President Ferdinand Marcos Jr. signed Republic Act No. 12252. This is a big move for the economy. The new law extends the maximum long-term lease period for foreign investors. It goes from 75 years (50 years plus a 25-year renewal) to a single, stable 99-year term.
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The core goal is simple: attract large, long-term foreign investments. This will boost the Philippine property sector and create new jobs.
Our take is clear: RA 12252 is highly likely to push Philippine property prices higher. It injects serious foreign money into key sectors. It also turns certain land assets into stable, desirable properties that are easier to finance.
Why 99 Years Transforms Investment Security
The 99-year lease term introduced by Republic Act RA 12252 significantly enhances the value of land assets. This policy attracts higher-quality foreign capital by offering investors long-term lease contracts that provide a stable and secure environment for their ventures. Key benefits of this extended lease period include:
- Reduced Uncertainty: Longer lease durations minimize administrative hassles and renewal risks, allowing investors to focus on project execution.
- Encouragement of Large-Scale Developments: The law supports ambitious projects such as industrial estates, factories, agro-industrial enterprises, and tourism developments.
- Sectoral Investment Growth: It promotes investments in vital sectors like agriculture, agro-forestry, and ecological conservation.
- Support for Local Economy: Stability in lease agreements fosters sustainable growth, benefiting local businesses and enterprises.
- Competitive Advantage: The extended lease term makes the Philippines more attractive to property developers and foreign lessees, driving up property values and boosting the overall property sector.
By enabling lease agreements that span nearly a century, RA 12252 creates a more favorable and competitive investment climate, encouraging foreign investors to commit capital with confidence and contributing to the country’s economic growth.
Near-Freehold Stability
The extended term removes the administrative hassle and uncertainty of renewal. This gives investors “near-freehold security.” Large, capital-intensive projects, like factories or resorts, need this long timeline to work. This stability makes the Philippines competitive with its neighbors in Southeast Asia.
Key benefits of this near-freehold stability include:
- Elimination of frequent lease renewals and associated risks
- Increased investor confidence due to long-term tenure security
- Ability to plan and execute large-scale, capital-heavy projects without lease expiration concerns
- Enhanced competitiveness of the Philippines as an investment destination in the region
Financeable and Liquid Asset
The law explicitly makes the leasehold right a stable asset. Investors can now easily sell, transfer, assign, or use the lease as security for a loan. This bankability is huge. It means securing funds for large projects becomes much simpler.
Additional advantages of this financeability are:
- Lease contracts become valuable collateral for financing institutions
- Easier transfer of lease rights encourages a dynamic property market
- Increased liquidity of leasehold interests attracts more foreign investments
- Facilitates partnerships and joint ventures by allowing lease rights to be assigned or shared
Mandatory Compliance for Security
To get the 99-year lease, a foreign investor must have an approved investment. This investment must be registered under existing Philippine laws, including:
- The Foreign Investments Act (FIA).
- The Corporate Recovery and Tax Incentives for Enterprises Act (CREATE Act).
- The CREATE MORE Act.
Registration is the Operative Act
The lease contract must be registered with the local Registry of Deeds. It also has to be duly noted on the property’s title. This registration is the key step that makes the lease legally binding against third parties, offering essential protection to both the lessor and the foreign lessee. Without this formal registration, the lease agreement could be vulnerable to legal disputes or challenges, undermining the long-term security that RA 12252 aims to provide.
Key points about registration include:
- Legal Enforceability: Registration ensures the lease contract is recognized and enforceable under Philippine law, securing the rights of foreign investors.
- Protection Against Third Parties: Registered leases prevent other parties from claiming rights over the leased land, safeguarding the investor’s interests.
- Transparency and Public Record: The lease details become part of the public land records, promoting transparency and reducing risks of fraudulent claims.
- Facilitates Financing: A registered leasehold interest can be used as collateral for loans, enhancing the financeability of projects.
- Compliance with Law: Registration aligns with the provisions of the Investors’ Lease Act and related laws, ensuring full legal compliance.
This step is crucial for establishing a stable environment for foreign investments, as it reassures investors that their land lease rights are secure and recognized by law.
Direct Impact: How Prices Will Surge
The extended 99-year lease term under RA 12252 significantly boosts demand for prime land. Foreign investors, attracted by the stability and reduced renewal risks, are eager to secure long-term leases for industrial, commercial, tourism, and agro-industrial projects. This heightened demand, combined with limited land supply, drives property prices upward. The law also promotes investments in critical infrastructure and priority sectors, increasing competition for strategic locations. Landowners benefit from higher property values and steady income streams, creating a “landowner premium” that further pushes prices higher. Overall, RA 12252 generates strong upward momentum for Philippine property prices by enhancing lease security and attracting substantial foreign investment.
Key points include:
- Major demand boost for prime land due to extended lease term
- High-capital foreign firms targeting industrial, commercial, tourism, and agro-industrial projects
- Increased demand meets limited land supply, pushing prices upward
- Confidence from stable 99-year lease contracts reduces renewal and legal risks
- More foreign entities are competing for long-term leases in strategic locations
- Encouragement of investments in critical infrastructure and priority sectors
- Rising interest in factories, industrial estates, agro-industrial enterprises, and tourism projects
- Landowners gain from higher property values and stable, long-term income streams
- “Landowner premium” adds upward pressure to property values
- Strong overall momentum for Philippine property prices under RA 12252
Surging Demand vs. Fixed Supply
The extended lease term acts as a major demand booster. High-capital foreign firms want prime land for industrial, commercial, tourism, and agro-industrial projects. When high demand hits a limited supply of desirable land, prices naturally increase.
Landowner Premium
Landowners now own an asset that can secure almost a century of high-value, stable rental income from global clients. They will certainly demand a higher price for this stable, long-term asset.
High-Threshold Tourism Investment
The law puts a high bar on tourism projects. It requires a minimum investment of $5 million USD. Also, 70% of that money must be infused into the project within three years of signing the lease. This requirement ensures that only serious, high-end developers are entering the market, which drives up the valuation of prime resort land.
Investment Hotspots: Where Demand Will Peak First
Logically, demand will increase the most in areas where foreign investors focus their large projects.
Metro Manila: Commercial & Industrial
This area remains the center for finance, logistics, and corporate headquarters. Expect commercial and industrial land near major ports, expressways, and airports to face immediate price increases. For example, developments like the Bonifacio Global City (BGC) and the Mall of Asia Complex continue to attract multinational companies and upscale residential projects, making these areas hotspots for foreign investors. Industrial parks such as Laguna Technopark, located between the bustling commercial districts of Biñan and Sta. Rosa, along with the Clark Freeport Zone, stands to gain significantly from the enhanced lease terms. These areas are increasingly attracting manufacturing and logistics companies seeking the long-term stability that RA 12252 provides. They also benefit from improved lease terms, drawing manufacturing and logistics firms seeking long-term stability.
Cebu: Industrial & Tourism Gateway
Cebu City offers a good balance of industrial zones and high-end tourism spots. Land near the international airports will be a prime target for new investment. Notable projects include the Cebu Business Park, which houses numerous BPO companies and tech firms, and the Mactan-Cebu International Airport expansion, which supports increased tourism and cargo traffic. Additionally, luxury resort developments in Mactan Island, like the Shangri-La’s Mactan Resort and Spa, exemplify the kind of tourism investments that will flourish under RA 12252.
Emerging Regions: Agro-Industrial Focus
Specific agricultural regions could see rapid, local spikes in value. This will happen as capital flows into building modern processing plants and agro-industrial facilities. For instance, areas in Central Luzon, such as Nueva Ecija and Pampanga, are attracting investments in rice milling and food processing plants. In Mindanao, regions like Davao are seeing growth in agroforestry projects and eco-tourism resorts, combining sustainable agriculture with conservation efforts. These developments demonstrate how RA 12252 supports diversified growth beyond traditional urban centers.
The Regulatory Roadmap
The government has a system to manage this, ensuring that investments are properly monitored and regulated. The Fiscal Incentives Review Board (FIRB) and the Investment Promotion Agencies (IPAs) play key roles in overseeing project approvals and compliance. They require investors to explain project delays and ensure that investments commence within a reasonable time, typically within three years. This oversight guarantees that only genuine, productive investments benefit from the law, maintaining a stable and secure environment for foreign investors and protecting the interests of local enterprises and the national economy.
FIRB and IPA Oversight
The Fiscal Incentives Review Board (FIRB) and the Investment Promotion Agencies (IPAs) handle project approval. They monitor compliance and make sure the investment starts within three years.
The Need for IRR
The law needs official Implementing Rules and Regulations (IRR) to fully work. Government agencies, like the Department of Trade and Industry (DTI) and the Land Registration Authority, must issue these. Investors need to watch for the IRR to get clear instructions.
Rules for Termination
The lease contract can be canceled if the registered investment is withdrawn. It can also be terminated if the investor fails to start the project within a reasonable time set by the FIRB or IPA. This rule ensures only real, productive investors benefit from the law.
Investor Conclusion and Action Plan
Will RA 12252 Push Philippine Property Prices Higher? Yes. The law guarantees long-term tenure and security. This will fundamentally increase foreign investor confidence and, in turn, demand for prime commercial and industrial land.
This is not a temporary price spike. The law lays a foundation for decades of sustained economic growth. This makes the Philippine real estate a strong long-term bet.
If you are a landowner, understand the increased value of your asset. Price it correctly. If you are an investor, start tracking the upcoming Internal Rate of Return (IRR) now. You should move to secure prime commercial properties before the market fully adjusts to this new stability. This strategic moment presents a significant opportunity to capitalize on future growth and stability in the real estate sector.
HousingInteractive: Your Strategic Partner in Real Estate
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HousingInteractive, the Philippines’ first property portal, is dedicated to delivering property solutions. We provide the expertise and listings you need to track your IRR and secure prime commercial properties now, before the market fully adjusts. Explore our commercial listings today!
| HousingInteractive is proud to announce a comprehensive series of articles designed to break down the nuances of the amended Investors’ Lease Act. Stay tuned as we analyze how RA 12252 is setting the stage for a new era of long-term, high-impact foreign investment in the Philippines. Next: Global Investors Take Notice |
