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A scattering of islands in the Pacific Ocean may not seem the most obvious property investment destination.

However, a growing number of people, from real estate tycoon Donald Trump to individual investors, are recognising the money making potential of the Philippines.

An archipelago nation of 7,000 islands, the Phililppines has a population of 90 million people and 180 languages, including the official languages of Filipino and English.

Crippled by the Marcos kleptocracy from the 60s to the mid 80s, the country has undergone a democratic and economic transformation, with stable government and a strong economy.

Economic growth is expected to hold up well this year, following gross domestic product increasing by 4.3 percent during 2008, according to the World Bank’s Quarterly Economic Update for the last quarter of 2008.

Much of this success can be attributed to manufacturing and tourism. From January to October 2008 overseas tourists increased by 4 percent compared to the previous year. There were 2.6 million overseas visitors over this period.

Tourism is attracting overseas investors to the Philippines.

One of Trump’s companies is backing a $1billion luxury resort project at Subic, a former US military base, located in the south west of Luzon Island, the Philippines’ largest island.

Smaller investors are also getting involved. From the UK, publisher David Gamage, aged 37, has invested in five studio apartments at Blue Coral Resort on Mactan Island.

David, who lives with his wife and two children in Ticehurst, East Sussex, purchased the properties, attracted by the high guaranteed rental returns of up to 20.9 percent.

He said: “If you put money into a bank you’ll be lucky to find an interest rate of four percent right now. This is something that gives both capital gains and rental yield well into double figures, making your money work harder for you

“Initially I was sceptical about investing in the Philippines. But after doing some detailed research into the country I was impressed. There is much investment from other Asian countries, such as Korea and China, as well as from the US.

“I was also reassured about the managing hotel company, Continent Hotels and Resorts, which have a track record of many successful projects worldwide."

Another factor in David’s decision is that prices are due to increase by 7.5 percent on April 21, 2009.
Mactan Island is among many small islands just off the coast of Cebu, a narrow 140-mile long island, which is one of the Philippines’ most prosperous provinces.

There are many tourist attractions on Mactan, ranging from golf to reef diving, while white powder sand beaches provide a perfect environment for relaxing. It also hosts the Philippines’ second busiest international airport, with direct links to almost all of South East Asia’s major cities, which is just a few minutes’ drive away from Blue Coral Resort and thirty minutes away from Cebu City, Cebu’s capital and the country’s second largest city.

Another blessing is the conservative lending policies of Philippines banks. After the Asian financial crisis in 1997 various regulatory reforms were introduced as well as consolidation in the banking sector. This has led to a relatively strong banking sector with lower exposure to bad debt.

The resort has a guaranteed 80 percent occupancy level, on a rolling five year contract, providing returns of 14.4 percent to 20.9 percent, depending on the property type. Guaranteed 60 percent non-status developer finance is available.  Owners are entitled to 20 percent or around ten weeks free stay a year.

There are 140 properties available at Blue Coral Resort and Spa, ranging from £63,425 studios to £182,750 three-bedroom poolside villas.