Real Estate Market Update – July 2010

hello everyone,

hope all is well and it seems so for most. our country just went through a first of a kind computer generated election and the fast results did add credibility to it.  of course, there will always be some that won’t agree but that’s human nature.

the filipinos have spoken ! honesty, transparency, fairness, and judgment must prevail to bring this country back in par with our neighboring countries.  now, it seems like there’s real hope.  let’s pray that President Aquino be guided with great wisdom to bring out the best our country has to offer after all, Filipinos are really talented.  i often wonder why we excel abroad and are considered real good employees / entrepreneurs but somehow quite a number don’t bring out their best when in the philippines.

i’ve spoken with several expats who work and live here and also to foreign companies on my travel abroad and the general consensus is that there is so much corruption in this country that’s it’s not worth the taking the risk of doing business here.  in fact, we rank pretty high as one of the most corrupt country in the world !

anyway, this is just an introduction, as for those that have been receiving my newletters for the past 17 years, i never discuss politics.  it’s just that the election of our new president, benigno aquino III has so much positive implication to it from the local farmer to the giant multi-national companies both locally and globally.

my newsletters are always based on actual experience, from call ins from our newspaper ads, websites and of course, conversations from very supportive friends and networks in both real estate and stock market industry.  our company prides itself as one of the few companies that handles all facets or real estate brokerage, from residential, commercial and industrial properties.

for your info, my blog site is currently under contruction so i’ve created a temporary one which has several articles on real estate laws and can be viewed at http://robertgsarmiento.wordpress.com , the main article that’s featured now is the “Real Estate Investment Trust ( REIT )” which can be viewed at our other website : http://philippinewarehouses.wordpress.com.

the reason i’ve chosen this article is that we’ve noticed a notable increase in foreign inquiries, particularly europeans, americans and even expats based in asia through phone calls, emails and  from our websites.  fund managers are looking at asia as the most attractive area to be while the rest of the global stricken countries recover and uncertainty looms with the unseen problems that may still happen.  the REITs will also alter the investment opportunities of both developers and investors as it will be a very attractive instrument for most !

this newsletter is so delayed because of the very active market we currently are going through as i haven’t had time to summarize what’s been happening to the real estate market.  anyway, let me start :

stock market index : 3,416.10

housing loans : 8.5% – 11% depending on term

dollar to peso : Php 46.85 to $ 1

Real Estate Procedures :

1)     Most BIR offices have undergone computerization and somehow this has delayed processing of documents instead of speeding it up, this is to assure entries match, hopefully this will normalize soon.

2)     Fees for certified true copies of title are now Php 148.00 ( good up to 4 pages ) from Php 50.00 and now takes three days to get.  Certified true copies for tax declaration remains the same at Php 50.00, however, the number of days to get it differs depending on the city.

3)     When buying a property and naming it to a new corporation, give enough time as the new TIN # of the corporation has to be activated.  This applies when you have to pay documentary stamps (BIR Form 2000) within five (5) days after the close of the month when the taxable document was made signed, issued, accepted or transferred, otherwise, you will pay a sizeable penalty for the delay.

Top headlines :

1)               Construction boom boosts profits of property firms, allied industries

2)               Balance of Payments surplus hits $ 2.345B

3)               Ayala Group bags $852M BPO deal for legal outsourcing industry, largest ever !

4)               Dell Computer plans to put up local subsidiary, bullish on RP economy

5)               Philippines largest casino by Belle Resources, Henry Sy, costing P9B to open in 2011

6)               Peso closes at 14 week low

7)               Government in talks with FTI buyer, sale seen before year end

8)               Eurozone woes threaten RP exports

9)               Three energy firms sign P1.12B tie-up for geothermal bid

10)            Surging Taiwan economy to benefit Philippines

11)            Investments at PEZA zone up by 68%

12)           DMCI property unit eyes to double size in 5 years

13)          Standard Chartered hikes RP growth target to 5.9% but remains cautious of Eurozone crisis

14)          Robinson’s Land Corporation mulls $300-million public offer of REIT papers

15)          $1B Subic resort complex to be developed by Korean developer cleared for SBMA

16)          RP Stocks hit new high on rising optimism

17)          GSIS and Megaworld in P3.5B venture to develop mixed used complex within CCP

18)          Over 300 foreign investors secure special business visas

19)          Investment commitments surge past full-year target

20)         Fast growth pace being sustained by ecozone firms, up by 43% from a year ago

as you can see, i’ve compiled quite a bit of headlines for the last 3 months and all point towards positive growth and this will just get better if president benigno aquino III delivers on his promise of good governance, which are to reduce poverty, create new jobs, and narrow our deficit to name a few.

demand for most prime properties are high but supply is low.  now we’re talking days, weeks or at the most months in the market !  what didn’t move then is now getting inquiries or may have been sold. given a realistic price, there are buyers.  it’s very much a seller’s market and will continue to be.

prices are reaching all time highs and just when we think it’s too high, next thing we know, the property is sold.  benchmarks are normally the basis of buyers and seller, however, this current market we have now doesn’t really follow the norm we’ve had, specially for the primer properties.

i now also see a small percentage of speculators investing and this is what led to the bubble during the asian crisis.  but is a bubble in the property market possible ? i don’t think so, in fact, we’re far from that, as now, we have the banks offering services and amortization schedules that weren’t available then.  the profile of investors have also changed as we now have foreign investors that have positioned themselves for the upcoming REIT such as fund managers who are now moving their portfolios into asia, primarily china and philippines is not far behind.

the business process outsourcing industry and the ofws which have kept our economy sound throughout the global financial crisis last year continues to be solid and will post double digit growths within the next year. a new market that’s also keeping the market active is  the “build and sell” developers who are focusing on a niche market.  townhouses and walk up condominiums are very popular investments.

banks are very liquid and are aggressively lending out money ( with due diligence of course ) as long as the borrower meets their requirements.  from a contractor’s point of view, the modern asian design which has become very popular are much simpler, easier, faster and cost efficient to build.  in addition, given the right design, color schemes and of course, location, a 2 to 10 unit townhouse project or can sell out in 18 months.

buyers have more flexibility because of the banks.  low down payments and 15 year amortization schedules are now standard.  it’s obvious that the banks don’t want our money, they want us to get loans from them !

also since bank rates are not as attractive, there’s been a big surge in demand for income properties where rates of return are anywhere between 5% to a high of 11% per annum, conservatively speaking.

i’ve mentioned in my september 2009 newsletter that i forecast a 10% appreciation in property values this year and that has been reached prior to the proclamation of our new president.  i still see another 10% appreciation for the rest of 2010 inspite of the global crisis happening in europe, united states and even our neighboring asian coutries wherein the philippine economy has remained resilient.

where are the growth sectors ?  we see it in tourism, information technology, logistic services, infrastructure, financial services, housing, green energy and education, i have to quote Albay Governor, Joey S. Salceda on this and i’ve always admired him and his brilliant ideas from talks he has done on our real estate conventions and articles that he writes about.

this is why i am in close watch with the stock market as it shows where the action is.  you notice where and what the big corporations and taipans are doing.  Henry Sy is all out on tourism, malls and residential condominiums.  Ayala Land has gone into mid-cost housing aside from it’s malls, information technology, and telecoms businesses.  Lucio Tan has merged PNB with Allied Bank and is very aggressive with it’s property developments and now ventured into providing office units for the business process outsourcing companies.  San Miguel Corporation of Danding Cojuanco has diversified itself into utilities ( buying 27% stake at Meralco ), infrastructure ( tarlac-pangasinan-la union tollway – 35% stake at PIDC ) and ( caticlan international airport development corp – 97% stake ), power ( sual power plant, san roque power plant, iligan natural gas power plant ), telecom ( liberty telecom ), oil and gas ( petron – option to acquire 51% stake but already own 20% ), mining ( daguma agro-minerals inc., bonanza energy resources inc, sultan phils energy corp ), and still in the works are logistics ( harbour centre port terminal for future oil depot and grains terminal ) and water ( dam project ).  Andrew Tan of Megaworld is now one of the top taipans in philippines and is considered the most aggressive developer of all, tying and bidding up with the best and primest properties, such financial backing !  Manny Pangilinan of Metro Pacific Investments Corp has been expanding into numerous infrastructure and power generation businesses, namely, meralco, maynilad, metro pacific tollways corp, healthcare, and recently took over and began development, management, operation and maintenance of Manila North Harbor, of course, this is in addition to PLDT.

the logistics industry is now one of the most promising investment campaign which may lead the country into becoming a region and and even a global logistics hub.  the Philippine Economic Zone Authority ( PEZA ), headed by Director General Lilia de Lima has done an extra-ordinary job in the last 15 years.  through her leadership, the philippines has become a global power in such enterprises as information technology, computer chips and parts, Nokia phones, solar power, airplane systems, autos and auto parts, medical equipment, shipbuilding, agriicultural plantations, medical tourism, call centers and business process outsourcing to name a few.  From 1995 to 2009, investments in the economic zones totaled Php 1.5M trillion, a staggering 4,351% increase from the Php 33.7B generated during the period 1981 to 1994.

this translates to increased property market activities.  income properties have become popular, prime subdivision properties ( lots and houses )  are very active, office spaces are being taken up ( quietly ), warehouses in flood free areas are becoming scarce ( companies affected during the flood have either moved or just finalizing their lease ), developers are taking advantage of people’s need to go high rise by aggressively constructing more high rise condos with the backing of their banks making a purchase of a unit affordable ( SMDC w/BDO, AYALA w/BPI, ETON w/PNB ), lots for development specially in flood free areas for residential townhouse developments are very attractive, and industrial lots for warehouse facilities and logistics specially in PEZA zones are likewise moving.  to sum it all up, all sectors are active and will continue to appreciate specially with the new government we have !

well, there’s still so much info i could say but i think i’ve taken enough of your time.  i’d like to invite you to the Philippine Real Festival happening this coming July 29-31, 2010 at the world trade center, roxas boulevard, pasay city.  this promises to be the real estate event of the year as the timing couldn’t be better.  booths were sold out months ago !

opening prayer to be officiated by father suarez and keynote speaker is none other that our new president, benigno aquino III.  what a cast !  in addition, noteable speakers from different sectors will be giving seminars the whole day. admission is free.  you may visit my modest booth, # 164, Robert G Sarmiento Realty, where my and partners and i will offer services from legal advisory, property and asset management, property appraisal, project planning, investment consultancy, general brokerage, and documentation to name a few. remember, the RESA Law is now in effect, so deal with a licensed broker !

i hope this newletter has somehow enlightened you with our current real estate market.  you may view our websites for properties you may be in the market for or to view articles which may be of interest, from our real estate laws to our precious environment.  should you also have a property you would like to sell or lease, please let me know.

finally, let’s pray for our country’s revival and show the world that the Philippines can still be the country it used to be in the 60’s. we were 2nd to japan then.  sad to say, we’ve also lost a lot of culture ( respect for elders, hospitality, trustworthiness, etc ).

thanks again for your time and may God Bless our country and our families !

Robert G. Sarmiento Properties
Professional Affiliation :
Real Estate Broker’s Association of the Philippines
President, Greenhills Chapter, 2008 – 2009
02 5148481 ( direct line )
+63 2 7235405 ( trunkline )
+63 2 7251832 ( telefax )
+63 2 5708882 ( line 2 )
+63 2 5707973 ( line 3 )
+63 920 9064829 ( mobile )
email : [email protected]
blogsite : http://robertgsarmiento.wordpress.com
website : http://www.philippinecommercialproperties.com
website : http://bestcondos.wordpress.com
website : http://philippinewarehouses.wordpress.com
website : http://groverockwell.wordpress.com
website:  http://www.rebapgreenhills.com
website : http://bechayv.wordpress.com
website : http://ningngo.wordpress.com

Leave a Reply