Many Filipino employees dream of building passive income and retiring early. However, they often feel held back by the belief that investing in real estate requires millions of pesos and direct property ownership. After all, who has the time (or capital) to deal with tenants or repairs?
Here’s the good news: You don’t need to own an entire building to earn from real estate. Thanks to Real Estate Investment Trusts (REITs), you can start investing in prime Philippine properties with just a few thousand pesos.
In this guide, you’ll learn how to invest in REITs in the Philippines, including how to start, where to buy, and what returns to expect.
What is a REIT and Why Should You Invest in One?
A Real Estate Investment Trust (REIT) is a company listed on the Philippine Stock Exchange (PSE) that owns, operates, or develops income-generating properties. These properties can include malls, hotels, hospitals, schools, and even renewable energy projects.
REITs allow you to earn dividends from rental income without having to buy or manage physical property yourself. Instead, you invest in shares of a REIT, and the company pays out a portion of its rental income to shareholders like you.
Unlike traditional real estate investments, REITs offer several advantages:
- Lower capital requirement: You can start with just a few thousand pesos.
- Passive income: Earn regular dividends without the stress of managing tenants or property issues.
- Diversification: Your investment is spread across multiple properties.
- Liquidity: REIT shares are traded on the PSE, so you can buy or sell anytime.
REITs in the Philippines are governed by the REIT Act of 2009, with strict oversight from both the PSE and the Bureau of Internal Revenue (BIR). These rules ensure transparency and investor protection. For example, REITs are required to distribute at least 90% of their taxable income as dividends.
In short, REITs are a practical and beginner-friendly way to earn stable, long-term income from real estate, without requiring millions in capital.
Factors to Consider When Choosing REITs
Not all REITs are created equal. If you’re wondering how to invest wisely, it’s essential to go beyond brand names or popularity. Here are the key factors to guide your decision:
Portfolio quality
Look at the types of properties the REIT owns, their locations, and occupancy rates. Well-located, income-generating assets with reliable tenants often provide more stable returns.
Dividend yield
The dividend yield shows how much income you can expect relative to the share price. But don’t just chase high yields. Check if the REIT has consistent earnings to support those payouts.
Management team
A REIT is only as strong as the people running it. Look for experienced, transparent leaders with a proven track record of delivering consistent returns.
Growth potential
Check if the REIT has expansion plans or is diversifying its portfolio into new segments, such as logistics, hospitality, or renewable energy. Broader portfolios reduce risk and open new income streams.
As Wendy B. Estacio Cruz, Head of Research at Unicapital Securities, Inc., explains:
“We remain positive on the REIT sector amid widening yield spreads, with interest rates poised to decline. REITs under our coverage offer an average 1-year forward yield of 6.8%, or 110 bps above the 2Y bond yield. Office occupancy remains healthy, supported by strong lease renewals and stable rental escalations. With a strong financial position and clear expansion plans, REITs are well-positioned for growth. One standout is AREIT (TP: PhP 48.30), with a 27% total return potential, and a fast-growing, diversified portfolio.”
How to Buy REITs in the Philippines (Step-by-Step Guide)
Wondering how to buy REITs as a first-time investor? It’s easier than you think. Here’s a simple, beginner-friendly guide to get you started:
1. Open an online trading account
To invest in REITs, you’ll need a stock trading account. An excellent option for beginners is UTrade by Unicapital, an easy-to-use online trading platform in the Philippines that enables you to invest in REITs and other stocks.
2. Complete your investor profile and verify your identity
As part of regulatory requirements, you’ll answer a risk assessment questionnaire and upload valid IDs. This step ensures your investment choices align with your financial goals.
3. Fund your account
Deposit money into your UTrade account. Learn how to fund your account here: https://utradeph.com/faqs/
4. Search for listed REITs
Look for REITs listed on the PSE, such as AREIT, FILRT, or RL Commercial REIT. Review their portfolio, performance, and dividend history before choosing.
5. Place a buy order
Enter the stock symbol (ex., AREIT), choose how many shares to buy, and select your order type (market or limit). Submit your order through the platform.
6. Monitor your dividends and stock price
REITs generate passive income through regular dividends. Keep track of your earnings, watch market trends, and adjust your strategy when needed.
For example, if you invest ₱5,000 in a REIT with a 6.8% yield, you could earn around ₱340 per year in dividends, plus any gains from stock price increases.
Ready to Build Your Passive Income? Here’s Your Next Step
REITs are a smart and beginner-friendly way to earn from real estate, minus the stress of property management or the need for millions in capital. For Filipino employees seeking to grow their wealth and generate passive income, REITs offer a practical and low-barrier entry into the world of investing.
With just a few thousand pesos and a trading account, you can start investing in high-quality properties like malls, offices, and even renewables, and receive regular dividend payouts.
Ready to get started? Open your REIT account through UTrade by Unicapital and explore your options today. The earlier you begin, the sooner your money can start working for you.
