Real Property - Condominium

The Philippines boasts a highly productive workforce in its different local industries and sectors, which makes it the ideal destination for foreign companies seeking to expand. This also drives the demand for affordable housing options among the predominantly young workforce as well as expatriates of businesses operating in the Philippines of the 21st century.

Since the 1990s, the government has crafted policies that highly encourage not just local but also foreign firms to expand and remain active in the Philippine economic landscape. This has paved the way for more job opportunities for Filipinos, including elevated standards of taste, preference, and everyday living—basically due to higher wages and social trends. The condominium is one of many manifestations of upgraded standards of living that the younger workforce yearns to consider as part of the present norm, whether it be via direct acquisition or rental—the latter being cheaper and appealing. Hence, investments in a rental condominium business present a promising return. One supporting factor would be its strategic location in central business districts (CBDs), not just in Metro Manila and Cebu, but also in other parts of the country.

Central business districts (CBDs) continue to emerge beyond Metro Manila, providing an opportunity for industrial expansion, labor force growth, and demand for residential spaces. (Photos from Tatler Asia and ABS-CBN)

As of 2020, the Philippine Statistics Authority noted approximately 169,327 condominiums and condotels in existence—making up 0.7% of the country’s residential environment. With the emergence of transportation infrastructure development projects, it is possible that more and more CBDs will emerge along with the improvement of urban and rural linkages. This will likely lead to further demand for affordable housing options for the ever-dynamic workforce—rental condominium units included. Though long-term/contractual renting is proven to be a viable form of investing in real property, short-term rentals such as Airbnb have also proved to be efficient in generating income.

Given its resilient nature due to stable demand and its leniency in matters of legal ownership for Filipinos, dual citizens, and foreigners, a condominium unit can be a worthwhile investment.

The business process outsourcing (BPO) industry continues to be one of the main drivers of housing demand. (Photo from Contact Center Association of the Philippines)

Investing in condominiums: some things to keep in mind

Location will always remain crucial in determining the feasibility of a rental business. Though specific industries drive the demand for affordable housing options, other factors contribute to the viability of a condominium rental business. Other significant factors need to be considered when involved in such a venture.

Knowing the target market - If the potential tenants belong to the younger generation of the local workforce, be prepared to meet not just their practical but also their miscellaneous demands. Visual and spatial aesthetics are crucial; hence, a good investment in furniture—if the unit will be rented fully/semi-furnished—will be necessary. This will determine how attractive the unit will be to the younger generation.

The price must always be right - While expediting the return on investment is tempting, remember that the unit’s rental cost must be at par with the salaries of the active local workforce. In some cases, potential tenants may not only be those belonging to the workforce but also students who are still dependent on their parents. Hence, further understanding and adjustments are necessary. One may refer to fellow owners who also lease their units to determine the right pricing options for the rental unit.

Landlord’s obligations - Though a renting business often requires minimal supervision, a proprietor still has some responsibilities. These involve the overall maintenance of the unit and other government-related commitments, including those due to the developers/administration of the condominium.

Photo from ABS-CBN

Recommended steps in starting a condominium rental business

[Disclaimer: Please still seek the expertise and guidance of a licensed broker/agent and/or lawyer.] Compared to the purchase of raw land and apartments, prior area research need not be done since developers have already executed this beforehand, saving time and effort. While potential investors have already waived this entrepreneurial duty, the list below may serve as a guide to further understanding the industry. Seeking the expertise and guidance of a licensed broker/agent and/or lawyer is best for a smoother process. Furthermore, steps may vary per developer—some even have a dedicated leasing service for unit owners.

Though developers have already done area research, make sure that this resonates with potential tenants' needs. Pick a condominium that offers the best proximity to main roads and public transportation. Some developers tend to have unstrategic locations, which is a disadvantage for workforce clientele and students.

•Some condominium developers offer pre-selling options, which may be cheaper via discounts and other incentives.•A site/ocular visit would be beneficial for further pre-purchase assessment.

Photo from Inquirer.net

Once a decision has been made, express an interest in purchasing to a licensed broker/agent who will assist in the acquisition process. Alongside, it is also necessary to perform due diligence via the following:

•Verification of a developer’s reputation (which can be done through the Chamber of Real Estate and Builders’ Associations, Inc.)•Developer’s legal compliance (through the Department of Human Settlements and Urban Development)

Photo from JDipterocarpus via Wikimedia Commons

Determine the best financing option for the acquisition process. This can be a full cash payment, in-house financing (from the developers), a bank loan, or through Pag-IBIG. A reservation fee will then be necessary as a precursor to the following essential documents involved in the purchasing process:

•Photocopy of Government IDs•Proof of Billing•Proof of Tax Identification Number (TIN)•Marriage License (if applicable)•and others (may vary)

Photo from UNA Tax & Accounting Services

Making a formal offer with an agent/broker to purchase the unit/s for the acquisition will start the process—further negotiations may be possible. After an offer has been made, filling up a buyer information sheet, reservation application, and other documents will be needed.

•If the proprietor is not the one filling out and signing the documents mentioned, a Special Power of Attorney (SPA) will be required for their representative.

Taken from Paul Baes via Scribd

The different modes of payment must then be discussed with the agent/broker/seller. This may vary per context, especially if an external bank loan is involved.

•It is important to request a monthly account statement and payment schedule if the mode of financing has been made in-house (this may vary if an external bank loan/financing option is opted for).•If payment has been made in full/cash, skip this step.

Photo from Marek Ślusarczyk via Wikimedia Commons

While due diligence has already been done, it is still essential todouble-check/verify if the previous owner has fulfilled tax obligations (if the unit is not sold directly by the developer). Furthermore, note that if the previous owner has fulfilled the payment of past association fees due to the developer, this covers maintenance and other regular services for unit owners.

Photo from UNA Tax & Accounting Services

Once the verifications have been made, it is time to prepare, sign, and legalize the Contract to Sell (if payment has not been made in full) or the Deed of Absolute Sale (if payment has been made in full). This will then be concluded through a Condominium Certificate of Title. Other closing costs may include the following (may vary in the case of condominiums):

•Documentary Stamp Tax (1.5% of the purchase price)•Transfer Tax (equivalent to 0.5% of the purchase price)•Registration Fee (approximately 0.25% of the purchase price)

Photo from Nicolas & De Vega Law Offices

Once the purchase process has been made, determine and get to know the desired tenants. Though demand is undeniably surging, aligning with their expectations and budget is wise. Be it BPO employees or workers from other rising industries; it is wise to know the profile of the typical young urban professional.

Photo from Araneta City Facebook page

After determining potential tenants' typical demands, model the unit to their standards and perform other necessary forms of maintenance.

Photo from DMCI Homes

Once the unit is ready for occupancy, advertising via social media (or any other platform) will be necessary to look for tenants. Recommendations from friends, family, and even fellow condo unit lessors will significantly help.

Photo from solutions.rent.com

In the Case of Filipinos with Dual Citizenship

Unlike raw land and infrastructure, ownership of a condominium unit is not limited to citizenship. Hence, those with dual citizenship—even those who have acquired full foreign citizenship—may enjoy the privilege of legally owning a condominium unit in the Philippines.

On the developer's side, Republic Act No. 4726 (also known as the Condominium Act) provides a 40% cap on foreigners' overall ownership of units in a condominium project. Therefore, it is the developer's responsibility to ensure that this cap is strictly adhered to.

Photo from the Philippine Information Agency

Government and Non-Government Support in setting up a Condominium Rental Business

Some programs can help Filipino dual citizens, expatriates, workers, and even foreigners (via the PNB only) set up condominium rental businesses in the Philippines.

Land Bank of the Philippines (LandBank)

LandBank provides a specialized loan program for Overseas Filipino Workers, known as the Bahay para sa Bagong Bayani (3B) program. This program can be used for a myriad of residential property acquisition purposes, including land/lots.

More information about the 3B Program can be accessed here: https://www.landbank.com/loans/personal-loan/housing-and-mortgage-loan-program/bahay-para-sa-bagong-bayani-3b

Philippine National Bank (PNB)

While the PNB offers a general housing loan program, there is a specialized loan catering to overseas Filipinos and non-Filipinos (for condominiums only) who want to own residential property in the Philippines. The Own a Philippine Home Loan (OPHL) provides a maximum of 80% of the appraised property/contract price value. While the program’s name focuses on home acquisition, it also covers the purchase of residential lots.

The OPHL can be availed whilst overseas via the PNB’s overseas offices/branches in Los Angeles, New York, Singapore, Hong Kong, Japan, the Middle East, Guam, and Europe.

For more information about the OPHL, please refer to the following links:

•https://www.pnb.com.ph/index.php/eu-ophl?tpl=revamp#faqs-eu•https://www.pnb.com.ph/index.php/loans-and-investments/own-a-philippine-home-loan•https://www.pnb.com.ph/wp-content/uploads/docs/FAQs_OPHL.pdf

Benefits, Challenges, and Possibilities

In ensuring a condo rental business’ return on investment, it is wise to remember its benefits (CO), challenges (ND), and future possibilities (O):

CHEAPER ACQUISITION

Condominium developers tend to provide discounts on their units if a purchase is made before completion. While some market prices on condominiums tend to be overwhelming at first, their return on investment makes them an ideal venture, given their infallible demand at present.

OBVIOUSLY, MANY ACTORS AND INDUSTRIES DRIVE OCCUPANCY RATES

While there are initiatives to connect with the provinces, the urban setting remains resilient in the demand for residential spaces—especially for mid- to luxury-standard rentals, like condominiums, among the young workforce.

NEGLECT IN DEMAND FOR CONDOMINIUM RENTALS IS POSSIBLE

This can only be possible if a significant increase in unemployment rates is observed. Still, it is unlikely to happen, given the continuous expansion of BPO companies and other industries in the Philippines.

DAMAGES TO A UNIT’S QUALITY WILL LIKELY HAPPEN, ESPECIALLY DURING EARTHQUAKES

While this may look like a liability on the unit owner’s part, resolutions for this can often be under insurance—a separate element from the purchase process.

OWNERS OF CONDOMINIUM UNITS ARE LIKELY TO ACQUIRE MORE FOR EXPANDED RETURNS ON INVESTMENT

Taking advantage of the contemporary unit surplus would be a strategic move to prepare for a possible surge in demand in the coming years.

Information Sources

Arriola, A. (2024, September 26). History of Business Process Outsourcing (BPO) in the Philippines. Codev. https://www.codev.com/article/history-bpo-philippines/#:~:text=The%20business%20process%20outsourcing%20(BPO,bolster%20the%20BPO%20industry's%20growth.

Condo Purchase Guidance for U.S. Citizens in the Philippines: Everything You Need to Know. (2025, February 7). Respicio & Co. Law Firm. https://www.respicio.ph/commentaries/condo-purchase-guidance-for-us-citizens-in-the-philippines.

Condo Purchase Process in the Philippines: A Step-by-Step Guide. (n.d.). Richest Philippines. https://richestph.com/condo-purchase-process-in-the-philippines-a-step-by-step-guide/.

Eight condo-renting tips for Filipino millennials. (2023, March 8). BPI. https://www.bpi.com.ph/about-bpi/news/eight-condo-renting.

5 Tips in Buying a Condominium Unit. (n.d.). Philippine National Bank. https://www.pnb.com.ph/index.php/tips-in-buying-condominium-in-philippines.

A history of the BPO industry in numbers. (2015, July 2). Rappler. https://www.rappler.com/brandrap/profiles-and-advocacies/98207-bpo-philippines-timeline/.

Housing Characteristics in the Philippines (2020 Census of Population and Housing). (2023, May 10). Philippine Statistics Authority. https://psa.gov.ph/statistics/population-and-housing/node/1684059631.

How to Start a Condo Rental Business in the Philippines. (2022, April 22). Citi Global Realty & Development, Inc. https://citiglobal.com.ph/blog/start-condo-rental-business-philippines/.

Lemke, D. (2021, October 4). A Guide to Buying a Condo in the Philippines. Crown Asia Properties. https://www.crownasia.com.ph/lifestyle-blog/step-by-step-guide-to-purchasing-a-condo-in-the-philippines/.

10.

Pearce, D. (2023, August 15). Business Process Outsourcing (BPO) in the Philippines: An Historical Timeline. Platinum Outsourcing. https://platinumoutsourcing.com.au/business-process-outsourcing-bpo-in-the-philippines-an-historical-timeline/.

11.

Pido, E. J. (2016). Return Economies: Speculation and Manila's Investment in Durable Futures. Verge: Studies in Global Asias, 2(1), 51-57. JSTOR. https://www.jstor.org/stable/10.5749/vergstudglobasia.2.1.0051.

12.

Property Ownership for Foreigners in the Philippines: A Comprehensive Overview. (2025, February 27). Respicio & Co. Law Firm. https://www.respicio.ph/commentaries/property-ownership-for-foreigners-in-the-philippines#:~:text=Condominium%20Units%20%E2%80%93%20Under%20the%20Condominium,project%20does%20not%20exceed%2040%25..

13.

Republic Act No. 4726. (1966, June 18). Supreme Court E-Library. https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/2/7243.

14.

Responsibilities of being condo unit owners. (2023, February 24). BPI. https://www.bpi.com.ph/about-bpi/news/condo-unit-owner-responsibilities.

15.

7 Tips on Starting a Condo Rental Business in the Philippines. (n.d.). DMCI Leasing. https://leasing.dmcihomes.com/blog/starting-condo-rental-business-philippines/.

16.

10 Considerations when starting a condo rental business. (n.d.). Asterra. https://www.asterra.com.ph/articles/blog/10-considerations-when-starting-a-condo-rental-business/.

Photo Sources

https://www.scribd.com/document/670263649/BUYER-S-INFORMATION-SHEET