Are you ready to invest in the future?

WE all think of a comfortable future for our loved ones and ourselves, for our children to go to good schools, to be able to go on an overseas or local holiday every now and then, and to have our basic needs accounted for. But with the Philippine inflation rate averaging at 6 percent in 2023, this dream of a comfortable, if not “good,” life seems to be more difficult to attain for many Juan de la Cruzes.

While there’s some wisdom in keeping money in banks, the interest rate of 0.10 percent to 0.25 percent per year versus the inflation rate gives the impression of money sleeping in a deposit account. Therefore, diversifying one’s portfolio and looking for other ways to ensure a comfortable future is paramount, most especially today. Investing in real estate is a good bet for several reasons.

Real estate is a good, hardworking investment

Those looking for passive investments would do well to consider real estate as it is a proven wealth creator and multiplier. This is first through property appreciation (for example, from 2010-2018, residential prices in the Philippines had an inflation-adjusted appreciation rate of 77 percent) and next through earning via renting it out.

For property appreciation, while the rates may differ by region, there’s a staple gain to look forward to for investors. Moreover, rental prices have also shown a steady increase. In 2023, the residential rental rates saw an average rental yield of 5.16 percent in Metro Manila and 5.0 percent in Cebu, which bodes well for those who wish to engage in leasing their properties for the long term.

Revenge travel also brought about opportunities for those who wish to rent out their properties as vacation spots. In 2023, when the borders opened, online bookings — which include shortterm rentals — grew from 88 percent in 2022, an indication that there’s a strong demand.

End users, aside from the financial gains through real estate appreciation, investing in a home to live in can have a positive overall impact on one’s overall well-being. Having a well-kept home in a convenient location can improve ease and quality of life. Selecting a residential property in a good location that has an array of facilities such as outdoor spaces, retail rows and gymnasiums also reinforces a holistic lifestyle. This idea was reinforced by the Global Wellness Institute (GWI) when they released a paper that analyzed the link between well-thought-out developments and people’s overall well-being.

How to know if a property is a good fit for you

Real estate is a long-term investment with yields that can potentially last a lifetime, so being able to discern if a property is a good fit for you is essential. After doing the math, selecting a reputable real estate developer and agent is next, so you have an awareness of all options available to you. Knowing the available loan offers by banks can also help you with financial forecasting.

Also, ask yourself if you prefer a property in a central location or on the outskirts of one, as this will affect the price and the number of viable options. You may also decide between a developed area or an up-and-coming one in anticipation of your rental or lifestyle considerations. Are there touristfriendly places to go in the area? Is it near a business district that will attract those who are looking into a long-term lease? Will you build a family soon? How many children do you intend to have? Will your desired property be able to support the lifestyle you envision to have? Asking these questions will help you decide on a property that fits your needs best.

Real estate is a tangible asset, an investment that can help you reap many rewards in the long run. It would be wise to, at the very least, investigate it if you want a nest egg — or multiple ones — for the future you wish to build for yourself.

The author is the president and COO of Cadence Property Development Corp. (CPDC), a member of the ICCP Group. He has held key executive roles in the property, healthcare, telecommunications and consumer goods sectors. He has a BS in business management from the University of the Philippines Diliman and finished the Advanced Management Program at Harvard Business School.