Investment in Philippines?
Question from Laurie Turnbull updated on 3rd August 2012:
I am living in Napier and my wife is from the Philippines, we have a block of land on Boracay Island. I am looking to build a three level block of units that will be sold to investors off the plan. I would then use this money to build the units. I have all the information from the Filipino Government based on expats investing in property, so no worries there. The units would be managed by our company and rented to tourists 11 months of the year with the owner having the month for their purposes/holiday. The question is what is the best way to promote this opportunity?
Our expert Ron Hoy Fong responded:
Sorry but no comment purely because I don't advocate investing overseas. I see most of these types of investment more as "emotional investments" and "speculative investing". Speculation to me is "gambling". An investor gets the benefit of a one month holiday at the loss of potential rent. Management fees and seasonal vacancies are often the killer of any profits with control in the hands of the majority shareholders. Huge loses can be incurred in the currency ex-change rates. Give me good old "kiwi home ownership" where I have my own control to make my own informed decisions.
My advice would be to sell the block of land, save on your development money and use it as a deposit on a property in New Zealand. We are at the start of the next "property boom cycle" having just gone through the "recovery period" (i.e. Auckland, Christchurch and Wellington property prices are back to where they were in the peak year of 2007).
I have seen too many investors buy off the plan only to lose their shirts when the developer went broke. Builders can go broke through strikes, governments change political stances, banks may pull the plug, interest rates change or just the cost of construction goes up.
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