It is quite obvious that Philippine Real Estate Developers are not as robust now compared to the previous 3 years due to the global economic slowdown, and therefore need new fresh tactics to survive.The Inquirer Property section started a series of articles that stated “Asia is no longer insulated” from the financial crisis originating from the West (source: http://www.inquirer.net/propertyguide/aroundtown/view.php?db=1&article=20090314-194072). Global Property Guide’s survey of publicly-available house-price time-series for 2008 showed that Philippine Property prices were declining steadily. Even until now, the slope is still going down as we brokers ourselves experience difficulty in selling. Most people we talked to our holding on to their money, or simply have hard times themselves in making it.According to the article, here is what Prince Christian Cruz, a Global Property Guide senior economist, suggests to Philippine Real Estate Developers to cope with the crisis:
• Provide cheaper properties by cutting back on certain amenities such as gyms, function halls and swimming pools. Location is more important to the working class Filipinos.
• Focus on accessibility to public transport as this is crucial to them
• Price properties according to the buying capacity of working and middle-class families. The international standard for affordable housing is three to five times the annual income. In other words, a Filipino worker who earns P10,000 a month can buy a Philippine property between P360,000 and P600,000.
• Offer rent-to-own schemes for better affordability
In other words, Mr. Cruz is suggesting developers should shift their focus from Overseas Filipinos an enormous local demand from the locally employed middle-class and working-class sector.
The second part of the Inquirer article quotes Alejandro Mañalac, president of the National Real Estate Association, saying that the Economic Slowdown is a blessing in disguise since there will be a smaller glut or oversupply of Philippine condominiums due to developers slowing down in new projects.
Mañalac also said the Ifric 15 issue (see my previous blog entry about it on http://www.realestatephilippinesblog.com/breaking-news-new-rule-to-hamper-philippine-real-estate-developers/) also made developers rethink their plans to build high-rise buildings (which takes three to five years to complete) in favor of end-user projects which they could finish within a year, and thus recognize their income in their books. “It’s a good thing that the implementation of this new accounting reporting standard was deferred until 2012,” he said, or else all of them would look bad to investors of their stocks.
Mr. Manalac also agrees with Mr. Cruz in terms of adjusting the payment schemes of properties for sale so that end users and the Filipino workers can afford it more. He reiterates that even though most of the Philippine Pre-selling projects are 60% sold, which gives them enough money to complete construction, developers should adjust their investment terms accordingly and not necessarily bring down prices, so that the remaining inventories of pre-sellers can be taken.
If you ask me, this suggestion should also apply to secondary sellers of Philippine property. They should try selling rent-to-own style, where in they can earn from the interest they charge to their tenants as well. In that way, they can help more Filipinos in owning their dream home while doing business also - a Win-Win situation for both buyer and seller
Alejandro Mañalac Filipino worker Filipinos Global Property Guide National Real Estate Association Overseas Filipinos Philippine Pre selling projects philippine property Philippine Real Estate Developers Prince Christian Cruz Rent to Own Alejandro Mañalac Filipino worker Filipinos Global Property Guide National Real Estate Association Overseas Filipinos Philippine Pre selling projects philippine property Philippine Real Estate Developers Prince Christian Cruz Rent to Own