If you’re at that point where you’ve committed to your decision to relocate to Asia, or perhaps you are still weighing up the different factors, one of the key elements at the top of your list, will be budgetary. While most other factors can be quantified, the potential cash you’ll be giving out after you land is a more fluid issue and friends and different websites will suggest or recommend varying amounts, none of which really account for the decisions you will need to make once you’re here.
To try and simplify your life, we’ve built a list below, of actual cost in terms of living here, buying land, building and a host of other related living costs. Only you know what sort of lifestyle you’d like to maintain here, and given these base costs you can build your own budget accordingly. Before we dive in though, a few thoughts and words of entrenched wisdom on money and the Philippines from old hands at the game.
You aren’t Elon Musk
While this may seem patently obvious, unless money is of no concern, you want to be extremely wary of the false sense of security your currency provides when you arrive here. By all means, do give fifty pesos to the old lady with polio, sitting in rags on the street corner. She really does need that money and the occasional charity from well meaning foreigners and locals can provide an otherwise inaccessible lifeline.
For Americans and Europeans, at an exchange rate of more than fifty to one, giving away a dollar here and there isn’t going to break the bank. Which is sadly exactly where the problem lies. Most new arrivals will be overcharged for everything, from tricycle fares to food at the markets. Some even overpay of their own accord to try and “help” local vendors. Don’t!
You have, if you’re a normal person looking to stretch your pension and dollars, a finite amount of cash, and these habits will cost you dearly if they become entrenched. In a country where poverty is prevalent, you’re a mark from the moment you land. All those pretty young girls eyeing you aren’t really seeing you, they’re seeing a path to an easier life. For newcomers this new found popularity can be overwhelming. Enjoy your Bruce Willis moment, but see it for what it is.
Watch your pennies. By all means, be charitable, especially if you can afford it, but be selective. Once you’ve settled in an area, consider things like buying two or three computers for your local primary school, or help out with food and supplies when storms ravage the area. These contributions directly help your local community, and aren’t spur of the moment spending, but usually carefully considered investments into your neighbourhood.
Breaking down your budget
Accommodation, whether you choose to buy, build or rent, will be your primary expense, and it is key to understanding exactly how much, on a monthly or once off basis, this is going to cost you. We’ll start with rentals and to simplify this, we’ve broken down the country into 3 Zones. All prices quoted are in Philippine Peso, so get your calculator handy. There is a downloadable spreadsheet, sans explanation, with all these amounts at the end of the article.
- Zone 1 – think Rio, Cancun, Marbella. The best the Philippines has to offer in terms of beaches, tourist hotspots and large cities with sprawling infrastructure.
- Zone 2 – Larger inland cities, away from the beaches, with decent infrastructure and medical facilities
- Zone 3 – Country bumpkins. If you love the quiet, safe life, want to be surrounded by wonderful communities and great scenery, this is for you.
Rental Costs in the Philippines
Expect to pay between two to three months, in some cases even six months, rental upfront with the addition of a security deposit when you negotiate the rental agreement. On occasion, you can even negotiate 25 year leases on apartments, but these will need to be paid upfront and in full, and will cost you anywhere from 4 million pesos, upwards. We would recommend staying in an area for a few months first before committing to this extent. More on leases here.
Zone 1. Rentals in these prime areas will run you anywhere from 250K a month (prime end penthouses and developments, particularly in areas like Makati and Green Park in Manila) to 100K (well established developments) down to 30/40K a month for a livable apartment in a development on or near to the beach.
Zone 2. You can look to pay between 30K (low end, but usually very livable) to 100K a month, with quality differing by the price tag. The more expensive, the more you’ll be shelling out each month, and these costs relate to rentals of both houses and apartments.
Zone 3. If you’re not into being surrounded by hordes of people, clubs and shopping malls, then we highly recommend country living. Cost wise, it is by far and away the cheapest option for property, and depending on location, we’ve seen two bedroom houses let out for 7-10K a month, one bed apartments (more than passable) renting at 6K a month and obviously, if you want to spend the additional money, for around 30K a month, you can secure a well built house or apartment with plenty of space.
A few pointers on renting
- If you have a Filipino partner or friend, have them look at the property on your behalf. They are more likely to come back with the units or house’s true asking price. Show your pointy nose, and odds are there is an instant price increase.
- Unless you’re in Manila or one of the larger cities, don’t expect builds the way Westerners build. Toilets can run off the kitchen, buckets can replace shower units, and ceilings can often be awol. Be patient and selective.
- The more remote the area, the more basic the buildings and the less likely you are to secure a rental easily.
- Build quality is often questionable, and flooding is commonplace here, so keep elevation in mind and do not rent a home built in the foothills of a mountain. Mud slides are a very real thing.
- Ensure you have proper legal representation to peruse your rental or lease contract or live to regret it later.
Securing Ground to Build
We use the term securing, rather than buying, as you cannot legally own ground in the Philippines unless you are a Filipino. You’ll need to work around this by either leasing a piece of ground or purchasing it through your Filipino partner/wife/husband. There are pros and cons for both scenarios, and you can read more on that here.
Ground is sold here by the square meter and is zoned under three distinct classifications, Agricultural, Commercial and Residential. Pretty self explanatory, in so far as you cannot build a house on agricultural ground, but you can plant corn in your back garden. As with all countries, prices differ dramatically, even within the confines of a small town (Zone 3). Potential commercial ground along the motorways fetches a premium, but move two or three kilometers away from the city center, and suddenly the land becomes wildly affordable.
Move to a city or town in Zone 1 and expect to hemorrhage cash for residential ground. We’ve included two examples on the main island of Luzon for comparison, the first based in Ligao City, Zone 3 (inland, 500 km’s from Manila), our preferred area for settling, and the other in Subic, Zone 1 (coastal, around 85 km’s from Manila). How much ground will you actually need? We recommend as a rule of thumb, calculating the footprint of your house and doubling it. Having said this, if you can afford a little more leg room, more is always better, allowing for additions like parking, a swimming pool and gardens.
Also, worth keeping in mind is that most leases, unless you purchase through a Filipino, require full payment of the lease amount for the full term, so this can also affect the final “real value” of the ground. Our PTL contracts we issue to our clients correspond with the land’s ticket price and contain no hidden costs.
Ligao City Zone 3
- City Center residential lots (8 -16K per square meter) Pricing Is influenced by proximity to main roads, schools and amenities.
- Suburban residential lots, 2-5km from city center (3-10k per square meter) Pricing is influenced by road access and proximity to city. To see an example of a residential lot we offer at 4K a square meter, click here.
- Ex-suburban residential lots, more than 5km’s from city center (1-6k per square meter). Pricing largely determined by location and access or whether the lot forms part of a development.
Subic (Zone 1)
- City Center residential lots (12 – 30k or more per square meter) Pricing is largely driven by scarcity and proximity to malls, nightlife and the beach. Developments, popular in these areas, can be prohibitively expensive, but do offer some benefits.
- Suburban and neighbouring towns, between 5 to 10kms from city center (8 – 15k per square meter) Pricing can vary wildly, again, often based on developments offering lots and access to amenities.
A few notes on securing ground
- Paperwork, or rather lack thereof. It’s the largest issue buyers face when looking to find buildable ground. Land titles (proving ownership) are often non-existent or sellers will offer up a mother title (walk away), many sellers rely on mother titles, rather than Transfer Certificates of Title, multiple owners, usually siblings, of a large tract of land (both living and deceased) further complicate transactions. For a much more detailed description of common property pitfalls and requirements, read this article.
- Location matters, particularly elevation. Does the area flood? Don’t decide by visual inspection, consult with neighbors and double check. Poor drainage and large flat expanses in city areas often contribute to flooding.
- Access to electricity. Ensure its available, particularly if the land you’ve chosen is remote and remember, when large typhoons hit, you will need a generator. Electricity supplies can sometimes take weeks to be restored and rural comes last.
- Road access. If the road looks dodgy or runs through a mountain, be wary of being cut off by landslides and heavy rains, which can wash away even the most robust of roads.
- Lastly, watch out for larger pieces of “agricultural” ground with homes on. Farmers on sections of these lots can enjoy certain legal privilege’s and you may find your transaction bogged down by legal claims, or find you have to settle with each family to take possession of the ground.
- If you look to buy in the name of you Filipino partner, be aware that legal costs for transfer of title, including but not limited to Documentary Stamp Tax, Transfer Tax, Land Registration Fee, Capital Gains Tax (ensure the seller shoulders this) and other contract fees can mount up quickly and most are based on a percentage of the selling price, so budget to add on around 10% of the total property cost to the final bill.
Building your Home
Once you’ve secured your land, it’s time to start building and while you are free to erect almost any kind of home you like, you will need to secure a building permit from your local council. Incidentally, as we’ve encountered this recently, you should only erect steel or concrete based houses here. Wood is a no go, unless it’s your life goal to feed termites and watch your home either wash or blow away during a storm.
You are going to need to set aside money for building permits, architect fees, possibly soil testing to ascertain what foundations you’ll need, electrical connection, water and then finally, the build itself. Most of the costs above are easy to quantify, however the one unknown is the cost of qualified labor and duration of the build, and its this part, the duration, that can end up bleeding you dry. We’ll discuss our advice later on how to best deal with this.
Budgeting for your build
- Soil testing (occasionally) – 15 to 30K, region dependant. Results are within a few days.
- Architectural Fees – allow for around 400-800 PHP per sqm of house, again region dependant. Do shop around.
- Building Permit – an architect will charge you around 20-30K per 100 sqm of floor space. Allow for two to four weeks to finalize
- Electricity connection – around 5-10K to process and you will be asked for a deposit that is based on your houses projected consumption. The bigger the house, the higher the deposit. This process can take up to four months in some areas.
- Finished Build Cost – 25K -50K per square meter, dependant on finish, with 30K being entry level mid-range and 50K representing a high end project. Yes, you can get away with less, but inevitably going cheaper here, even on a do-itself basis will end up costing you as much as a normal build, with labor issues and other hidden pitfalls.
- Contingency Fund – to be safe, you should allow for at least ten percent of you final total cost, for example, if the project is set to cost you 5 million pesos, set aside 500K for unforeseen costs, and there will be unforeseen costs, unless you’re extremely fortunate in your selection of project managers and contractors.
A note on labor costs
While building materials have increased in price over the last three years (post Covid) these increases are small and overall, unless availability becomes an issue, prices on key building components like cement, aggregates, steel, rebar and scaffolding remain stable and can be effectively calculated. Labor however, is more difficult to quantify, and one of the reasons that selecting a contractor over bringing in your own team of builders is by far the more preferable option.
Labor is a costly part of the building equation, and drawing out your build can cost you dearly in the long run.
Do not confuse the Western work ethic with that of the Filipino. Make no mistake, their work can be fantastic, and their ability to be productive in sweltering temperatures is nothing short of amazing, but… Workers will often be absent on a Saturday or Monday, suffering from the weekend’s drinking spree. Weekday celebrations, frequent, almost always involving drink, will also result in absenteeism, with no prior warning. If you’re new to the Philippines, odds are you’ll also upset some of the workers, never to see them return. As we said, they aren’t Westerners and require a different, softer approach when it comes to management.
Add to this the weather, with erratic storms and days of rain bringing projects to a grinding halt, and your estimated dates for completion can suddenly be stretched by weeks, if not months, with you having to foot the bill.
Contractors come fully equipped with tools necessary to their trade, while private labor will often look to you to purchase equipment. A simple example is scaffolding, which contractors often have on hand from previous sites. If you build privately you will need to rent scaffolding, most likely for a prolonged period. A properly negotiated deal with your contractor will ensure they carry the financial burden of delys, and you are free to monitor progress and quality along the way. It’s a win-win. To read more on the pros and cons of private build vs. contractors click here