8 trends to affect housing purchases

Real estate insiders weigh in on how buyers affect the real estate market and explains why in the end, buyers have the last say on when to invest in a property. 

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Buyers make or break projects. What factors, therefore, would influence buyers’ demand for housing in the future? What obstacles will affect the real estate purchases of Filipinos? Here are 8 trends to look out for to determine the industry forecast:

1 Overseas Filipinos’ financial status vis-à-vis global economic concerns. Claro dG. Cordero Jr., Jones Lang LaSalle Leechiu’s head of research, consulting and valuation, said the recent uptake in real estate purchases has primarily been demand driven. Hence, the less than optimistic recovery of the US economy and the spiraling debt concerns in the Eurozone may affect job security in these areas, and may affect the earnings of overseas Filipinos which have helped finance these purchases.

Enrique Soriano, Ateneo program director for real estate and senior adviser for Wong+Bernstein Business Advisory, agreed that there has definitely been pressure on overseas Filipinos.

“Absolutely depressed economies in Europe and North America are creating jitters to the local property market. OFs are sending less money as a result of limited opportunities in the host countries. In one study, the growth of OF remittance has declined to single digit levels, with Middle East and Europe declining by 15 percent and North America exhibiting a big drop of 40 percent in remittances. Only Asia continues to remain robust, exhibiting double digit remittance at 12 percent,” Soriano said.

Julius Guevara, Colliers International’s associate director for valuation and advisory and head of consultancy and research, said that “if the economic conditions in Europe and the United States continue to deteriorate, thereby exacerbating the slowdown in China, then there would be an effect on remittances in some way.” Colliers International is a global real estate services.

Guevara added: “However, as was seen during the global financial crisis in 2008 where remittances were steady despite a slowdown, then we could also expect the same resiliency. In times of trouble, Filipinos abroad have no qualms taking second or even third jobs just to meet their financial obligations back home.”

Victor Asuncion, CBRE executive director for global research and consultancy, said OFs are “resilient amid the lingering global economic crisis.”

“If they lose their job, they may still be redeployed in other countries, or could consider starting a business in the Philippines. Ultimately, the motivation of OFs to go abroad is to afford buying their lifetime dream of their own house and lot, send all their kids to school to earn a degree and have a decent life.”

2 Population/demographic movements at home. Cordero revealed that another interesting trend which may affect the future real estate environment, primarily the housing market, is the impending change in the demographic makeup of the local population.

“As seen in the case of Japan in the 1990s and the United States of late, the introduction of various measures to disrupt the demographic pattern (through various measures such as population control and incentives for delaying births) has contributed to the slump in housing demand.”

Guevara said the Philippines will not be experiencing the same situation as Japan with regard to population.

“If you look at a tornado graph of the age distribution of our population, you will see that this is weighted heavily on the younger age set. So, in terms of demand for housing, we see that this will be sustained due to a rising population, whether this be through housing purchases or rentals,” Guevara said.

Asuncion said “the close to 100-million population of the Philippines is the ‘unique selling proposition’ of the Philippine housing market. Population control in its broadest sense is not expected to influence the persistent housing backlog of the country.”

Soriano said the “Draconian policies apply to countries that are considered ‘statist’ economies. The Middle East, Japan, Singapore and China are classic statist economies and can unilaterally make or unmake real estate demand via regulatory initiatives from adjusting interest rates to carving vast tracts of land and convert them to cities to accommodate the migration of workers.”

3 Major policy shift on land due to calamities. “In the Philippines, we have yet to experience major policy shift in land and demographic movements. The only exception would be when government uses its regulatory and police powers to isolate areas prone to earthquakes and flash floods,” Soriano said.

4 OFs’ preference for high-rise apartments. Soriano observed that with the increasing population rate in the Philippines, in particular the close to 17 million people in the expanded National Capital Region, people are currently purchasing affordable condos in Metro Manila because of the proximity and the orientation of OFs that have experienced living in high-rise apartments in their host countries.

5 Affordability, prevailing market conditions and interest rates. Asuncion said that the “affordability of the property, given the prevailing market conditions, prevailing interest rates enable the buyer to avail of cheap bank loans to amortize the purchase.”

Soriano said other factors affecting purchases in real estate include the demographics, economy, interest rates and government policies. Similarly, interest rates would have a major effect as a decline in interest rates encourages more people to purchase the property.

6 A “bloom or gloom” general economy. Asuncion observed: “In the case of the Philippines now, confidence from local and foreign investors is strong and encouraging. This results to more investments and more demand for real estate to conduct business. A stable economy translates to a stable employment.”

7 Fluctuations in government policy. According to Soriano, inconsistencies in government policy and implementation can also cause a decline in confidence in the real estate sector.

8 Function/purpose of buying. Asuncion said buyers’ purpose to buy properties—either for their own use or for business—can affect the pattern of real estate purchases in the Philippines.

SOURCE; PHIL DAILY INQUIRER

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Raymund B. Baroy

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Visit Us here: Robinsons Land Premier Properties 

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Condo buyers encounter more woes in PH

Second in a series

Condominiums are no longer the exclusive domains of the moneyed. They have also become financially attainable by the working class. Consider the competitive prices of condominiums at P45,000 to P80,000 per square meter in the city, and one can understand how tempting it is to buy a place to live in and be literally a stone’s throw away from the workplace.

However convenient condo living may be, buying a unit can be frustratingly difficult, as Inquirer Property started revealing last week, based on the experiences of actual buyers who e-mailed their buying “woes.” This series started by citing the first three of the eight most-ranted-about issues: condos with no parking slots; lost deposits; and overseas Filipino workers taken advantage of.

Before proceeding to the next rants, let’s expound a bit more on the overseas Filipinos’ complaints, particularly on payment forfeiture. A disgruntled reader/buyer wrote Inquirer Property online, “As a result of an OFW’s ‘absence,’ paperwork does not matter to selling agents, as they do not help you out. They just forfeit your payments.”

National Real Estate Association chair Alejandro S. Mañalac shed light on this issue. Most developers, he said, make “forfeitures their last resort. However, in most cases, this is not done without due process. Notices and reminders are sent with ample time/grace period for settlement before a final demand or notice of forfeiture is served (via registered mail).”

Mañalac stressed that the most important action in situations like these would be to communicate with the developers and “never ignore” their notices.

“If they have valid reasons and are not in habitual default of their payments, considerations and even restructuring of payments are accommodated. The problem is that some buyers ignore these letters and use the lame excuse that they are not receiving these notices (that is why it is very important to indicate the mailing address in the buyer’s info sheet that they fill up because this will be the same address used for the contract. Also, make sure that in case they decide to use their local address here, the people residing in the local address are responsible enough to inform them about such notices. There are many cases where relatives do not inform the buyers that the account is already delinquent),” Mañalac said.

Veteran real estate broker and educator Enrico Cruz of Marikina said OFWs should seek out reliable salespersons and brokers (before buying). Cruz said he always taught his students at Urban Institute that brokers and salespersons should always remember that the buyer is their principal, even if the commission fee they receive comes from the developer.

4“Multiple ownership leads to manipulation of condominium units.” A reader lamented that “Koreans, Chinese and Filipino politicians who own a number of units are renting out their units to ‘balikbayans’ for the duration of their vacation… Are they (unit owners) even paying income tax for renting out?”

Architect Edilberto J. Morcilla agreed with the observation. “Since foreign nationals are not allowed by Philippine law to own land, but allowed to own condominium units, these enterprising foreigners opt to buy several units for their investments. I am not sure, though, whether it will be easy for them to evade paying taxes as we now have stricter rules on taxation,” Morcilla said.

Mañalac said: “I am not sure whether the reader is referring to the ‘co-development/comunidades/Build-your-Own’ set-up where all the buyers are considered ‘coowners’ or ‘codevelopers.’”

SEEK out reliable salespersons and brokers before buying a condo unit near your office. Ask around. Investigate. Photo by Tessa R. Salazar

He added, however, that it is true that “some units were sold to investors to be operated as condotels where the investors enjoy monthly returns through short- and long-term leasing of their units without personally managing it since it is being done by professional hotel operators, and there is absolutely nothing wrong with it.”

5 No price regulation of association dues. Enrique M. Soriano, Ateneo program director for real estate and senior adviser for Wong+Bernstein Business Advisory, said: “Again, it’s a balancing financial act played by the developer in the initial stage prior to the turnover. Then, another challenge will come from the facilities manager managing the condo using as baseline variables like security, staffing, cost of maintenance, brand value and competitiveness.”

Mañalac said rates for association dues really depend on several factors: a) who manages the condo (in-house or professional building managers?); b) number of units/residents (to share in the operating expenses); and, c) size of common areas, amenities to maintain and to secure. “Thus, comparisons should be done apples to apples,” he stressed.

Morcilla said the varying rates would be due to “project cost and package prices of condominiums differing greatly, depending on location, amenities, specifications and of course, target market.” Cruz said such wildly varying dues happen “especially if the condominium corporation is still controlled by the developer.”

“However, for condominium corporations already in the hands of the unit owners, all dues and assessment emanates from the boards after thorough discussion with the members. Besides, any excess becomes property of the corporation, which is owned by unit owners,” Cruz said.

6 Some developers don’t reveal the “geological background” of the location. “I agree (with this rant). There should be full disclosure,” quipped Soriano, while Manalac said, “Buyers should always exercise due diligence before buying a property, especially if a particular area has a recent history of problems like flooding, faultlines, landslides and the like.”

Morcilla said such geological data would be “too technical for most buyers, but for those who would want this particular information, the local government is the best entity to solicit documents from.” Cruz discloses that “development permits are issued by the Housing and Land Use Regulatory Board for the condo projects. The LGU issues building permits. These two should be able to prevent such an occurrence where a condo project is located in geo-hazard zone.”

7 No clear policy for discounts on bare or damaged units. Soriano agreed with this complaint, observing that “buyers must catch up on a lot of issues before investing or buying a condominium.” Morcilla explained “This is also dependent on package prices of condominiums. Damaged units also differ on extent, thus, discounts cannot be encapsulated in the form of policy.”

Cruz agreed, saying discounts on bare/damaged units are the prerogative of the developer.

8No clear policy on accountability when man-made disasters occur. The unfortunate incident involving unit owners of the West Tower Condominium Building in Makati and the busted gas pipeline of First Philippine Industrial Corp. comes to mind. In such cases, Soriano said “legal remedies are provided through the condo corporation, but then again unit owners must contend with the Philippine legal system.”

Mañalac said “this problem would already be outside the developer’s concern and control.” Morcilla explained that “this falls on a different law of the land called ‘Writ of Kalikasan,’ where the Filipino people are empowered to assert their rights for a healthier environment.”

Cruz said building codes, structural codes, fire codes and development permits pinpoint responsibilities. “In the case of the pipeline leak, this is not the responsibility of the developer,” he said.

By: Tessa R. Salazar
Philippine Daily Inquirer

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AmiSa

Everyday is a Holiday

Beach Resort Condominium at Punta Engano Mactan

Units Available include RFO and Preselling

Azalea Place

Life's Simple Joys are Always Within Reach

Convenient Business and Leisure Living at the Heart of Cebu

Currently Preselling!

Quality Projects of One of the Pioneering Developers in the Country

Robinsons Land Corporation

Flexible payment terms available!

For inquiries please call 09065549505 or 09229452718 and look for Ray.

You can also email at raymund.baroy@yahoo.com

=========================

Best Regards, 

Raymund B. Baroy

Account Manager

Robinsons Land Corp. - Cebu Sales Force

Visit Us here: Robinsons Land Premier Properties 

Call/SMS:

Local: 09065549505 / 09229452718

International :  +639065549505 / +639229452718      

Email : raymund.baroy@yahoo.com

AmiSa: AmiSa Private Residences

Azalea Place: Azalea Place