Decline in OFW purchases of condominium due to inflating taxes

 

 

 Participation  of Overseas Filipino Workers (OFWs)  in Philippine condominium investment has softened materially as they are shifting to  offshore condominium markets.

 

PRIME Philippines  recently  presented a 10-year property market review and multi-year projections during the 2026 Annual Outlook and Media Briefing at Grand Hyatt.

 

PRIME Philippines is the fastest growing real estate service company in the country consistently providing effective integrated real estate solutions to developers, investors, occupiers, land bankers, and other clients.

 

PRIME reported that residential condos are now end-user led, not investor-driven.

 

Investor demand has softened due to compressed rental yields, muted capital appreciation over recent years, and heavy taxes imposed on transactions which structurally weaken condo investment returns.

 

Inflated zonal values ranging from 20-30%  have increased transaction costs through inflating taxes and fee bases.

 

 For ordinary assets used to generate income , taxation erodes roughly 36% of revenue,  30% of which are government taxes.

 

The usual costs include   Value Added Tax (17%), Capital Gains Tax (8%), Broker’s Commission (4%), Documentary Stamp Tax (2%), Association Dues (2%), Real Property Tax (2%), Transfer Tax & Registration Fee (1%).

 

 Higher interest rates weaken borrowing capacity and reduces  mortgage affordability for end-users.

 

PRIME noted that  an estimated 2 in 5 OFWs who previously bought in the Philippines are now allocating to offshore condominium markets. From a pricing perspective, upper-mid condominiums in central Dubai is also reported to be comparable to uppermid Metro Manila proper.

 

Rental yields have also shrunk. With yields ranging 5-10% pre-pandemic, the current state is now at 2-4%, more aligned with global standards.

 

PRIME noted in its 2025 reselling radar that 15-20%  were sold at a loss, 30-40% as “break-even”,  5% with more than 10% returns while the rest  “ on hold”.

 

Buyers increasingly favored house-and-lot living over high-density condominium formats, and developers adapted by launching “new normal” products.

 

PRIME noted that mid to luxury condominiums and residential lots posted estimated value declines of 10% to 25% in 2025. 

 

The more damaging shift was the deterioration in investor confidence following the flood control scandal, which depressed sentiment and prices for luxury assets. As a result, discounting became more aggressive, with developers offering 20–30% discounts.

 

PRIME suggested proper actions to address the several issues confronting the real estate industry: (a) realignment of zonal values for the “interest cut cycle”;  (b) reduce taxation redundancy for the  “weak economic growth”;  (c ) encourage longer mortgages for  declining investor confidence  and (d) first-time home buyer incentive for declining asset values  

 

 According to an Asian Development Bank study conducted in 2023, approximately 27.1% of remittances go into savings or investments, 72.7% of which are allocated towards real estate.

 

OFWs often buy homes for their families back home or as investments for their future. For many Filipino families, owning a home is a top priority, and OFWs play a crucial role in making that dream a reality.

 

In 2020, cash remittances experienced a minor 0.76% decline due to the pandemic, dropping from $30.13 billion in 2019 to $29.9 billion. 

 

In 2021, there was  strong recovery with a 5.1% year-on-year growth to $31.4 billion, driven by the reopening of global economies.

 

In 2022-2023, continued growth driven by land-based and sea-based workers with US$32. 539 billion  in 2022.

 

In 2024,  total personal remittances hit a record high of $38.34 billion, a 3% increase from 2023, representing 8.3% of the country's GDP.

 

As of November 2025 , the BSP data showed personal remittances of $35.73 Billion.

 

In terms of 2024 total  remittances amounting to $34,492,616,000, the sea-based sector sent home $6,941,085,000, or almost 20 percent, while the land-based sector sent home $27,551,532,000.

 

BSP records showed that he sea-based sector’s remittances (in thousand US dollars) for the past 20 years: $1,669,358 in 2005; $1,949,290 in 2006; $2,236,363 in 2007; US$3,034,553 in 2008; US$3,400,412 in 2009; $3,806,108 in 2010; $4,340,416 in 2011; $4,835,342 in 2012; $5,215,378 in 2013; $5,575,722 in 2014; $5,572,148 in 2015; $5,792,459 in 2016, US$6,870,827 in 2017; $6,139,512 in 2018; $6,539,246  in 2019; $6,353,522 in 2020; $6,545,002 in 2021; $6,715,880 in 2022; $6,852,362 in 2023; and $6,941,085 in 2024.

 

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.

 

(Atty. Dennis R. Gorecho heads the Seafarers’ Division of the Sapalo Velez Bundang Bulilan Law Offices. For comments, e-mail info@sapalovelez.com, or call 0908-8665786.)