On 3 September 2025, the Philippines signed into law Republic Act (RA) 12252, extending the maximum lease term on private land for foreign investors to up to 99 years (replacing the former 50 years + one 25-year renewal model). The constitutional ban on foreign freehold ownership remains, but the reform dramatically lengthens security of tenure, aligning the Philippines with long-lease markets that global tourism capital already knows and trusts.
What changed—and why it matters
From 75 to 99 years. The amendment to the Investors’ Lease Act of 1994 (RA 7652) pushes the previous 75-year cap to 99 years, giving developers and financiers a horizon that matches the useful life of large-scale resorts, branded residences, marinas and integrated tourism estates.
Policy intent. Government framed the move as a signal to long-term capital—particularly hospitality, tourism and agri-tourism—to build now, operate for decades, and reinvest with confidence.
Constitution intact. Foreigners still cannot own land in the Philippines; long leases remain the legal path to control and develop sites. The 1987 Constitution (Art. XII, Sec. 7) is unchanged.
Why this is a tourism inflection point
1) Bankability & financing
Large resort assets typically need 25–40 year debt with major capex cycles (renovations at years 10–15 and 25–30). A single 99-year lease avoids the cliff-edge of a one-time renewal and reduces refinancing risk, improving lender appetite and pricing.
2) Master-planned resort economics
Integrated tourism developments (ITDs) combine hotels, retail, F&B, wellness, entertainment and branded residences. A 99-year ground lease supports:
Saleable leasehold inventory (residences, villas) with long remaining tenure—crucial for take-up and resale values.
Condotel and resort residence structures with clearer exit horizons for buyers.
Long concession windows for marinas, golf, adventure parks and MICE venues.
3) Competitive positioning in SEA
Thailand commonly uses 30-year leases (with uncertain “renewals”).
Indonesia (e.g., Bali) offers long “right-to-build/use” terms but often via layered rights.
The Philippines’ 99-year certainty is easy for international counsel to underwrite and market globally—especially to branded residence buyers seeking longevity.
4) TEZ incentives + 99 years = powerful stack
Projects sited in Tourism Enterprise Zones (TEZs) can access income tax holidays and, after the ITH period, a 5% tax on gross income in lieu of most national and local taxes—plus duty-free capital equipment and other non-fiscal incentives. When paired with a 99-year lease, developers can model longer, steadier cash yields and IRR uplift from tax efficiency.
What investors and developers can do now
A) Pipeline strategy & site control
Secure options/MOUs on coastal and nature-led sites in Palawan, Cebu/Mactan, Bohol, Siargao, Siquijor, Northern Palawan/El Nido, Coron, and emerging circuits near Clark/Subic for fly-and-drive markets.
Prioritize tenure clarity: verify the land classification, titles, easements, shoreline setbacks and any ancestral domain claims.
B) Structure the 99-year lease for value
Front-loaded vs. indexed ground rent: Blend a moderate base rent with CPI-linked escalators and milestone-based premiums (e.g., upon residence sales phases).
Subleasing rights: RA 12252 clarifies subleasing (with lessor consent and proper registration), enabling branded residence sales and third-party operators within the estate. Ensure your lease expressly allows it and register subleases.
Reversion & residuals: Define hand-back conditions, residual value treatment, and capex responsibilities after major refurb cycles (e.g., years 25, 40, 60).
C) Financing & risk allocation
Non-recourse project finance becomes more realistic with a clean 99-year lease, TEZ status, and strong operator covenants.
Title insurance & political risk cover: Price in extended tenures; many carriers will now quote more favorably on Philippine resort ground leases.
D) Sales & place-making
Branded residences: The 99-year story is simple to explain to buyers comparing Bali or Phuket leaseholds.
Wellness & medical tourism, blue-carbon and eco-resorts, and marine lifestyle (diving/sailing) concepts can underwrite guest loyalty and longer lengths of stay.
Policy guardrails and diligence checklist
1. Constitutional boundaries
Freehold is still restricted to Filipino citizens and at least 60% Filipino-owned corporations. Foreign investors should continue to use leasehold, condominium (unit ownership with land owned by a Filipino-controlled condo corp), or joint ventures with proper Filipino equity.
2. Environmental compliance
ECC (Environmental Compliance Certificate) from DENR; coastal projects need robust setback, mangrove and reef protections.
Climate resilience: typhoon risk, surge modeling, and nature-based defenses must be designed in.
3. Indigenous and community consent
If a site overlaps with ancestral domain, FPIC (free, prior and informed consent) via NCIP is required. Build benefit-sharing into the master plan.
4. Registration & annotation
RA 12252 requires registration of subleases and annotations on title; failure to do so can impair enforceability and financing.
5. TEZ targeting
Validate TEZ eligibility early; model the ITH → 5% gross tax step-down, customs duty exemptions and visa facilitation for key foreign hires.
Market impacts to watch (12–24 months)
Land value uplift in prime resort corridors (Palawan, Cebu, Bohol), as longer leases widen the buyer universe and improve financing.
Operator interest: Expect more proposals from global brands (upper-upscale/luxury, wellness, branded residences) seeking first-mover coastal flags.
Domestic partnerships: Filipino landowners and LGUs can retain land while capturing ground rent and profit-share, de-risking development cycles.
Stronger pipeline in Clark/Subic for conference, sports and mixed-use leisure driven by air connectivity and freeport logistics.
Illustrative investment models
Core resort with branded residences
220-key five-star beachfront + 120 branded residences (villas/condos) on a registered 99-year lease.
TEZ-registered; assume 4–6 years ITH then 5% gross tax.
Pre-sales of residences recycle equity; condohotel pool drives stabilized GOP.
Eco-archipelago lodge network
Cluster of low-impact lodges on multiple leased islets, unified by a single operator brand and marine conservation program; blue-carbon credits bolster returns.
Wellness + longevity retreat
Medical-adjacent wellness village near a major city (Cebu/Clark), tapping regional medical touri
sm with longer-stay programs under long-lease certainty.
How to position the Philippines against peers
Message to capital: “Freehold isn’t required when you can secure 99 years of transparent, registrable control, plus TEZ incentives and a diversified demand story (domestic + intra-ASEAN + long-haul).”
Message to residence buyers: “A clear 99-year lease keeps it simple vs. stacked renewals—easier to finance, easier to resell.”
Message to communities & government: “Keep land Filipino-owned, share upside through ground rent, jobs, training, and environmental stewardship.”
Key takeaways
99 years turns the Philippines into a top-tier leasehold destination for global tourism capital.
The reform, combined with TEZ incentives, can lift project IRRs and unlock bigger, greener destination resorts.
Discipline on diligence (titles, environment, community, registration) will separate investable projects from the rest.
Sources (selected)
Official: Presidential Communications Office notice on RA 12252.
News: Reuters, Bloomberg, Philippine Daily Inquirer coverage of the 99-year lease law.
Legal/Advisory: Baker McKenzie (InsightPlus) summary of RA 12252 mechanics.
Incentives: TIEZA pages on TEZ fiscal package (ITH, then 5% of gross income).
Constitutional context: 1987 Constitution, Article XII; reputable legal explainers.
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