Remittances sustain demand for real estate in the Philippines

The sustained inflow of remittances from overseas Filipino workers (OFWs) has sustained the demand for real estate projects, particularly in the residential and retail segments, according to a report by SunStar.

"We have noted that OFW households have partly driven the take-up for affordable to lower mid-income residential unit prices from P2.5 to P7 million per unit," said property advisory firm Colliers Philippines.

Money sent home by OFWs in 2023 reached an all-time high of US$37.2 billion, a three percent increase from $36.1 billion in 2022.

According to the Bangko Sentral ng Pilipinas (BSP), the robust inward remittances reflected the rise in the deployment of OFWs due to the continuous increase in demand for foreign workers in host countries.

The full-year 2023 remittances represented 8.5 percent and 7.7 percent of the country's gross domestic product and gross national income, respectively.

"The continued OFW inflows should also help purchasing power, and this should boost retail spending, especially for a consumption-driven economy like the Philippines," Colliers noted.

On a year-to-date basis, cash remittances reached $33.5 billion in 2023, a 2.9 percent growth from $32.5 billion in 2022.

The United States, Saudi Arabia, and United Arab Emirates were the main contributors to the increase in remittances in 2023.

Real estate stakeholders in Cebu are banking on the steady and strong inflow of remittances to fuel Cebu's property sector.

Filipino Homes founder Anthony Gerard Leuterio said OFWs continue to be the primary market for real estate.

"They are increasingly looking at investment income opportunities, and real estate is one of them," said Leuterio.

Leuterio said real estate stands as one of the primary purchases made by OFWs with their hard-earned money.

"Condominium remains the top choice, especially for Cebu City, whose prices of raw land now stand at P100,000 to P180,000 per square meter," he said.

"Condo and city living will be more pronounced in 2024 unless buyers would want to endure the traffic congestion. Then they can settle in nearby towns of Cebu and buy house and lot properties," Leuterio added.

2024 Survey

According to the BSP's latest Consumer Expectations Survey, however, the percentage of households that plan to acquire real property within the next 12 months decreased to 4.8 percent from 7.7 percent in the third-quarter 2023 survey results.

In particular, a lower percentage of households plan to acquire residential lots and condominium units compared to the previous quarter.

When asked about the price range of real properties that they intend to purchase in the next 12 months, the majority (51.1 percent) of the households indicated a range of P450,000 and below.

Meanwhile, 29.9 percent and 19 percent of households plan to buy a house and/or lot worth P450,001 to P1,700,000 and P1,700,001 and above, respectively.