Published: March 23, 2017 | Updated: April 15, 2020 | Posted by: Kyle Kam | Personal Finance
Note: This article is a guest post from Zipmatch.com, an online real estate marketplace in the Philippines that aims to empower home ownership.
What makes a condo, townhouse, or house and lot for sale in the Philippines a good investment? Any real estate broker or agent will tell you that a good investment property is the one that offers a high rental return, in the shortest possible time period.
In this article, we will discuss how to compare the best properties in Metro Manila using the rental yield concept. By definition, rental yield is how much rental income a condo, townhouse, or house and lot produces each year as a percentage of that property’s value. The formula is as follows:
Now, why should you determine the rental yield for a specific property? This is because rental yield helps you determine how fast you can recover your investment in that specific property. A higher rental yield means that you can recover your investment in the property faster and generate more profit after it has been paid off.
The Data Science Team at ZipMatch took a look at the most investment worthy properties in Metro Manila in terms of rental yield. In the next paragraphs, we demonstrate how we use rental yield as one of the factors to rank which properties in Metro Manila are worth your investment. The Data Science team evaluated one year’s worth of sale and rental listing data on ZipMatch.com to get an estimated average of rental yields for projects in top cities within Metro Manila.
In the next image, we highlight the top condo, townhouse or house and lot units in Metro Manila with the highest rental yield.
|Quezon City||Olympic Heights||Eastwood City||Megaworld||8.95%|
|Quezon City||Victoria Station 1||Diliman||New San Jose Builders Inc.||8.78%|
|Quezon City||The Avenue Residences||8.73%|
|Quezon City||Trees Residences||SMDC||8.64%|
|Quezon City||Grass Residences||SMDC||8.57%|
|Pasig City||Hampton Gardens||Maybunga||Dynamic Realty & Resources Corporation||10.29%|
|Pasig City||East Raya Gardens||San Miguel||DMCI||9.75%|
|Pasig City||The Pearl Place||Ortigas Center||Robinsons Land||9.50%|
|Pasig City||Goldland Millenia Tower||Ortigas Center||Goldland Properties||9.38%|
|Pasig City||The Prime Condominium||Kapitolyo||Almayo Ventures Construction and Development Corporation||9.37%|
|Manila||Alpha Grandview Condominium||Malate||KSY Land Development Corporation||9.58%|
|Manila||The Grand Towers||Taft Avenue||Moldex Realty Incorporated||9.23%|
|Manila||8 Adriatico||Malate||Eton Properties Philippines, Inc.||9.15%|
|Manila||Three Adriatico Place||Malate||Robinsons Land||8.43%|
|Manila||Sorrel Residences||Sta. Mesa||DMCI||7.06%|
|Makati City||Cityland Pasong Tamo||Cityland Development Corporation||11.78%|
|Makati City||Makati Prime Tower Suites||Bel Air Village||10.76%|
|Makati City||Belton Place||San Antonio Village||Eton||10.46%|
|Makati City||The Palm Towers||10.21%|
|Makati City||Cityland Makati Executive Towers||Cityland Development Corporation||10.00%|
|Taguig City||Cypress Towers||DMCI||9.77%|
|Taguig City||Ridgewood Towers||C5 Mansions Development Corporation||9.38%|
|Taguig City||Icon Plaza||Fort Bonifacio Global City||Xcell Property Ventures Inc.||9.08%|
|Taguig City||Sapphire Residences||Fort Bonifacio Global City||G & W Architects||8.44%|
|Taguig City||Fort Palm Spring||Fort Bonifacio Global City||First Global BYO Corporation||8.28%|
|Paranaque City||Avida Towers Sucat||Avida||9.26%|
|Paranaque City||Azure Urban Resort Residences||Century Properties||8.76%|
|Paranaque City||Siena Park Residences||Bicutan||DMCI||8.64%|
|Paranaque City||Raya Gardens||DMCI||8.52%|
|Paranaque City||Chateau Elysee||SMDC||8.23%|
|Mandaluyong||California Garden Square||Empire East||10.43%|
|Mandaluyong||Gateway Regency||Robinsons Land||9.47%|
|Mandaluyong||Tivoli Garden Residences||Hulo||DMCI||8.64%|
|Mandaluyong||Pines Peak Tower||Brgy. Barangka||Cityland Development Corporation||8.48%|
|Pasay City||150 Newport Boulevard||Newport City||Megaworld||10.10%|
|Pasay City||Shell Residences||SMDC||9.38%|
|Pasay City||Bay Garden Club and Residences||Federal Land Inc.||7.66%|
|Pasay City||Sea Residences||SMDC||7.24%|
|Pasay City||Parkside Villas||Newport City||Megaworld||7.09%|
Overall, real estate in the Philippines have good rental yield at an average of 6-7%. That’s a good range compared to its neighboring countries in SE Asia. India, for example, has an average of 2-3% rental yield. Based on data found in ZipMatch.com, rental yields for the best properties in key Metro Manila cities go no lower than 7% and can go as high as 11.78%.
Makati City properties lead the rankings with the highest yield, which came as no surprise. Cityland Pasong Tamo (11.78%), Makati Prime Tower Suites (10.76%), and Belton Place (10.46%) prove that a piece of real estate in the Philippines’ financial center will yield the best return on investment.
Interestingly, there are affordable properties in underrated Metro Manila locations with notably high rental yields– Hampton Gardens in Maybunga, Pasig (10.29%), California Garden Square (10.43%) and Dansalan Gardens (10.21%), which are both in Mandaluyong. If you’re really curious as to why they have high rental yield rates, you can take a look at their neighborhoods, the amenities, facilities, or privileges tenants have access at these properties, affordability, unit cuts, and property appreciation rates in their neighborhoods.
Computing rental yield for a specific property and comparing it to your other prospective ones can certainly help you determine which is a good investment.
On the other hand, go beyond comparing rental yields if you happen to have two prospective properties (or more) that you really can’t make a decision on. Run the numbers and determine the implications of investing in a property that’s located in a specific neighborhood, have these numbers, and type of amenities.
Don’t forget to also run the financial and tax implications, including whether you can afford it well after you purchased the property. Sure, a Makati property will always yield the best return, but if you’re under a limited budget, you can always be creative by looking at below-the-radar locations for affordable properties that will give you a maximum return on investment.
Rizza Sta. Ana is a guest contributor from ZipMatch.com, a real estate marketplace for home seekers and property sellers.