As promised here’s my real estate market update for the year 2011 and forecast for 2012. The year 2011 has been a challenging and tedious year for us licensed real estate brokers as we’ve had to deal with so many variables particularly the European & US financial crisis which has been so uncertain.
In addition, property owners have also been unpredictable insofar as selling their properties and understandably, this is because of the surging price in real estate prices. Buyers on the other hand ( I’ve encountered more that have regretted not buying earlier ) have had to settle with buying a property at current prices or something that was not their primary choice ( feng shui, orientation, etc ). Bottom line is they bought as I don’t see the market correcting in the near future.
Transactions slowed down beginning the 3rd quarter of 2011 as inventory became scarce and buyers / investors hoped for a correction in market prices. Most properties excluding condominiums ( studios & 1 bedrooms – already a glut ) didn’t correct, rather, it consolidated, reached an equilibrium then appreciated another 5-20% toward the last quarter depending on the location of the property.
Below are some financial information for your reference :
Stock Market = 4518.91 ( as of January 5, 2012 )
Peso – Dollar Exchange : $ 1 = Php 43.79
Housing Loan = 8.75%
Inflation = 4.8%
Imports = 11.7% gain
Exports = 27.4% drop
Economy = 4%
GDP = 4%
Real Estate Procedures :
1) Bureau of Internal Revenue has been very strict, please make sure that your TIN #s are accurate and updated, if you were single that would have to be converted to married.
2) Assessor’s Office – when getting a certified true copy of the tax declaration, get two copies as both the BIR and Register of Deeds require originals.
3) For licensed brokers, make sure your PRC license is updated as developers are now requiring your license in order to get accreditation.
4) For Sellers, please deal with licensed real estate brokers as required by the RESA law and to get professional advice on new laws.
5) Please check with banks on their loan procedures & requirements as they differ.
6) Upon release of new title by Register of Deeds, a certified true copy of the cancelled title is now required specially if you’re getting a bank loan.
7) There is now an additional fee Php 3000 for Information Technology at the Register of Deeds for issuance of new title.
8) An Authority to Transact is now required to process Certificate Authorizing Registration at BIR and certified true copy of new Tax Declaration.
REMINDER : Annual Real Estate Tax can now be paid to the City Treasurer’s Office in order to avail of discounts.
The Philippines is now considered a newly industrialized country, a transition from one based on agriculture to one based on services ( business process outsourcing, nurses, seamen, etc ). These overseas foreign workers ( land based & sea based ) and the business process outsourcing business has saved our economy from the worldwide financial crisis.
In fact, overseas remittances which was supposed to decrease due to the problems Europe, Middle East, Australia, United States, Japan, Italy, Norway, Germany and other Asian countries encountered, rose to Php 1.7B., up by 8%. Studies show that the OFW demand will continue to increase due to the aging population of developed countries thus a creating a labor shortage particularly in the service sector for those industrialized countries.
On the other hand, the Business Process Outsourcing business is the other savior to our economy. For those not knowledgeable enough, the business lingo for it is Outsourcing or Off shoring. These are the call centers, back office, medical transcriptions, legal transcription, data transcription, animation, software development, engineering design and digital content. From a decade ago, the number of employees has grown one hundred thousand to almost a million. We are now ahead of India as the number one place for BPO.
This industry will continue to grow ( 20%-35% in 2012 ) as the demand to cut cost is inevitable for foreign companies. We offer very competitive rates with regards to office spaces and our labor force are well educated and well versed in the English language.
Another factor to consider is the inflow of Foreign Direct Investments. Net inflow was $ 729M as of Oct. 2011, 25% lower than the previous year. The sentiment of foreign investors was less favorable due to the prolonged debt crises in the Euro zone and the slower than expected recovery of the US economy from it’s recession in 2009. However, our economy is still projected to grow between 5-6% this year.
Investments came mostly from United States, Japan, South Korea, Singapore, and the Netherlands and were mostly placed in manufacturing, mining, gas, trade and financial sectors.
I have always kept track of the Philippine Stock Exchange as it gives me an idea of what the major companies / taipans are up to. Judging from what I’ve seen, these top corporations’ investments are the following :
a) power ( coal, oil based, geothermal, wind and solar )
b) infrastructure ( roads, highways, expressways, airports and seaports )
c) utilities ( water and telephone )
d) energy ( oil, power generation )
Lastly, our economy has also been dependent on the performance of our PEZA Zones which has been headed by Director-General Lilia B. De Lima. Inspite of the the global crises, PEZA reported a “GROWTH” of 41% in investments, 15% in employment and 4.5% in exports !
RESIDENTIAL HOUSES AND LOTS :
Property appreciation for this segment has ranged from 25% to 75% within a year, believe it or not. That of course depends on the location. Prime residential subdivisions ( Makati, Pasig, Quezon City, Muntinlupa, San Juan ). Prices are at an all time high in comparison to 1997. Inventory remains scarce therefore prices will continue to consolidate, then reach an equilibrium but I don’t see a correction, rather an appreciation of another 10-15% by the end of 2012.
These segment particularly the studios and 1 bedroom units really concern me. There is just too much being developed. In a way, I hope this is addressing the housing backlog of the country. As much I want to say it’s low cost given the affordability, it’s not, given the price per square meter developers are charging and the floor area it offers. Occupancy of these newly developed units can be seen in the evening by the lights turned on (reminds me of the days when Pacific Plaza Towers at Bonifacio Global City was so dark in the evenings as very few units were being occupied).
The demand for condominiums has increased since the “Ondoy” calamity and developers have taken advantage of this. In addition, Pag-ibig has been very aggressive addressing the needs of this market. Luxury condominium particularly the bigger floor areas build in the past have appreciated as buyers / investors have realized the difference in size ( floor area ) and quality these condominiums offer.
Townhouse developments have been very popular and I’ve seen a lot of investors getting into “Build and Sell”. Location, price, design and bank financing are very important in selling the project. I’ve seen projects sell out within 6 to 12 months upon completion. San Juan, New Manila, Sta. Mesa Heights, Loyola Heights, Merville and Makati have been the preferred locations.
The demand for warehouse has also increased as companies have opted to outsource their manufacturing and logistics here. This can be seen by the increase in the number of locators at the PEZA accredited industrial zones and business applications at the Department of Trade and Industry. For those looking into investing in warehouse rentals, the demand for commissary and cold storage continuous to good as there aren’t enough supply.
The leading mall developers such as SM Prime, Ayala Malls and Robinsons continue to expand across the country ( General Santos, Cebu, Davao, Bacolod, Palawan, Cavite, Pampanga and Metro Manila ). Demand for these spaces is high and this could be seen by the increased applications and franchises that opened. ( For our info, Philippines is within the top five countries that lead in Franchisees )
Studies and figures have shown that our tourism ( domestic and foreign ) has increased substantially. Thanks to the efforts to Cebu Pacific to initiated offering affordable rates ( not only in the airline industry but in the Telco business as well ). Efforts began by former Secretary Ace Durano are now bearing fruits and of course, current Secretary Ramon R. Jimenez is doing what’s needed to further improved out tourism. We have the capability of being a premiere destination for MEDICAL TOURISM.
In addition, we are blessed with 7100 islands, do you see the opportunity this offers to the RETIREMENT INDUSTRY ? Our aging countrymen are now coming home( with a $2000 pension, they could live comfortably in a middle class location ) and we’ve also seen an influx of foreigners ( Europeans, Americans, Australians and Asians ) retiring here, again their pension money goes a long way and they love our weather ( retirement villages have already been around since mid-90s, search Google ).
The Philippines is looking at a very favorable year inspite of the foreign issues in Europe and U.S. But for the leading financial services companies such as Moody’s Fitch, World Bank, and S&P to upgrade our investment grade status, it shows that our financial fundamentals and our economy are stable. Our salute to our BSP Governor, Amando M. Tetangco who has done a spectacular job in controlling the financial institution as this is one reason why we weren’t affected during the global financial crisis.
In addition, the “good governance”, President Aquino is showing has never been done ( we wish him well and may he succeed in bringing justice the country so long deserves, the foreign investors are also hoping for this ! ) and the major industrialized countries, ADB, World Bank, and Financial Institutions realize this.
I just hope that we can get on track with the government’s plan for their PUBLIC PRIVATE PARTNERSHIP plan the country needs so badly . They need to spend for various infrastructure projects and fast track the bidding to perk up the economy and consumer spending !
Lastly, do you know that the Philippines is considered as one of the top SECONDARY EMERGING MARKETS IN THE WORLD ( there’s 15 countries in this category ) ! Let’s hope and pray that we could be the country, if not better, that we once were in the 60s ( in Asia, at the least ). Don’t you think that’s worth dreaming and fighting for ?
Personally, I believe in the Filipino talent and if we could just be as disciplined as we are when we’re abroad ( where Filipinos are considered outstanding workers, really makes me wonder why we follow the law abroad but not in our country – i admire Singapore & Japan ), get our act together, get rid of crab mentality, truly care & love our country, bring back the culture we once had (Thailand, Japan have maintained theirs ) and have DECENT GOVERNANCE in POLITICS, it’s highly possible that we’ll be an INDUSTRIALIZED COUNTRY by 2020 !
May God Bless Us Always !
Robert G. Sarmiento Realty
Professional Affiliation :
Real Estate Broker’s Association of the Philippines
President, Greenhills Chapter, 2008 – 2009
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