The Philippines has an inimitable charm to it, with its 7,641 islands, of which only about 2,000 are occupied. It is not new for foreigners to fall in love with the country and hope to buy an island in the Philippines. Located between the South China Sea and the Philippine Sea and surrounded by Vietnam, Sabah, and Borneo, one can just imagine the beauty that a Philippine island has. Boasting of thousands of miles of beaches and pristine coastlines, the region is sure to have an island that will suit every taste, lifestyle, and budget.
How to Buy an Island in the Philippines
Locals can buy an island in the Philippines in the same way as they would buy land. Former Filipino citizens can also take ownership but they have several restrictions mandated by the Batas Pambansa 185 and the Republic Act No. 7042 (amended by RA 8179).
Foreigners cannot buy an island in the Philippines. However, several options are available that will allow foreigners to gain access to some of the region’s prized jewels. This will allow investors to choose from an abundance of islands with its unique character to suit their taste and budget.
The islands of the Philippines are national assets. Therefore, land ownership is only possible for locals. Foreigners who want to gain ownership can only do so by:
Marriage. Foreigners married to a Filipino can buy an island but the title will be under the spouse’s name. The foreigner can only inherit the property if the spouse dies. Their children, even if they are not Filipino citizens, can also inherit the property.
Buying a Condo in an Island. Foreigners can have a taste of island life if they purchase a condo unit on the island of their choice since they can own up to 40% of the development.
Become a Naturalized Citizen. Foreigners who want to live in the Philippines can become a naturalized Filipino. Through which, they receive all the rights a local has.
Through Leasehold. In the Philippines, a leasehold through incorporation is possible for foreigners. For privately-owned islands, the foreigners can lease the properties for 50 years and renew for an additional of 25 years. However, for government-protected islands, the lease is up to 25 years with renewal for another 25 years. Note that corporations cannot develop islands for commercial purposes if the square footage is less than five hectares.
The company must have a Filipino incorporator who will own 60% of the company and the property.
Real Estate Market in the Philippines
More recently, the Philippines became the hotspot for foreign property buyers in Asia. Thanks to its rising middle class and favourable demographics roused the interest of investors. The country’s strong economic growth fuelled the real estate market boom. As a result, property prices continue to rise steadily. Rental yields for luxury condos in the Philippines average at 5.3% according to Collier’s report. In the past two years, an increase in rents in residential properties was not significant but Collier forecasts a 1-3% increase by 2020.