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Rental yield and ROI on property investment in the Philippines

rental yield in the Philippines
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Real estate remains an attractive option for investors aiming to safeguard their financial future. Grasping the intricacies of rental yield and Return on Investment (ROI) can revolutionize how investors approach property investment in the Philippines. These key indicators guide the real estate landscape, helping investors make knowledgeable choices and optimize their investments. In this article, we will discuss the ROI on property investment and rental yield in the Philippines.

Average rental yield in the Philippines

The Philippine real estate market began 2024 on a high note, with the average gross rental yield climbing to 5.19% in the first quarter. A notable gain above 5.12% was previously reported in the third quarter of 2023. A strong demand for residential space, particularly in large urban areas, is indicated by this steady but slow expansion. This also shows how resilient the Philippine rental property market is. The slight gain, which is indicative of the market’s rising dynamics, particularly in the rental sector, points to a positive outlook for homeowners and investors.

Upon closer examination of the performance of the rental yield in the Philippines as of February 16, 2024, a complicated terrain influenced by property size and location becomes apparent. Metro Manila shows a range of yields, with smaller apartment units generally being more favorable. For instance, Taguig City’s higher yield of 3.36% for larger units with four or more bedrooms is far lower than Manila City’s remarkable 5.41% yield for studio and one-bedroom flats. This trend emphasizes how young professionals and small families are the main drivers of the rising desire for small, inexpensive living spaces.

Comparatively, Cebu City exhibits a more consistent and marginally higher average rental yield in the Philippines of 5.35% for apartments of all sizes. It highlights its growing appeal as the Visayas region’s centre of commerce and residential activity and attracts interest from both domestic and foreign stakeholders.

ROI on real estate investment in the Philippines

Real estate investment in the Philippines has been experiencing a comeback, recovering steadily from the global pandemic. With the economy bouncing back, the real estate sector is witnessing an increase in demand across various segments, such as residential, commercial, and industrial spaces. To maximize investments, many entrepreneurs utilize an ROI calculator in the Philippines to assess the potential returns of their business ventures accurately.

Residential real estate

The residential sector, in particular, has shown impressive resilience, with condominium units in major cities such as Manila and Cebu still attracting significant interest. Both end-users and investors drive demand due to the competitive rental yield in the Philippines, which ranges from 4% to 8% annually, depending on the location and type of property. Moreover, investors seeking options for investment with monthly returns in the Philippines are increasingly attracted to these residential spaces, drawn by stable revenue streams and the potential for capital appreciation.

ROI in the philippines

Commercial and industrial spaces

Commercial real estate, especially in prime areas, has been rising with companies expanding operations in the Philippines. BPO (Business Process Outsourcing) companies and other international corporations are continuously seeking office spaces, contributing to the demand for rental yield in the Philippines. Industrial real estate benefits from the country’s strategic position as a manufacturing and logistics hub in Southeast Asia. Investing in commercial real estate can offer significant ROI in the Philippines due to the growing economy and increasing demand for business spaces.

How much is rent in the Philippines?

The average rent in the Philippines can vary greatly depending on its location and size. A furnished apartment in a high-end neighborhood measuring 85 square meters would typically cost ₱ 35,213 ($599) per month in rent. On the other hand, the monthly rent for an apartment of the same size in a less costly region is approximately ₱ 28,924 ($492). The rent in the Philippines in an upscale neighborhood costs ₱ 22,895 ($389) per month for smaller units, like a furnished 45-square-meter studio. In a more economical neighborhood, it averages ₱ 15,317 ($260). These pricing variations illustrate the difference in housing costs across various neighborhoods and unit sizes in the Philippine rental property.

Is buying property a good investment in the Philippines?

Buying property in the Philippines is highly attractive due to the country’s robust economic growth. This presents a significant investment opportunity. According to the International Monetary Fund (IMF), the rental yield in the Philippines in 2024 is 5.6% and is expected to grow by 6.2% in 2025. The backbone of this growth of the rental yield in the Philippines includes robust consumer demand, a dynamic employment market, solid remittances, and a significant rise in urban household income levels.

These factors set the stage for potential investment with high returns in the Philippines through value appreciation and position the rental market as an attractive income stream. Hence, with the increasing rental yield in the Philippines, investing in real estate now could offer substantial financial rewards

Buy property in the Philippines with Own Property Abroad

Are you considering purchasing a house in the Philippines? Understanding the regulations and property laws can be daunting, especially for foreigners. Own Property Abroad is here to guide you through the complexities of the market, including optimizing rental yield in the Philippines. Our experts offer assistance with legal requirements, property searches, negotiation, and due diligence, ensuring a smooth and efficient property journey.

With our knowledgeable team, you don’t have to face the intricacies of the Philippine real estate market alone. For more details on how we can help, please provide your contact information below or email us at hello@ownpropertyabroad.com.

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Frequently Asked questions (FAQs)

How much is an apartment in the Philippines?

An apartment in the Philippines costs ₱ 23.49 million ($399,330) on average in Manila.

How much is the rent in Manila?

The rent in Manila costs ₱ 35,213 ($599) on average.

Where to invest money to get good returns in the Philippines?

To invest money to get good returns in the Philippines, consider investing in stocks, mutual funds, UITFs, a part-time business, time deposits, or the Pag-IBIG MP2 Savings Program.

How is the Philippines’ real estate market performing?

The Philippines’ real estate market is experiencing growth, as evidenced by an increase in the average price of luxury condominiums in the capital’s central business districts.

Does property investment offer high monthly returns in the Philippines?

Property investment in the Philippines can offer an average monthly return of 5.41%. However, this figure can vary based on factors such as the location, type of property, and prevailing market conditions.

Your guide to buying property in the Philippines
Written by Therese Angeles

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Your guide to buying property in the Philippines
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