Philippine Real Estate Market 2015 & 2016 Forecast

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Hello everyone,

Here’s an update on the Philippine Real Estate Market for 2015 and my forecast for 2016 for your reference.   I remember starting this newsletters way back in 1993 and the last newsletter i did was in 2012. I now course my blogs through a Viber group and it has worked out well for all real estate practioners.  I have to credit Colliers, Pinnacle and KCMag for continuously providing  important information on Philippine Real Estate we all need .

From what my associates tell me, this 2015 has actually been one of their best year but one has to know where the activities are, taking into consideration several factors ( demand, price, location, developer, availability of units, financially  capability and  if client is emotionally ready  to buy ).  Personally, with regards to the condominium market, the studios and the one bedroom units take so much time and effort to finalize due to an oversupply in the market so we’ve adjusted our company’s activities to be commensurate with results.

In our case, we were able to shift our operations to the industrial, commercial and office sector four years ago where demand was big and transactions took a shorter time to conclude.   The demand will continue and now, we have more foreign firms relocating their operations to the Philippines.  This is inspite of the less attractive incentives our Government offers in comparison to what’s being offered by our ASEAN neighbors.  Vietnam, in particular, a war stricken country in the late 60s has more foreign direct investments in comparison to the Philippines.

Much credit has to be given to PEZA Director General Lilia de Lima firm and savvy management and the country’s natural advantages and perks to both local and foreign locators.

For your info, we’re one of the few local real estate firms that have been around since 1993 that deals with all property lines so we are very much in tune with what’s happening in all sectors, thanks also to our valuable networks from all lines.

Financial market update :

stock market index : 6,735.01

housing loans : 5% to 8%

commercial loans : 3% to 6%

dollar to peso : Php 47.16 to $ 1

Here’s some important blogs you should be aware of  as this are all based on actual experience and may affect your real estate transaction sooner or later, to view the blogs, click on the link below :

http://www.robertgsarmiento.org/tin/

http://www.robertgsarmiento.org/section-4-rule-74-of-the-rules-of-court/

http://www.robertgsarmiento.org/zonal-values-fyi/

RESIDENTIAL HOUSES AND LOTS : ( Seller’s Market )

Property appreciation for this segment has ranged from 10 – 45%.  That of course depends on the location.  Prime residential subdivisions ( Makati, Pasig, Quezon City, Muntinlupa, San Juan, Laguna – Nuvali ).  Prices are at an all time high.  Inventory remains scarce, prices consolidate, reach an equilibrium then someone buys and therefore sets a new benchmark on prices. I don’t see a correction, rather an appreciation of another 10-15% by the end of 2016.

The last three weeks, I have gotten calls from clients who seem to be ready to bite the bullet with the current values of property specially in the high end market.  Historically, optimism is up during an election year and this one is something most can’t wait for.  Quite a disappointing governance to say the least.

If the 2016 election is peaceful and positive, real estate values will continue to appreciate ( take note we have been waiting for a correction for the last 10 years but it never happened due to external factors that happened in the U.S. and Europe and even during the recent recession that our Asean countries experienced in 2009, we were the least affected ).  Thanks to the BPOs, OFW Remittances and or course our Banko Sentral Governor Amando M. Tetangco who has done a spectacular job in managing the overall finances of the Philippines.

Since the values of prime subdivisions have gone up, buyers / investors are now looking at options they weren’t open to before.  For example, a client who was keen on buying at Valle Verde is now open to White Plains or Capitol 8.  Ayala Alabang clients are now open to neighboring villages that are much cheaper. And the list goes on.

Another sector in the housing market is the Socialized Housing market which i see growing by at least 20% as developers realize the opportunity in this much needed sector, add to the fact that the government agencies that are critical to the success of this market have gotten their act together ( Pag-ibig Fund, HUDCC, HGC and HLURB to name a few.  The government also offers tax incentives for these developments.

CONDOMINIUM ( Seller’s Market for High End, Buyer’s Market for Studios & One Bedroom Units )

These segment particularly the studios and 1 bedroom units really concern me.  There has been too much  development.  In a way, I hope this is addressing the housing backlog of the country. As much I want to say that it’s a low cost development given the affordability, it’s not, given the price per square meter developers are charging and the floor area it offers.  Please don’t be deceived by great / bargain price because as an Investor / Buyer, you should look at the flip side of buying which is selling, how fast can you sell the property should you need to do so.  A Rockwell or an Ayala Land Development always has a buyer and it’s just a matter of price to unload it, this should be an important factor to consider, who the developer is and of course, location.

I expect a correction in this market, lately, you can now see foreclosed inventories from banks slowly on the rise.  The issue is there’s just so much availability and investors / speculators were expecting that their units can lease out easy.  Take note that during pre-selling, their amortization was interest free but once the unit was turned over, interest was added into their amortization.  Thus additional amortization may not be as easy to pay for most.  Most also don’t bother to furnish their units, in order to lease or sell a unit, an upgrade on the unit is a must and an attractive price is also important.  Your unit has to stand out from the rest of what’s available in the market !

Three years ago, the demand for older buildings increased and this was because of the bigger floor areas and quality it offered.  At that time, their prices were also cheap in comparison to what the new developments offered.  This market has appreciated by  25%-50% as buyers realize that the new developments are much smaller in size.

With prices such as Rockwell and Ayala Land now hitting Php 200T/m2, buyers are taking their time to shop around and looking at good deals !

TOWNHOUSE ( Mixed Market )

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.

Less prime areas such as Congressional, Tandang Sora, Merville and BF Homes to name a few have become popular  due to cheaper prices thus  land values have also gone up too.

INDUSTRIAL ( Seller’s & Lessor’s Market )

This is where my company has focused our activities as the demand for warehouse & industrial lots has increased right after the sale of FTI and also foreign companies have opted to outsource their distribution and logistics operations here.  Add to the fact the unhappy companies currently in China.

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, there is a big demand for commissary and cold storage as there aren’t enough supply.

This for me is the of the brightest spots in the industry.

I have been closely monitoring Clark and Subic and it’s good to know that both are now getting locators it needs and will continue to be a hot spot for both local and foreign locators.  In addition, it’s good to know of the various infrastructure projects that have been completed and are currently underway.

Bulacan, particularly the Burgos area has also been very active due to the infrastructure currently underway there.

RETAIL SPACE ( Landlord’s Market )

The leading mall developers such as SM Prime, Ayala Malls, Robinsons, Vista Land Group, COSCO and Double Dragon 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.

LEISURE MARKET 

Studies and figures have shown that our tourism ( domestic and foreign ) has increased substantially. Two years ago I was at Coron Palawan and again two weeks ago and was amazed at the obvious increase in the number of tourists.

This tourism growth since two years ago have also led my firm to service foreign based hotel & resort developers looking to position themselves in our booming tourism industry.  Palawan has been the favored location to invest for most.

OFFICE – BUSINESS PROCESS OUTSOURCING  ( Seller’s & Developer’s Market )

Emerging cities outside of Metro Manila are now being looked at for expansion by BPOs.  Batangas, Cavite, Laguna, Baguio, Davao, Cebu, Iloilo and Bacolod.  The BPO sector will continue to grow as more foreign firms move and expand their operations here.

For investors, the office sector also offers one of the best return on investment in the industry and I foresee a 15-20% appreciation particularly in Bonifacio Global City.  Makati CBD will always be good although for I see Ortigas Center appreciating 20% -30% next year as it hasn’t really appreciated much.

COMMERCIAL LOTS ( Seller’s Market )

Income properties has always been favored by investors but more so now.  For developers, since Ortigas Center ( 350T/m2 ), Bonifacio Global City ( 500T/m2 ) and Makati CBD ( 400T/m2 ), Filinvest Corporate City ( 200T/m2 ) has gotten to high, peripheries of these areas have also gone up as that is where developers have been land banking.

CONCLUSION :

The Philippines is looking at a very favorable 2016.  It’s election year and government expenditure will be up.  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.

I just hope that we can get on track with the government’s plan with their PUBLIC PRIVATE PARTNERSHIP plan the country needs so badly and have poorly executed !  The upcoming government have  to spend for various infrastructure projects and fast track the bidding process to perk up the economy and consumer spending !

Lastly, the Philippines is considered as one of the top SECONDARY EMERGING MARKETS IN THE WORLD ( there are 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 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 and Malaysia for their discipline and nationalism ), 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 and be one of the major economies in the WORLD by 2030 !

May God Bless Us Always !

Visit www.robertgsarmiento.org for blogs, news, case studies and property listings which you may find informative.

thank you.

robert

CROP NAME

Robert G. Sarmiento Properties
Professional Affiliation :
Real Estate Broker’s Association of the Philippines
President, Greenhills Chapter 2008, 2009
02 5148481 ( direct line )
+ 632 5536051 ( trunkline )
+ 632 4781316 ( telefax )
+ 632 8561365 ( line 3 )
+ 632 8041701 ( line 4 )
+ 63 917 5364829 ( globe )
Email : [email protected]
Website : www.robertgsarmiento.org
Website: http://condosphil.wordpress.com
Website: http://www.philippinecommercialproperties.com
Website: http://philippinewarehouses.wordpress.com

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