The Philippines has long been one of the more overlooked real estate investment markets in Asia. After all, the Philippines has not been known for having both political and economic stability as well as clear rule of law - like in Singapore.

However and with some of Asia's best beaches and more than 7,000 islands to choose from (some of which can even be bought), more and more international investors and retirees have started to take a much closer look at the Philippine real estate market as a retirement or holiday destination. Nevertheless, there are still pitfalls to investing in residential real estate located in an emerging market like the Philippines. Hence, here is a closer look at both the pros and cons of reidential real estate investing in the Philippines:

Manila

Pros: Why consider residential real estate in the Philippines?

Location, Location, Location. The Philippines is located roughly an hour by plane from Hong Kong. In fact, its possible to work in Hong Kong and then commute back to the Philippines on weekends where residential real estate, especially luxury residential properties, are a fraction of the price of comparable properties back in Hong Kong. Moreover, the Philippines is just a few hours by plane from most major Asian cities - making the country an excellent location to have a vacation or holiday real estate property.

Low Costs. Residential real estate in the Philippines remains significantly cheaper than residential real estate in most other Asian markets. In fact, Colliers' 1Q2011 Philippine Real Estate Market Report noted that selling prices for luxury 3 bedroom condos in the exclusive Makati CBD, Rockwell and Fort Bonifacio areas were Php120,000 per sqm ($2,800), Php125,000 per sqm ($2,900) and Php103,000 per sqm ($2,400) respectively. Meanwhile, monthly rental rates for luxury 3 bedroom condos (250 to 290 sqms) were Php560 per sqm ($13), Php736 per sqm ($17) and Php636 per sqm ($15) for each area respectively.

Lifestyle Choices. Upscale real estate developers in the Philippines such as the Ayala Group and even middle income real estate developers have become increasingly creative in their property and residential real estate development offerings and choice of locations. For example: There are now upscale developments along the country's beautiful beaches (especially to the south of Manila) that could easily rival what Phuket or Bali have to offer (and sell for a fraction of the price). On the other hand, those who prefer cooler climates can seek properties in Tagaytay on the ridges surrounding spectacular Taal Lake near Manila. Meanwhile, those who prefer the excitement of city life have a wide range of residential real estate options to choose from in major Philippine cities such as Manila and Cebu.

Improving Economy. Finally, the economy of the Philippines and its real estate market has largely weathered the global economic downturn thanks to remittances sent home from Overseas Filipino Workers (OFWs) and the booming call center, BPO and outsourcing industries that's creating a growing middle class at home. In fact, these two economic pillars have helped to both sustain and grow the Philippine residential real estate market for middle and lower end condominiums and homes.

Cons: What are the drawbacks of investing in Philippine residential real estate?

Foreign Ownership of Land is Restricted. In the Philippines, foreigners can own condos outright but they cannot own land as this is prohibited by the country's constitution. Of course, there are plenty of creative ways around this through lease agreements or by simply putting the property in the name of a Filipino citizen (usually a Filipina spouse's name) but these options also come with risk.

Quality of Construction Varies Dramatically. As with every real estate market, construction standards and the overall quality of construction can vary significantly in the Philippines with some developers having a notorious reputation for shoddy construction. Given that the Philippines is also prone to earthquakes, would-be buyers should do their due diligence and talk to as many people as possible to get up to date information on who builds quality and who does not.

Beware of Real Estate Scams. Finally and as with many emerging markets or developing countries, owners of many pieces of property, especially beach fronting property or property in the countryside, may not have clear title to the property they "own." In other words, its up to the buyer to thoroughly do due diligence to ensure that a seller actually owns what they are selling.