Buying and owning property in Davao City as a foreigner

Authored by the expert who managed and guided the team behind the Philippines Property Pack

Everything you need to know before buying real estate is included in our The Philippines Property Pack

Who is the author of this content?

BAMBOOROUTES

A team specialized in real estate investing in APAC countries (Japan, Thailand, Indonesia, Australia, etc.).

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Davao City. If you'd like to learn more about us, you can check our presentation page.

How this content was created 🔎📝

At BambooRoutes, we explore the Philippine real estate market every day. Our team doesn't just analyze data from a distance—we're actively engaging with local realtors, investors, and property managers in cities like Davao City, Manila, and Cebu. This hands-on approach allows us to gain a deep understanding of the market from the inside out.

These observations are originally based on what we've learned through these conversations and our observations. But it was not enough. To back them up, we also needed to rely on trusted resources

We prioritize accuracy and authority. Trends lacking solid data or expert validation were excluded.

Trustworthiness is central to our work. Every source and citation is clearly listed, ensuring transparency. A writing AI-powered tool was used solely to refine readability and engagement.

To make the information accessible, our team designed custom infographics that clarify key points. We hope you will like them! All illustrations and media were created in-house and added manually.

What types of property can foreigners legally buy in Davao City compared to locals?

Foreigners face significant restrictions on property ownership in Davao City compared to Filipino citizens.

Filipino citizens can purchase any type of real estate including residential land, commercial land, houses, condominiums, and commercial buildings without any ownership limitations. They have full property rights across all categories of real estate in Davao City.

Foreign nationals are limited to owning condominium units with a maximum of 40% foreign ownership per building or project. Foreigners can also own the building structure itself but cannot own the land underneath. Additionally, foreigners can lease land for up to 50 years with an option to renew for another 25 years.

The only indirect way for foreigners to acquire land ownership is through a Philippine corporation where foreign ownership cannot exceed 40% of the company's equity. However, this requires careful legal structuring and ongoing compliance requirements.

Foreigners married to Filipino citizens may purchase land, but legal ownership must remain in the Filipino spouse's name, creating potential complications in case of separation or death.

Can foreigners own land directly or only through specific structures like condos or leases?

Direct land ownership is prohibited for foreigners in Davao City under Philippine constitutional law.

The Philippine Constitution restricts land ownership to Filipino citizens and corporations with at least 60% Filipino ownership. This means foreigners cannot directly purchase, own, or hold title to land in their name regardless of the amount of money they have or their residency status.

Foreigners have three main legal options for property acquisition in Davao City. First, they can own condominium units where the land underneath is considered common property shared among all unit owners, with foreign ownership capped at 40% per building. Second, they can enter into long-term land lease agreements for up to 50 years with renewable terms of 25 additional years.

Third, foreigners can establish or invest in a Philippine corporation with maximum 40% foreign equity that owns the land. This corporate route requires ongoing legal compliance, annual reporting, and maintaining the 60% Filipino ownership requirement throughout the corporation's existence.

It's something we develop in our Philippines property pack.

Are there specific residency or visa requirements to purchase property as a foreigner?

No specific residency status or particular visa type is required for foreigners to purchase allowable property types in Davao City.

Foreigners can buy condominium units or enter lease agreements regardless of whether they hold tourist visas, business visas, or longer-term resident visas. The property purchase process does not require establishing Philippine residency or obtaining permanent resident status before completing transactions.

However, the type of visa does affect long-term property management and tax implications. Tourists on short-term visas can purchase property but may face challenges in managing rental operations or property maintenance from abroad. Business visa holders and those with longer-term legal status have more flexibility in property management activities.

For tax purposes, your residency status determines income tax rates on rental income. Non-resident foreigners pay 25% tax on gross rental income, while those who establish tax residency may qualify for lower progressive tax rates on net rental income.

Long-term property ownership and residence requires appropriate visa categories such as the Special Resident Retiree's Visa (SRRV) for retirees or investment-based visas for those planning extended stays in Davao City.

Do you need to be physically present in the Philippines to complete the purchase?

Physical presence is not mandatory to complete property purchases in Davao City, though it can simplify the process.

Many property transactions can be completed through legal representatives using a Special Power of Attorney (SPA) properly executed and authenticated at a Philippine consulate in your home country. This allows your designated representative to sign documents, make payments, and complete title transfers on your behalf.

Remote transactions work particularly well for condominium purchases from established developers who have standardized processes and can handle international wire transfers. Your lawyer or real estate agent can coordinate document signing, notarization, and government registrations without requiring your physical presence in Davao City.

However, being present offers several advantages including personal property inspection, direct communication with all parties, immediate problem resolution, and the ability to verify document authenticity. Physical presence also allows you to establish banking relationships and set up property management arrangements more efficiently.

For complex transactions involving land leases, corporate structures, or significant investment amounts, physical presence is strongly recommended to ensure all legal requirements are properly met and to avoid potential complications or disputes.

What is the step-by-step process for buying property in Davao City and which documents are required?

The property buying process in Davao City follows a structured sequence with specific documentation requirements at each stage.

Step 1: Title Verification - Conduct thorough due diligence by checking the property title at the Registry of Deeds to verify authenticity, ownership, and ensure the property is free from liens, mortgages, or legal disputes. Request a certified true copy of the title and tax declarations.

Step 2: Contract to Sell - Sign a legally binding agreement that outlines purchase price, payment terms, property condition, and completion timeline. This contract protects both buyer and seller interests and establishes the legal framework for the transaction.

Step 3: Payment Processing - Arrange payment of all required taxes and fees including capital gains tax, documentary stamp tax, transfer tax, and registration fees. These payments must be completed before title transfer can occur.

Step 4: Deed Preparation - Execute and notarize the Deed of Absolute Sale, which serves as the legal document transferring property ownership from seller to buyer. Both parties must sign in the presence of a notary public.

Step 5: Title Transfer - Process the official transfer of ownership by submitting all documents to the Registry of Deeds and paying registration fees. The new title will be issued in the buyer's name upon completion.

Document Type	Purpose	Required For
Certified Copy of Title (CCT/TCT)	Proves legal ownership	All property types
Valid Government ID/Passport	Buyer identification	All transactions
Proof of Payment/Bank Statements	Source of funds verification	All purchases
Contract to Sell	Purchase agreement	All transactions
Deed of Absolute Sale	Ownership transfer document	All property types
BIR Tax Clearance	Tax compliance verification	All transactions
Lease Contract	Land use agreement	Land lease arrangements

Is hiring a lawyer mandatory or just recommended when completing the transaction?

Hiring a lawyer is not legally mandatory but is strongly recommended for all property transactions in Davao City.

While Philippine law does not require legal representation for property purchases, the complexity of real estate transactions and potential for costly mistakes make professional legal assistance extremely valuable. Many buyers who proceed without lawyers encounter title problems, hidden liens, or documentation errors that result in financial losses or legal disputes.

A qualified real estate lawyer provides essential services including title verification, contract review, due diligence on property history, and ensuring compliance with all legal requirements. Lawyers also identify potential red flags such as pending litigation, zoning violations, or incomplete developer permits that could affect your investment.

For foreign buyers, legal representation becomes even more critical due to unfamiliarity with Philippine property law, language barriers, and the need to navigate complex ownership restrictions. Lawyers ensure your transaction structure complies with constitutional foreign ownership limits and help optimize tax implications.

The cost of legal services typically ranges from 1-2% of the property value, which is minimal compared to the potential losses from improper transactions. Most experienced lawyers offer fixed-fee packages for standard property purchases, making legal costs predictable and manageable.

What taxes, fees, and costs are involved when buying and later reselling property as a foreigner?

Property transactions in Davao City involve multiple taxes and fees that foreign buyers must budget for beyond the purchase price.

Tax/Fee Type	Rate	When Paid
Capital Gains Tax	6% of selling price	Usually by seller, sometimes negotiated to buyer
Documentary Stamp Tax	1.5% of selling price	Within 5 days after deed notarization
Transfer Tax	0.5-0.75% (varies by locality)	During title transfer process
Real Property Tax	1-2% annually of assessed value	Annually to local government
Special Education Fund	1% of assessed value annually	Annually with property tax
Registration Fees	0.25% of property value	During title registration
Notarization Fees	Fixed rate per document	When executing deeds

For rental income, non-resident foreigners pay 25% tax on gross rental income without deductions. Foreign residents who establish tax residency may qualify for progressive income tax rates ranging from 20-35% on net rental income after allowable deductions for property management, maintenance, and depreciation.

When reselling property, the same tax structure applies with the seller typically responsible for capital gains tax. However, buyers and sellers can negotiate who pays specific taxes as part of the purchase agreement. Additional costs include real estate broker commissions (typically 5-6%) and legal fees for transaction completion.

It's something we develop in our Philippines property pack.

Can foreigners realistically get a mortgage in the Philippines and what are the rates and conditions?

Obtaining a mortgage in the Philippines as a foreign non-resident is extremely difficult and rarely successful.

Philippine banks have strict lending policies that heavily favor Filipino citizens and permanent residents. Most major banks require borrowers to have established credit history in the Philippines, stable local employment income, and significant cash deposits in Philippine banks before considering mortgage applications.

For the few foreigners who qualify, mortgage rates are significantly higher than in developed countries, typically ranging from 8-12% annually for peso-denominated loans. Loan-to-value ratios are usually limited to 60-70% for foreigners compared to 80-90% for Filipino citizens, requiring substantial down payments.

Foreign residents with long-term legal status, established businesses in the Philippines, or significant asset holdings have better chances of mortgage approval. Banks may also consider foreigners married to Filipino citizens or those with permanent resident status, though approval remains challenging.

Most foreign property buyers in Davao City rely on cash purchases or financing from their home countries. Some international banks with Philippine operations may offer bridging loans or asset-based lending, but terms are typically less favorable than domestic mortgages in your home country.

What are the common mistakes and pitfalls foreigners make when buying property in Davao City?

Foreign property buyers frequently encounter preventable problems due to unfamiliarity with Philippine real estate practices and legal requirements.

1. **Illegal "Dummy" Arrangements** - Some foreigners attempt to circumvent land ownership restrictions by having Filipino citizens hold title as nominees. This practice is illegal and leaves foreigners with no legal ownership rights or recourse if the nominee decides to keep the property.2. **Inadequate Title Verification** - Failing to conduct comprehensive title searches leads to purchases of properties with hidden liens, pending litigation, or questionable ownership. Always verify titles at the Registry of Deeds and check for any encumbrances or legal issues.3. **Developer Due Diligence Failures** - Not researching developer track records, financial stability, or project permits results in purchases of units that may never be completed or lack proper legal documentation. Verify all development permits and licenses before purchasing.4. **Incomplete Understanding of Total Costs** - Many buyers budget only for the purchase price without accounting for all taxes, fees, and ongoing costs. Total transaction costs can add 8-12% to the purchase price, and annual property taxes and maintenance fees require ongoing budgeting.5. **Avoiding Professional Assistance** - Attempting to complete transactions without lawyers or experienced real estate agents increases risks of scams, documentation errors, and legal compliance failures. Professional fees are minimal compared to potential losses from mistakes.

Additional pitfalls include not understanding condominium association rules, failing to establish proper property management for rental properties, and not considering currency exchange risks for ongoing expenses and rental income.

We did some research and made this infographic to help you quickly compare rental yields of the major cities in the Philippines versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.

Where do foreigners usually prefer to settle in Davao and which neighborhoods are best for different purposes?

Foreign residents and investors in Davao City gravitate toward specific neighborhoods that offer the best combination of amenities, safety, and investment potential.

**City Center (Downtown Davao)** attracts foreigners who prioritize urban convenience and business access. This area offers the highest concentration of shopping centers, restaurants, offices, and government services. Property prices range from PHP 110,000-180,000 per square meter with strong rental demand from business travelers and local professionals.

**Lanang** serves as Davao's business district and is popular among foreign executives and entrepreneurs. Located near the airport and major hotels, this area provides excellent connectivity and modern infrastructure. Properties typically cost PHP 95,000-140,000 per square meter with good appreciation potential due to ongoing commercial development.

**Matina** appeals to foreign families and retirees seeking a more residential environment. This suburban area offers international schools, medical facilities, and family-friendly amenities at more affordable prices of PHP 70,000-120,000 per square meter. Rental yields are steady due to consistent demand from expatriate families and students.

**Bajada** provides a mixed-use environment popular among foreign investors seeking rental income properties. With prices ranging from PHP 90,000-130,000 per square meter, this area offers good balance between affordability and amenities, making it attractive to a broad range of tenants.

For long-term capital appreciation, foreign investors typically focus on areas with planned infrastructure improvements, proximity to business districts, and growing expatriate communities. Rental properties perform best in neighborhoods with universities, hospitals, and international business centers.

What does current data show about liveability, rental yields, rental income, tourism demand, and growth forecasts for Davao City?

As of September 2025, Davao City continues to rank as one of the Philippines' most liveable cities with strong fundamentals supporting property investment.

**Liveability Rankings**: Davao consistently receives high ratings for safety, cleanliness, and affordability compared to Manila and other major Philippine cities. The city's crime rates remain significantly lower than national averages, and infrastructure quality continues improving with ongoing government investment in transportation and utilities.

**Rental Yields**: Gross rental yields in Davao City typically range from 6-8% annually for well-located condominium units and apartments. Prime locations like Lanang and the city center achieve yields closer to 8%, while suburban areas like Matina average 6-7%. These yields compare favorably to other ASEAN cities of similar size and development level.

**Rental Demand Drivers**: Strong rental demand stems from several sources including local universities attracting students, international companies establishing regional offices, medical tourism growth, and increasing numbers of foreign retirees. The presence of major educational institutions ensures consistent student housing demand throughout the year.

**Tourism Growth**: Davao's tourism sector continues expanding with increasing domestic and international visitor arrivals. The city's reputation for safety, natural attractions, and business-friendly environment attracts both leisure and business travelers, supporting short-term rental opportunities.

**Growth Forecasts**: Urban development projections indicate continued property value appreciation in prime areas, particularly those benefiting from infrastructure improvements and commercial development. Foreign investor interest remains strong due to the city's political stability and economic growth prospects.

It's something we develop in our Philippines property pack.

How do property prices in Davao compare across different parts of the city and nearby regions?

Property prices in Davao City vary significantly based on location, with premium areas commanding substantial price differences over suburban neighborhoods.

**Premium Central Locations** like the downtown business district and major commercial areas see the highest property values, with condominium units ranging from PHP 110,000-180,000 per square meter. These areas offer maximum convenience, walkability to amenities, and strongest rental demand but require higher initial investment.

**Business District Areas** such as Lanang provide slightly lower prices at PHP 95,000-140,000 per square meter while still offering excellent connectivity and growth potential. These locations balance affordability with strong fundamentals for both owner-occupation and investment purposes.

**Established Residential Areas** like Matina and Bajada offer more affordable entry points at PHP 70,000-130,000 per square meter. These neighborhoods provide good value for families and investors seeking stable rental income without premium location pricing.

**Suburban and Developing Areas** outside the main city center offer the lowest prices but also carry higher risks regarding infrastructure development, appreciation potential, and rental demand. Prices in these areas can be 30-50% lower than prime locations but may have limited liquidity.

**Regional Comparisons** show Davao City property prices remain significantly lower than Manila but higher than smaller provincial cities. This positioning makes Davao attractive for investors seeking growth potential without Metro Manila's price premiums, while still maintaining urban amenities and infrastructure quality.

Price trends indicate continued appreciation in well-located areas, with annual growth rates of 5-8% in prime neighborhoods, making timing and location selection crucial for maximizing investment returns.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.

Sources

1. Juwai - Philippines Property Laws for Foreigners
2. International Surf Properties - Buying Property in Philippines as Foreigner
3. MyHouse.ph - Can Foreigners Buy Property in Philippines
4. Davao Properties - Real Estate Laws
5. Global Property Guide - Philippines Taxes and Costs
6. Davao Properties - What You Need to Know Before Buying
7. Davao Property Solutions - Title Processing Overview
8. 3D Universal - Real Estate Taxes Philippines 2025
9. Global Properties Consultants - Rental Income Tax Philippines
10. Pacific Cross - Buying Property as Foreigner in Philippines