As we continue to navigate the ever-changing landscape of a post-pandemic world, one thing remains constant: Overseas Filipino Workers (OFWs) play a significant role in shaping the country’s economy. As such, it’s no surprise that the fluctuations in their remittance inflows have had ripple effects on various industries – including real estate.
The Filipino diaspora has been making waves yet again as Overseas Filipino Workers (OFWs) have shattered records with their remittances in 2022. But what does this mean for the Philippine real estate industry?
From bustling metropolises to idyllic provinces, let’s dive into how OFW money is driving change in the country’s housing landscape.
The role of OFW remittances in the economy
In 2022, Bangko Sentral ng Pilipinas estimated that the remittances to the country reflected that year was at $32.65 billion. An increase of 3.4% in cash remittances coursed through Bangko Sentral ng Pilipinas from 2020 of the same period and was a significant increase from the year before. This is largely due to the continued rise in the number of Filipinos working abroad, with more than 2.4 million Filipinos currently employed in Saudi Arabia, Europe, and the United States.
In addition, the Philippine economy has been strengthening, with GDP growth reaching 9.2% in 2022. This has led to an increase in the remittance inflows from other countries in the region, such as Singapore, Malaysia and Thailand from foreign workers amid a global crisis.
Robust inward remittances play a vital role in the Philippine economy. They contribute to economic growth and help reduce poverty. They also provide foreign currency and help improve the balance of payments.
The majority of remittances come from Filipinos working in host countries like Saudi Arabia, United Arab Emirates, Qatar, Kuwait, Singapore, and Hong Kong. These workers typically send money to support their families back in the Philippines.
The effect on the real estate market
OFW remittances have also had an impact on the real estate market in the Philippines. The Filipino overseas foreign workers are a major source of demand for property, both for investment purposes and as a place to live when they return home. Its impact on the real estate market is evident in several ways.
For one, it helps boost demand for property, as more and more Filipinos are now able to afford their own homes. This, in turn, drives up prices and makes investment in real estate more attractive. Moreover, it also contributes to the development of infrastructure and amenities necessary for a thriving real estate market.
For instance, they help finance the construction of roads, bridges, and other transportation facilities that make it easier for people to move around and access properties for sale or rent.
They also support the development of commercial establishments such as malls and restaurants near residential areas, making these locations even more desirable places to live in.
All in all, it plays a significant role in driving the growth of the Philippine real estate market. With their continued inflow, we can expect this trend to continue in the years to come.
What does this mean for real estate investors?
For starters, remittances are a major source of foreign currency for the Philippines. This inflow of foreign currency helps support the value of the Philippine Peso, which is important for real estate investors who are looking to purchase property in the country.
The most immediate impact of OFW cash remittances and personal remittances on the real estate market is likely to be felt by those who invest in properties that cater to overseas Filipino foreign workers or their families. These include condominium properties, subdivisions, gated communities, and other types of housing that are marketed specifically to this demographic.
In the short term, the increasing demand for these properties is likely to increase as more OFWs look to invest their money in safe and stable assets. This could lead to an appreciation in prices and higher rental yields for these types of properties.
In addition, OFW cash remittances help drive economic growth and create jobs in the Philippines. This increased economic activity can lead to higher demand for housing and office space, which is good news for real estate investors.
Finally, OFW cash remittances also help improve the quality of life of Filipinos. As more Filipinos are able to access basic services and amenities, this will likely lead to increased demand for better-quality housing. This could present an opportunity for real estate investors to develop market-driven housing projects that cater to this growing market.
Steps to take when thinking of investing
The first step is to assess the property, any new construction projects, and local zoning laws. You should also assess the local infrastructure and transportation services to determine if it would be a desirable place for potential tenants or buyers.
Once you have determined what size and type of property is suitable for your needs the next step is to locate a real estate agent who specializes in OFW buyers. These agents can help guide you through the process of buying and selling properties in an area that will best suit your needs.
It is important to consult with an experienced real estate advisor who can guide you through the entire investment process. They can help you identify potential risks and opportunities, and provide you with the necessary resources.
Another important step is to prepare your finances for the purchase. You should work out how much you can afford to invest, which is important because it will determine the size of the property you can afford to buy.
Finally, it is important to research the market and understand the current trends in the area. This will help you make an informed decision about your investment.
Overseas Filipino Workers | Cash Remittances
Overall, OFW remittances have a huge effect on the real estate market. This is especially true in countries where there are large numbers of overseas Filipino workers, such as the Philippines.
With more money coming into the country it can help boost economic development and create jobs and opportunities for people who may not be able to find them otherwise.
It also helps increase demand for housing and other types of property investments from foreign buyers which in turn increases prices and boosts the local economy. The outlook for it looks positive going forward which should provide an excellent opportunity for those looking to invest in real estate or even just buy a home of their own to reside in.