Did you know the fact that the price of a new real estate property drops at the moment of its purchase in Japan?
For instance, if you buy a brand new real estate in the suburbs of Tokyo, the price would fall more than 5,000,000 yen in 1 year, become half the price in 10 years, and finally end up with one third of the original price in 20 years. This is caused by dropping of land price, as well as the low
valuation of old buildings by Japanese banks, as the Central Bank regulates bank loans to be based on the residual life of the building provided by income tax law, which is relatively shorter than actual useful life (e.g. 22 years only for a rental house).
However, it is not rare that the price of the second-hand property goes up beyond its original price at the time of purchase, because there are various reasons such as the continuous increase in land price fueled by the economic growth in other Asian countries and the valuation of properties are less likely to drop. It is not a rare case that a house was sold at the price 10% higher than its purchase price when it was sold after 2 years from its construction.
Of course there are some areas in Japan where the value of the property does not drop. They are called 3A - Azabu, Aoyama, and Akasaka in Tokyo. It is generally believed that the prices of the premium properties such as “Hiroo Garden Hills” would not drop or may even rise so there are many people who invest and buy properties in these areas. A highly-valued property in 3A areas could easily cost over 100 million yen. However, it is possible to purchase a 3A-equivalent property for 10 million to 30 million yen (also possible to get financing under certain condition) in emerging economies. We recommend especially the Philippines as such country.
Japanese people might not have a very positive impression upon the Philippines.
But it is worth knowing the possibilities that the Philippines can offer by increasing our knowledge of the country.
The Philippines is a country that overcame political crisis in the 80’s and continues to grow economically since the late 90’s. It is the only English-speaking country in Southeast Asia and the majority of the population is Christian.
Politically the Philippines used to be colonized by the United States, is under the strong influence of the United States even up to these days. The Philippines has obtained constant supports from the U.S. government and the Japanese government under the U.S. leadership throughout its difficult times. You might be surprised but the Philippines are also known among Americans as one of the secure investment destination among the emerging market.
Why do Japanese have a negative impression about the Philippines? It is because English is not widely used in Japan. In the Philippines, the people speak English besides their native language Tagalong in everyday life so the Filipino people usually choose to migrate to English speaking countries. Due to language difficulties, several Filipinos can only find opportunities to work in the red light district. It is also noted that the areas where Japanese men can meet their type of women are often located in areas not generally considered safe in the Philippines.
The average income of Filipino immigrants abroad is 20,000 U.S. dollars. The remittance received by their family members in the Philippines enable them to live a comfortable life without working. The Overseas Filipino people say that they might not be able to buy a property but they can afford to rent a high-class condominium for their family. There are also increasing demands from expatriate employees working in Muslim countries in Southeast Asia. Since the Philippines is the only English-speaking Christian country in this area, some of them choose to locate their wife and children in the Philippines while the husband is working in the above Muslim countries. Due to such various reasons, the vacancy rate is always less than 4 % in the metropolitan area such as Makati.
Who can afford a condominium which costs minimum of 8 million yen where the average income is 1,800 dollars? There are 3 answers for the question:
1. Foreigners who purchase it for investment purpose
2. Filipinos who migrated overseas purchase it for investment purpose
3. Filipinos who migrated overseas purchase it for their family remaining in the Philippines
It is common for Filipinos who migrated overseas to support their family members left in the Philippines financially since they have strong family bonds.
The Philippine economy, which had been sluggish due to its political setback in the 1980s, has been growing at a steady rate during the past 10 years.
The economic growth rate of the Philippines rank second after Malaysia in East Asia. Backed by the spur on growth rate, the rental yield is currently 8 % or above.
Moreover, the Philippines are attracting investments from English-speaking countries due to its low labor cost and its future potential growth. The international financial services group, JP Morgan, has chosen the Philippines as its world base for it is an English-speaking country.
There are about 10 million Filipino living outside the country, a little over 1 million people in Saudi Arabia, about 530,000 in United Arab Emirates, about 460,000 in Canada, (202,557 in Japan, 8th classified by countries). The total population of the Philippines is 92 million, implying that over 10 % of the citizens live abroad. The income gap between outside and inside the country is more than 10 times. The citizens who work overseas have a major role in supporting the Philippine economy.
[Filipino in the Philippines] 92 million x 1,800 U.S. dollars per capita income = 165.6 billion U.S. dollars
[Filipino overseas] 10 million x 20,000 U.S. dollars per capita income = 200 billion U.S. dollars
Money remitted from Filipino’s living abroad is one of the economic foundations of the Philippines. For that reason, the Philippines are also aggressive in attracting investment from overseas.
However, foreigners can only buy condominiums and not land. Overseas investment tends to concentrate on high-end condominiums, thus, there exists a high possibility of price increase for the second-hand real estate properties. It can be said that success rate for investing in the luxury condominiums is high.
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Special Resident Retiree’s Visa (SRRV)
You can obtain the residency right if you acquire the Special Resident Retiree’s Visa (SRRV). In the Philippines, it is a distinctive characteristic that the acquisition of SRRV is easier than other countries.
With this SRRV, you can get more advantageous credit line. It is possible to obtain SRRV if an applicant is 35 years old or above with 50,000 U.S. dollars or above deposited at a bank specified by the Philippine government.
Amount of deposits required for SRRV
| 50 years and above |
20,000 U.S. dollars |
| 35 to 49 years old |
50,000 U.S. dollars |
| 50 years and above with a pension |
10,000 U.S. dollars |
| If a person brings more than 3 family members, per additional 1 member |
15,000 U.S. dollars |
A person who used to hold Philippine nationality
(no limit for the number of company) |
1,500 U.S. dollars |
Jumping into buying a real estate property overseas can be a tough challenge.
MSJ is prepared to eliminate all of your worries and established a secure support system so you will feel secure to purchase properties.
MSJ will provide support to the clients in Japan and China and local support will be performed by iCube, Inc. With our reservoir of knowledge and experience, the two companies will answer to all the questions based on our broad knowledge and experiences.
MSJ is a licensed real estate transaction specialist specializing in Chinese and Japanese real estate transaction. It has been often given media coverage by Japanese real estate media for its extensive knowledge on international real estate transaction.
iCube, Inc. is a licensed real estate brokerage company run by a Japanese CEO with a Japanese Certified Public Accountant (CPA) license. iCube not only specializes on real estate but also offers total support from remittance between Japan to the Philippines to negotiations with banks from the perspective of an accountant.
- ・Copy of your passport’s picture page
- ・Fill up the application form of the developer
- ・- Other documents may be requested by depending on the developer
In addition, the following cost is required for purchasing a new real estate;
Real estate transfer tax 0.5 to 0.75%
Real estate registration fee 0.225 to 0.5%
