The first issue of The Freeman this year bannered on its front page that real estate will be the next big thing in 2015. While I am one of those who agree with the prediction, skeptics think this may not be the year yet, while doubting Thomases conversely, foresee the beginning of a property bubble in which I made a lengthy discussion in this column last year why a property bubble is not likely to happen. And I would like to cap them off with some basic concepts about the cause of a property burst specially for people who would like to try investing in real estate this year.
First, a bubble happens when there is an unnatural surge of property prices caused by speculation. Speculators, in real estate investing, are also flippers who buy properties at low prices then sell them higher in a year or two. But property speculators operate in a different way in that, they do not only buy by the bulk, the properties they bought are resold many times in that the last to own are unable to resell or rent them out because of their unreasonably high prices. And this is what’s happening in China now where you’ll see ghost towns of untenanted real estate. Second, a property burst is also brought about by a bad economy where buyers can no longer pay off their mortgage due to joblessness or unfruitful business.
A bubble is far too likely to happen (this year and in the short term) because property buyers in the Philippines are not speculators or flippers but are mostly investing for the long term and for end use. More than sixty percent of the buyers are also Overseas Filipino Workers (OFW) many of whom do not only have stable jobs but are also well paid. And since OFWs work out of the country, they’re the least affected even if the (our) economy is down.
So let’s put aside property bubble for now. If you’re looking to invest your hard-earned money this year, then real estate is your best bet. I would like to believe so because the demand is clear. If the Chamber of Real Estate Builders Association (CREBA) has it, there are already close to 4 million families who need housing to date and many of them will be renting. This means, if you invest your money on a condo, by way of a bank loan, renting out your condo would be good way to help you cover your mortgage payments.
Renting out your condo is not so difficult nowadays as there are already property professionals who can handle them for you. Rent.ph (www.rent.ph) is one of those companies that can assist you with the marketing and even as far as property management so you don’t have to worry about where to look for clients or to take care of your property while you’re busy with work or too far to take care of your condo’s day to day operations.
2015 is a banner year for real estate investors because of ongoing infrastructure developments which are expected to spur current homeowners to invest in second or third homes according to Gulf News. Areas of interest are focused on properties near commercial centres, including Makati, Bonifacio Global City and other parts of Metro Manila. Other preferred locations: Laguna, Bulacan, Cebu, Davao, Boracay, Bacolod, Ilo-ilo and Cagayan de Oro, are also popular. Investing in Philippine property today is ideal for Filipino and international investors as prices are likely to soar substantially in the coming years.
To continue, this year will be a good year to invest in real estate as prices are still within reach for the average middle income earner. Thanks to competition, prices of properties have remained relatively stable and developers are getting more creative and aggressive when it comes to amenities, features and concept.
With BPOs increasing by the numbers each year, the number of local migrants will definitely push the demand for more rentable spaces for office and residential use. You might want to consider putting up a building configured for BPOs or rent out your condo to house call center executives.
Tourism is also expected to balloon in the next two to three years and is expected to push real estate buying to capture the need of tourists for alternative and cheaper accommodations. Presold condos are the way to go if you’re thinking of letting your unit for short stays. Be selective though if you’re planning to venture into leasing your condo. Worth noting is that, not all condos are ideal for rent. Condos that are accessible to public transport and conveniences will always be the first choice of renters.
With the Asean Integration in full swing this year, we will be seeing the coming of real estate practitioners from the region to make their luck in the Philippines. We will see real estate brokers and agents from the Asean (except Singapore for now) in competition with our local property professionals. For those who are not yet ready, they better level up or else, give up. Contrary to popular notion, the Asean Integration is never a downside to the practice. People in real estate service have so many reasons to be thankful for. To be in competition with the best of the best in Southeast Asia, is a pinch on the cheek that real estate service is not to be taken lightly. Real estate investors need service providers who can amply answer questions beyond what they know in product knowledge seminars (PKS). They should be able to understand the language of investors and should be able to crunch numbers when it comes to mortgage and making presentations on comparative returns.
The Asean Integration beacons a new beginning in real estate practice as well as augurs well for property players by being able to collaborate with sellers or agents outside the country — a welcome addition to their product portfolio which they could also offer to their clients in their own country.
In a survey conducted by Gulf News last November, “majority of overseas Filipinos say they are looking at buying property back home for their families, or as an investment, in the coming 12 months.” Thus, this year is going to be another heyday for developers and property sellers. Investing in real estate in 2015 will be a good year for real estate with rentals also another “Big enterprise” says president of Rent.ph, Anthony Leuterio in light of the economic growth and the coming in of “BPO locators.”
Areas that I would like to consider as potentially profitable when it comes to rental are Labangon, Guadalupe, Banawa, IT Park, Lahug, Uptown or near Fuente Osmeña, Capitol, Labangon and those located near Cebu Business Park. Mabolo, Panagdait and Hernan Cortes in Mandaue are exciting to watch as well this year with the growth of retail conveniences in these locations.
Growth areas to watch in Cebu, especially for residential developments will be down south specially those proximate to South Road Properties. The start of rapid urbanization from Talisay to Carcar will be more pronounced this year with increased presence of retail players. Northwards, Mandaue, Lapu-Lapu, Consolacion will still be attractive if you’re thinking purchasing a property this year. Cordova and Liloan are new growth centers that have been eyed so expect property prices to rise this year in these areas.