Lifting of restrictions on foreign ownership of land to boost property sector

Real estate consultancy firm CB Richard Ellis (CBRE) Philippines Inc. is pushing for the lifting of restrictions on foreign ownership of land to help attract more foreign capital into the country and further spur the growth of the property market.

The 1987 Constitution bans foreigners from owning land in the Philippines.

Only corporations that have at least 60 percent of the capital owned by Filipinos can purchase land.

Although foreign individuals can purchase condominiums, no more than 40 percent of a condo development can be owned by foreigners.

CBRE Philippines president and managing director Rick Santos said limiting foreign ownership to 40 percent is a disincentive to long-term investments by foreigners, particularly in badly-needed industrial plants and large-scale infrastructure projects under build-operate-transfer schemes.

"The benefits to eliminating these restrictions would be far reaching for the Philippines.

Infrastructure, agriculture, tourism, commercial and office and industrial development and investment would greatly improve while foreign investors would be encouraged to conduct more long-term business in the country, reducing unemployment and increasing the country’s productivity," Santos said.

Santos said the market for land, especially land located in the country’s central business districts and industrial parks, would be strengthened and become more liquid, benefiting small and large landowners.

He explained that as land is developed and land values improve, local governments will be able to collect more revenue from taxes and other fees to further invest in badly-needed infrastructure and services while foreign institutions will be able to collateralize land.

"With the Philippines and both the real estate and tourism markets picking up, now is the right time to eliminate this outmoded restriction on land ownership, " Santos said.

Santos said the success of the Special Purpose Vehicle law in attracting foreign institutional players shows the potential for investment that would result from the lifting of the ban on foreign ownership of land

Although the SPV law temporarily lifted the ban on the foreign ownership of land to help the country’s banks, only large foreign institutional investors were able to take advantage of this change, Santos said.

Santos said the tourism sector would especially benefit from a change in the land ownership law as a change would encourage more international players and individual foreigners to come here and operate tourism-related facilities.