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Fil-Ams contribute to Philippine real estate boom!
04/29/2006
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Eighteen months ago, Luis Butay, a Hawaii businessman, bought 17.3 acres of farmland in his native country of the Philippines for about $128,800. Now it's worth almost three times as much. A real estate boom and government incentives have persuaded a growing number of Filipino-Americans to invest in their birth land. The "sick man of Asia " is finally seeing economic growth after decades of martial law, regulated industries and political instability. |
The number of returning balikbayan -- those born in the Philippines with citizenship overseas -- has almost tripled since 1981, when 57,798 came back. Last year that number reached 142,753, according to the Philippine Department of Tourism.
Although foreigners cannot own property, the amount of rural land balikbayan can purchase was tripled last year to three hectares, the equivalent of about 71/2 acres. The government also increased the amount of urban land balikbayan could own to 5,000 square meters (6,000 square yards).
"Balikbayan can realize 100 percent profit in one year," said Reynaldo Duterte of RP Duterte Realty in Manila.
"Filipino Americans should look here to invest and retire."
Land in the provinces, including the Ilocos region where most Filipinos in Hawaii were born, is still affordable and a good investment, Duterte said. "Prices won't go down but maybe slow down," said Duterte, past president of the Real Estate Brokers Association of the Philippines. Still, he predicted at least 20 percent to 30 percent annual growth for the next five years in the provinces.
The longer-term value of agricultural land will depend on the infrastructure that develops around it, economists say. And that's something you can't count on yet in the Philippines.
Butay, owner of Loulen Hawaii Sports Wear and part-owner of Crown Court Restaurant, is keeping an eye on real estate in provinces like Ilocos Norte.
"I've seen the economy improve every year," Butay said. "The middle class is starting to grow. My friends are rich. The shopping centers are much better here than in Hawaii and the mainland."
Butay bought his property, located in the provinces of Batangas and Quezon southeast of Manila, with other family members.
He uses it to raise chickens -- a profitable business, he said, because the Filipino middle class is more health-conscious about red meat. More poor also can afford to buy it now.
Manny Valin, a Hawaii tax consultant, bought 15 hectares (37 acres) of Batangas land in 1993 with a Philippine partner and plans to house 150,000 chickens in the first stage.
Ten years ago, he probably wouldn't have considered buying land here. But now Valin knows others in Hawaii who also are considering it. Rose Churma, president-elect of the Filipino Chamber of Commerce of Hawaii, also said there is growing interest in doing business in the Philippines.
According to the Philippine Department of Tourism, real estate prices started rising about five years ago, Duterte said. But they "went wild" after the sale of land in the military's Fort Bonifacio triggered prices in nearby Makati, and real estate values now sound like the kind you hear in Waikiki.
The skyline of Makati, the financial hub of the capital, is laced with tall cranes and bamboo catwalks, and the always-congested traffic is even worse because of heavy construction. Inch your way a few miles down the city's main artery known as Edsa to the headquarters of the Asian Development Bank, once the only business complex in Ortigas Center. Now a high-rise city surrounds it. And Manila 's megamalls are some of the biggest in Asia.
Values in some areas have multiplied five to 10 times: Makati property that sold four years ago for 100,000 pesos, or $4,000 (25 pesos to the dollar) per square meter now goes for 450,000 pesos, or $18,000 per square meter. A square meter equals 1.2 square yards.
The boom spreads in all directions into the countryside. Once-
tranquil rice paddies and carabao paths are now subdivisions and industrial zones.
Agricultural land north of Manila in La Union, Pangasinan, Nueva Ecija and the Ilocos provinces still sells for 40-80 pesos per square meter, Duterte said.
Cebu is one of the fastest-growing areas. Even in the southern island of Mindanao, which has suffered years of Moslem insurrection and kidnappings, prices are skyrocketing.
Deregulation that allowed foreign banks into the Philippines has loosened up the property market, Duterte said. Interest rates for home and condo loans used to run 27 percent-40 percent but have dropped to 15 percent-17 percent. Most people, however, still pay with cartloads of cash.
Foreigners without Philippine partners are prohibited from buying land but can purchase condos, government officials said.
But constantly changing foreign investment laws and a court system that favors Filipinos still throw up red flags for foreign investors, Duterte said.
Butay agreed that doing business isn't easy in the Philippines because of government red tape, corruption and payoffs in return for security. But with the minimum daily salary in the Philippines roughly equivalent to the minimum hourly wage in Hawaii, and with an educated, hard-working and English-speaking work force, the advantages outweigh the problems. He's planning to open two restaurants.
Specialty of the house: chicken.
Source: Honolulu Star-Bulletin
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