In the Philippines, leaseholds often appear as:

• Foreigners leasing land for up to 99 years.
• Condo corporations granting long-term leasehold rights to unit buyers in certain developments
• Commercial developers leasing land for malls, hotels, or offices (instead of buying it outright)

Here’s the key mechanism:

• Foreigners cannot own land under the Constitution.
• But they can own condo units, as long as foreign ownership in the building doesn’t exceed 40%.
• The land beneath the condo is either:
  • Owned in common by the condominium corporation (freehold), or
  • Leased by the corporation (leasehold structure)

Foreigners and corporations often lease land from the state under the Public Land Act, which allows:

• A 25-year lease, renewable for another 25 years
• For legitimate business or investment purposes
• Subject to approval from agencies like the DENR or PEZA

Breakdown:

• Filipino citizens → Full rights to own land (freehold), including residential, commercial, agricultural, and industrial.
• Foreigners → Can own buildings or condo units, but not land.
• Corporations → Must be at least 60% Filipino-owned to hold land title. Foreign investors can hold 40%, but no more.

Foreigners can legally lease private land in the Philippines under these structures:

• Up to 50 years, renewable once for 25 years (RA 7652 – for investment purposes)
• For residential purposes, long-term leases are commonly structured as 25 years + 25 years, although not legally capped unless public land is involved
• All leases should be formalized through a notarized contract, often annotated on the land title at the Registry of Deeds
• For public land, the maximum lease remains 25 years + 25 years (CA 141)

This structure is also commonly used by:

• Expats building homes on leased land
• Business ventures that want to avoid heavy capital exposure on land acquisition
• Developers building on land they don’t own (especially where land acquisition is politically or financially risky)

Common Scenarios:

• Buying leasehold condos in Makati, BGC, or Cebu—within the 40% foreign ownership cap
• Leasing land for 25+25 years to build vacation homes, beach villas, or investment properties
• Entering long-term lease contracts through 60/40 corporations (foreigners own 40% but control through contracts or share structuring)

Why it works:

✔️ Legal compliance with constitutional land ownership limits

✔️ Access to prime locations (even beachfront) without full capital exposure

✔️ Ideal for investors with short- to mid-term ROI horizons

Common Scenarios:

• Buying land in developing cities or provinces for long-term appreciation
• Acquiring house-and-lot packages with full ownership for family use or retirement
• Inheriting and expanding ancestral lands to build equity for future generations

Why it works:

✔️ Strong long-term appreciation, especially in urban fringes

✔️ Eligible for mortgages, home equity loans, or collateralization

✔️ Simplifies estate planning—clean title = clean succession

Examples:

• SM Mall of Asia – built on land reclaimed and leased from the government
• Tech parks and PEZA zones—often on government or joint-venture leaseholds
• BPO towers in Makati or Ortigas—corporations lease land to reduce upfront land acquisition

Why it works:

✔️ No need to tie up millions in land purchase

✔️ Lease costs become operating expenses, improving balance sheet optics

✔️ Flexibility to relocate or re-strategize after lease term

Key Motivations:

• CapEx Efficiency – Save cash for construction and marketing
• Strategic Access – Lease land in ultra-prime areas where landowners won’t sell (e.g., Ayala, government agencies, indigenous lands)
• Speed to Market – Leasing can mean faster negotiations vs. complex land titles or estates

Investor Profile:

• Singaporean national, married to a Filipina
• Wanted to build a luxury boutique resort on Palawan beachfront

The Setup:

• Leased 5,000 sqm of private land for 25 years, renewable for 25 more
• Formed a domestic corporation (Filipina wife: 60%, him: 40%)
• Built a ₱50M eco-resort with solar power and modular design
• Registered lease with the Registry of Deeds and annotated it on the title
• Signed a renewal clause with defined buyout terms for improvements if lease is not renewed

Result:

• Opened for business within 18 months
• Resort gained international traction, profiting by year 4
• Plans to exit via corporate share sale—not land transfer—after 10 years

What the law says:

• If your lease contract has a renewal clause, you’re entitled to extend—but it’s not automatic.
• If there’s no renewal clause, the lessor is legally entitled to reclaim the land—and everything built on it, unless your contract says otherwise.

Default rule under Civil Code: All improvements belong to the landowner unless:

• You included a “retention of ownership over improvements” clause, and
• The lease is registered and annotated on the land title

Common conflict zones:

• Non-renewal after heavy investment (“We never agreed to renew…”)
• Conflicting heirs of the original landowner refusing to honor the lease
• Unregistered lease claims challenged by third-party buyers or creditors
• Government lease revocation due to regulatory non-compliance (for leases on public land)

How to defend yourself:

• Always demand a notarized, registered lease
• Include a mediation clause to avoid instant litigation
• Engage a lawyer to create risk mitigation addenda—clauses that define remedies, improvements buyout, and lease exit routes

Let’s be blunt: Leasehold is built for speed, not permanence.

• Short-term ROI (5–10 years)? Leasehold makes sense—lower capital outlay, faster turnarounds, especially in high-demand urban pockets where land is locked but leasing is open.
• Long-term value creation (10+ years)? Freehold wins, hands down. You own the land, the appreciation, the leverage potential, and future generational wealth transfer.

Leaseholds are creatures of dense, high-cost metros. Freeholds rule the provinces.

• Urban leaseholds (e.g., Bonifacio Global City, Newport City, Arca South): Great for short- to mid-term plays like commercial units, condotels, or build-operate-transfer setups.
• Provincial freeholds (e.g., Bulacan, Cavite, Laguna): Ideal for land banking, subdivision development, agribusiness, or retirement homes.

This is where many leasehold investors get burned.

• Resale market for leasehold is thin. You’re not just selling a unit—you’re selling time left on a lease. Less than 15 years? Banks won’t finance it. Buyers won’t touch it.
• Freehold resales, on the other hand, are straightforward. Title transfers, clean due diligence, and property appreciates over time—not depreciates like a ticking lease.

Exit-proof your investment:

• Buy leasehold only with 20+ years remaining
• Get contracts that allow assignability or subleasing
• Exit before the 10-year remaining mark to avoid fire-sale territory

Yes—but with strict conditions.

Foreigners cannot own land in the Philippines, but they can lease it—and leasehold is the legal workaround.

Under the Investor’s Lease Act (Republic Act No. 7652):

• A foreigner can lease private land for up to 50 years, renewable once for 25 years.
• The lease must be for investment use—residential, industrial, commercial—but not for land speculation.

Yes—but it’s complicated.

You’re not selling land. You’re selling the right to occupy and use the property for the remaining lease term.

• You can assign your lease (if the original lease contract allows it).
• The value of your unit depreciates as the lease term shortens. Once under 15 years? Expect fewer buyers and no bank financing.
• Leasehold resale is common in condo-hotspots like Newport City and BGC—just don’t expect freehold-level returns.

Standard leasehold agreements in the Philippines run 25 years, especially for residential or commercial use on private land. After that:

• The land and improvements revert to the lessor—unless the contract says otherwise.
• You can try to renew the lease, but it’s at the discretion of the landowner.
• If no renewal? You either dismantle and vacate—or walk away with nothing.

Leasehold ≠ Less control—but it demands more legal finesse.

Freehold = Stability, but expect a steeper climb upfront.

Smartest move? Match your deal structure to what you’re really solving for—cashflow, security, flexibility, or legacy.