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Philippines Rental Market: New Regulations and Investment Opportunities Amidst Economic Growth


Date: January 25, 2024

In a recent announcement, the Department of Human Settlements and Urban Development (DHSUD) in the Philippines unveiled new measures to regulate residential rental rates, focusing on providing relief to lower-income families. The National Human Settlements Board has approved a 4-percent increase cap for monthly residential rental rates of P10,000 and below, effective from January 1 to December 31, 2024. The move aims to prevent unwarranted rental rate hikes and is a part of the government's ongoing efforts to encourage affordable housing.

Regulation for Tenant Protection:

  • The DHSUD's decision, outlined in NHSB Resolution No. 2023-03, reflects a commitment to tenant protection. Undersecretary Henry Yap, representing DHSUD Secretary Jose Rizalino Acuzar, highlighted that the rental cap was based on empirical studies, including the annual family income and expenditure survey and census of population and housing. The move aligns with Republic Act No. 9653, or the Rent Control Act of 2009, which seeks to protect tenants in lower-income brackets from unreasonable rent increases.

Stability in the Philippine Property Market:

  • While the government focuses on protecting tenants, foreign investors and property buyers may wonder about the current state of the Philippine property market. The country is currently experiencing a period of vulnerability and fragility, with a low Fragile State Index of 80.5. This fragility is attributed to factors such as susceptibility to natural disasters, limited access to resources, and socio-economic disparities.

Positive Outlook for Economic Growth:

  • Despite the current challenges, there is optimism regarding the Philippine economy. The International Monetary Fund (IMF) predicts a growth rate of 6% for 2023 and 5.8% for 2024. Key drivers of this growth include strong consumer demand, a vibrant labor market, and robust remittances. The World Bank emphasizes the growth in urban household incomes, providing a favorable environment for property investment.

Business Confidence Index and Local Sentiment:

  • In addition to foreign forecasts, the Business Confidence Index (BCI) provides insights into local sentiment. The Bangko Sentral ng Pilipinas reports a high BCI score of 42 for the Philippines, indicating strong confidence among business leaders. This positive sentiment is attributed to business-friendly policies implemented by the government, creating an environment conducive to economic growth.

Investment Opportunities Amidst Confidence:

  • The high Business Confidence Index is a positive sign for property investors, suggesting a thriving economy with increased job opportunities and higher incomes. Local businesses radiate confidence, indicating a higher demand for properties. This favorable climate provides an opportune time for investors to earn rental income and potentially witness property values appreciate over time.

As the Philippine government introduces rental regulations to protect tenants, the property market remains a dynamic landscape with both challenges and opportunities. Foreign investors should carefully weigh the regulatory environment and economic indicators to make informed decisions. The positive economic outlook and business confidence index provide a promising backdrop for those considering real estate investments in the Philippines.




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