99-year land lease to strengthen foreign-local investor ties
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House approved 99-year land lease
Late last year, the House of Representatives approved a bill allowing foreign investors to lease private land in the Philippines for 99 years. This move addresses concerns over the current 50-year lease, which has been extended for 25 years.
The bill, which aims to make the Philippines more competitive regionally and globally, is imperative in attracting foreign capital, expanding business opportunities, and creating jobs. It aligns with the government’s open-door policy for foreign investment and the long-term stability needed for industrial and commercial growth.
Santos Knight Frank’s Associate Director for Investment and Capital Markets, Toby Miranda, agrees with the bill’s potential in terms of generating tourism and service manufacturing. “Real estate, with its inherent multiplier effect, will undoubtedly generate more jobs and new opportunities,” he adds.
Opportunity to strengthen local players
While the 99-year land lease extension benefits foreign investors, Miranda asserts that local firms and investors will also reap the rewards. With the extended lease term, local businesses can expect a more stable and competitive environment, leading to increased investment opportunities.
“Successful joint ventures between foreign and local firms can provide local businesses with access to new skills, technologies, and global expertise. As these partnerships grow, local firms can demonstrate their sustainability and adaptability,” Miranda notes.
Pros and cons of the land lease extension to 99 years
Extending land lease limits to 99 years offers several advantages, especially for the real estate investment trust (REIT) sector, which stands to benefit from an increase in available properties.
Foreign direct investment (FDI) is likely to surge, contributing to a more robust and stable economy. With more foreign capital flowing into the Philippines, businesses can expect better infrastructure, job creation, and improved economic conditions that will benefit both local and international enterprises.
However, challenges may arise if local firms view foreign investors as direct competition rather than potential collaborators. This perspective could hinder growth, as it may lead to missed opportunities for partnerships and strategic alliances.
How critical is a 99-year land lease extension for foreign investors and the Philippines?
Miranda answers, “The extension of the land lease to 99 years is a critical development for foreign investors seeking to expand in the Philippines. It offers a significant advantage over other SEA markets with shorter lease terms.”
Thailand is still exploring this option, while Malaysia and Singapore already allow 99-year leases. Vietnam, in contrast, permits up to 50 years with a one-time extension option.
A 99-year lease provides long-term stability, making the Philippines a more attractive destination for investments in infrastructure and facilities that support the tourism and service manufacturing industries. It opens up growth opportunities, helping the country compete more effectively in these sectors and drawing in both local and international investment.
In a nutshell
Some may see the 99-year land lease extension as excessive or unnecessary, but for the Philippines to achieve a stronger economy, collaboration between local and foreign investors is essential.
Through strategic partnerships, this legislation can catalyze economic growth, enhance infrastructure, and open new opportunities across various sectors, beyond just real estate. By fostering mutual benefits, the extension offers a pathway to long-term stability and competitiveness in the global market.
Are you a foreign investor looking to explore opportunities in the Philippines? At Santos Knight Frank, we can help you navigate this exciting landscape and secure strategic investments that will drive growth and success. Get in touch with us today to explore your options. Call +63 917 806 6315 or email inquiry@santos.knightfrank.ph to learn more.
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The world of real estate can be a difficult place to navigate. Whether property is your investment or a tool that drives your business success, you need a partner who can guide you in every step of the way.
Since 1994, Santos Knight Frank has been guiding Fortune 1000 companies, BPOs, private clients, and institutions in all facets of real estate. We advise companies on their best office, retail, and industrial location, oversee commercial fit-out projects, and manage facilities. We have facilitated over 4 million sqm of office transactions on behalf of clients and managed over 40 million sqm of real estate under our property & facilities management arm.
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