Philippine Real Estate Market – February 2011

As promised, here’s a summary of what transpired in philippine real estate in 2010.  For a more comprehensive report, new government procedures, zonal values,  important rulings and laws you may not be aware of, you may visit my blog at www.robertgsarmiento.org

The year  2010 started off with a bang as we were coming off a very strong market 2009 inspite of the global crisis. Even our Asian neighbors were hit by the crisis, China in particular, and surprisingly, we were the only country that wasn’t affected and in fact still managed a minor growth, thanks to our ofw’s remittances and the bpo industry !

Early on in 2009, I had forecasted a 10% appreciation in property values for the year in the prime Makati villages such as Forbes Park, Dasmarinas, Urdaneta, Bel-air, San Lorenzo ; Valle Verde, Capitol 8, Kapitolyo in Pasig ; Corinthian Hills, Corinthian Gardens, Greenmeadows, Acropolis, White Plains, Ayala Heights, Ayala Hillside, Scout Area  in Quezon City ; Wack Wack Subdivision in Mandaluyong ; Greenhills Subdivisions in San Juan and Ayala Alabang, Alabang Hills, Hillsborough  Muntinlupa ( I purposely am discussing residential villages  only to shorten this newsletter ).  By the year end, prices have soared to about 15% of it’s value on some of these areas including other locations I haven’t mentioned.  Other property lines such as condominiums, warehouses, offices, commercial lots, and buildings also went up in value.

Going into 2010, the market was waiting for a consolidation as the sentiment was that the Philippines have to be somewhat affected by the global crisis. The 2009 market had been an active one with property values going up and inventory getting scarce.  There were a lot of buyers but not much sellers.  There was lack of inventory.  At this point, it was very much a seller’s market already.

If you were a seller, you were thinking…. “ If I sold, where would I buy ?  Prices were peaking ?”

At the beginning of 2010, I forecasted another 10% appreciation for the year, but prior to the election, property values had already appreciated by 10%.  Buyers and Investors were hedging that real estate prices would correct but it didn’t.   Just when you thought that the property you were interested in wouldn’t sell and that it’s price would go down, the property was sold !  This then created a new benchmark on the market value of the property !  For the record, property values in the prime areas I mentioned earlier appreciated by 25-40% in 2010 ( figures are below ).

It was also during the 1st quarter of 2010 that a small percentage of speculators were getting into the market. Remember it was speculation that led to our crisis in 1997, but was a property bubble possible last year ?  I didn’t think so, in fact, we were far from that, as now, we have the banks offering services and amortization schedules not available in 1997.  The profile of investors have also changed as we now have foreign investors and fund managers from U.S. and Europe who have positioned themselves for the upcoming REIT and moving their portfolios to safer havens only found in Asia.

The success of the 2010 elections led to an increase in foreign direct investments ; continued expansion on the bpo sector which then lead to more domestic jobs ;  more jobs then lead to more consumer spending thus real estate sales activities picked up ; continued peso strength due to rise in foreign direct investments and sustained ofw remittances ; optimism from upgrade of international credit rating agencies on the back of its improving macroeconomic and fiscal fundamentals ; and increased demand in logistics.

Due to these demands, there was an increase in the rental market of residential ( house and lot, condominium, townhouses ) and commercial ( offices, warehouses, factories, retail space ) properties.

This then translated to increased property market activities.  Income properties ( condominiums, commercial lots, buildings ) have become popular as bank rates weren’t attractive ; prime subdivision properties ( lots and houses )  became very active ( lack of inventory ) ; office spaces  being taken up  ( rental rates have gone up 15%  and vacancy rates are declining ) ; luxury residential 2-3 bedroom condominium units for the expatriate market became low in supply due to surge in the expatriate community but sufficient supply for the yuppies and young families who go for the studio and 1 bedroom units ;  warehouses in flood free areas became scarce as business environment picked up ( growth and expansion of manufacturing and logistic companies ) ; developers taking advantage of people’s need to go high rise by aggressively constructing more high rise condos with the backing of their banks and making the purchase of a unit affordable with easy financing schemes ( SMDC w/BDO, AYALA w/BPI, ETON w/PNB ) ; lots for development specially in flood free areas for residential townhouse developments became popular ( build and sell developers mushroomed, in alabang hills alone, 39 houses were being built as of november 2010 )  ; and industrial lots for warehouse facilities and logistics specially in PEZA zones have likewise moved ( this can be seen just by looking at the bank assets ).  To sum it all up, all sectors have been active and will continue to do so specially with the new government we have !

The Business Process Outsourcing Industry ( recently surpassed India as the number one bpo provider ) and the OFWs which have kept our economy sound throughout the global financial crisis in 2008 continues to be solid and will post double digit growths within the year.

Finally, the Philippine economy will continue to benefit from a convergence of positive influences. Continued goodwill towards the new Aquino administration is contributing to a relatively benign political situation and strengthening investor confidence – both domestic and overseas.

With all these positive factors going for us, don’t you think we should be looking at a bright future for the years to come and maybe, just maybe, somewhat regain the respect and stature we used to have when we were the proud country the Philippines used to be in the 60s.

SUMMARY OF PROPERTY VALUES IN METRO MANILA : ( please take note that i am not an appraiser and that all figures are based on actual transactions as shared by our wide network of professional licensed brokers )

Alabang Hills               11.5T/m2        18T/m2

Ayala Alabang             19T/m2           28T/m2

Ayala Heights              25T/m2           32T/m2

Bel-Air 1,3,4                60T/m2           75T/m2

Bel-Air 2                        52T/m2           65T/m2

Corinthian Gardens   65T/m2           85T/m2

Corinthian Hills           55T/m2           65T/m2

Dasmarinas Village    65T/m2           100T/m2

Forbes Park                  60T/m2           95T/m2

Greenhills                      42T/m2           60T/m2

Greenmeadows            40T/m2           55T/m2

Hillsborough                11T/m2           17T/m2

La Vista                          17T/m2           24T/m2

Loyola Grand Villas  12T/m2           17T/m2

Loyola Heights            16T/m2           24T/m2

Mckinley Hills             49T/m2           58T/m2

San Lorenzo                 55T/m2           70T/m2

San Miguel                    50T/m2           62T/m2

Southbay Gardens    11T/m2           15T/m2

Tierra Bella                  11.5T/m2        15T/m2

Valle Verde 1              32T/m2           42T/m2

Valle Verde 2              38T/m2           55T/m2

Valle Verde 3              33T/m2           45T/m2

Valle Verde 4              33T/m2           48T/m2

Valle Verde 5              45T/m2           60T/m2

Valle Verde 6              35T/m2           45T/m2

White Plains                32T/m2           45T/m2

I will be sending our updated property requirements and best property deals in our upcoming email.  Thanks for your time and God Bless…..

Robert G. Sarmiento Realty
Professional Affiliation :
Real Estate Broker’s Association of the Philippines
President, Greenhills Chapter, 2008 – 2009
02 5148481 ( direct line )
+63 2 7235405 ( trunkline )
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email : [email protected]
website : http://www.robertgsarmiento.org
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