hotel projects in Metro Manila and Cebu, with rental returns poised for rapid growth."
Investment in Asian commercial properties has doubled annually over the past five years. Collingz sees the Philippine condotel market reaching unprecedented heights in 2007/8 as more developments emerge.
Demand for housing, hotels, office space, and shopping complexes in the Philippines?"home to nearly 80 million people?"continues to drive rent increases. The return of millions of overseas Filipino baby boomers further fuels this demand.
Residential rents in Metro Manila jumped 26% in early 2007, marking the highest quarterly increase in over a decade. Companies like Texas Instruments are investing heavily in Philippines operations, further driving rental demand. High-end rents saw a 13% increase from the previous year, Collingz noted.
She forecasts regional rent growth of at least 8.7% annually over the next five years, outpacing the United States and Europe. Rental yields of 8% to 16% starkly contrast the 4% to 5% seen in Western markets.
"Shifting fund flows toward Asia is having a profound market impact," Collingz stated. In Singapore, large deals by private real estate funds amounted to $6.7 billion since September 2005, driving some markets to saturation. As Singapore, Japan, and Hong Kong reach capacity, the Philippines is attracting significant foreign investment.
Low property prices, especially compared to UK housing, alongside retirement spending, are turning international eyes toward Philippine condo hotels, sparking a construction boom.
This influx is driven by affordable market rates and flexible payment plans for condo hotel developments, according to Collingz. Buyers enjoy rental incomes that promise returns between 8% and 16%, depending on their payment strategy.
Beth Collingz
PLC International Marketing Networks
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