Real Estate Philippines News Blog

A Philippine Condotel Investment Marketing Company sees sustained growth during 2009 in the Philippine Real Estate sector despite the Global financial crisis.

This worldwide financial catastrophe has affected the economic growth of emerging economies such as the Philippines, where growth slowed down from an outstanding GDP growth of 7.3 percent in 2007 to a lower than expected expansion within the vicinity of 4.5 percent according to economic experts.

Despite this, experts say it’s time to go to back to the basics for 2009 as the remaining liquid investors flock to traditional investment instruments such as direct investments and ownership of real estate. The way to go is revisiting investment opportunities from bricks and mortar businesses or companies which have a physical presence that offers face-to-face customer experiences, ” says Beth Collingz, overseas marketing director of PLC Global, lead marketing partners for the Lancaster Condotels in the Philippines.

Moreover, highly populated countries like the Philippines which, among other sources rely on export revenue; can fall back on its human resources to survive the global financial crisis. The law of
supply and demand tells us that if the Philippines’ export sector is on the downturn because of the recession in the global export market, it can shift to its huge internal market to compensate a shortfall in exports into manufacturing for domestic consumption.

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In light of the current global economic crisis, the Bangko Sentral ng Pilipinas has dedided to cut Philippine interest rates by 50 basis points (or .5 percent) to 5%, which they said was the same level of interest rates during the start of the US meltdown. In fact, they are signaling another .5% cut next month to further encourage consumer spending among Filipinos and keep our Philippine economy afloat amidst all this chaos.

In my previous blog post (see and read http://www.realestatephilippinesblog.com/part-2-of-inquirer-article-on-real-estate-philippines/ ), I mentioned there that our Economy grew more than what our government expected at 4.5% GDP, which is obviously good news since it proves we are resilient to the economic downturn. This current move by the BSP is precautionary because they’re “playing it safe” and making sure that there is still enough money to go around with and keep our country moving forward. Perhaps they were taking notice of the many multinationals here cutting jobs or decreasing working hours for Filipinos, so we definitely would experience a slowdown in growth. Still, HSBC analysts confirm that our monetary reserves remain adequate to keep us going (as also mentioned before in http://www.realestatephilippinesblog.com/hsbc-sees-asia-more-resilient-to-crisis/)

This of course has great implications for Real Estate Philippines investors and buyers. Lower interest rates mean that people will get encouraged to loan more in the bank to buy houses, lots and condominiums. It also implies lesser interest expense in loans for constructing a home or buildings. However, this can also turn out to be a sign that our fall is yet to come since the US had several straight rate cuts in a row, but still their economy fell into recession.

The main difference here is that their exposure to sub-prime mortgages are way too high, and they even had complicated debt instruments which were also exposed to bad debts from American homes which gave them more trouble. Here in the Philippines, such is not the case, because majority of home buyers here are not speculators but mostly end-users who really need a place to stay. As I mentioned before (in blogpost http://www.realestatephilippinesblog.com/philippine-properties-still-good-bargains/ ), population growth is our main demand driver for the Real Estate Philippines sector, so we should remain strong in the times ahead. In fact, Philippine banks here have made it more difficult to loan, since they do not want to emulate the disaster of the US banks, so this should put us in check.

If you ask me, we should definitely consider going to the bank for a housing loan, especially when they cut rates again next month, and maybe even the months after. Provided, of course, that the Philippines indeed proves to be healthy in these hard times.

So… continue to be watchful folks!

As a continuation on part 1 (http://www.realestatephilippinesblog.com/still-more-positive-philippine-real-estate-outlooks/), Part 2 of the Inquirer Article on Philippine Real Estate outlooks (found on http://www.inquirer.net/propertyguide/buildingblocks/view.php?db=1&article=20090123-185183) continues to emphasize the resilience of our property sector since OFW‘s still need a home to go back to here and want properties to relax in. It features interviews with JAO Builders VP of Marketing Erlinda Tiozon and a continuing interview with EDGE Properties and Kawayan Cove president Jose Razon Puyat III.

To be honest, Part 2 of the article was not as good as the first one because half of it just advertised Kawayan Cove and JAO Builders. Well, it did talk about their strategies on how to overcome the slowdown of the world economy, but it was quite redundant considering that the first part of the article already did that with other developers. I was hoping they would come up with more figures or substantial proof that Philippine Real Estate is indeed in good shape.

Well, let me do that for you by sharing what I’ve come across lately… Bloomberg has reported that the Philippine Economy grew 4.5% last quarter of 2008, which is higher than what the Philippine Government had anticipated. Of course, this means good news to all of us Filipinos because it shows that we are indeed resilient to the crisis. Since OFW’s still continue to remit money to their relatives here, we will still be OK. Of course, we can’t help but cut our spending since even some multinationals such as Intel, Yazaki-Torres and Toshiba are cutting out employees to save out labor costs. But, as long as our Business Processing Outsource Industry is still growing, Pinoys can still find new jobs, so this should keep our economy afloat.

Other than that, let’s just continue working hard for our loved ones and praying… Godspeed to all!

Another new weekend article about the resilient and still robust Philippine Real Estate sector came out in the Philippine Inquirer last Saturday (http://showbizandstyle.inquirer.net/lifestyle/lifestyle/view/20090117-183843/RP_property_sector_optimistic). In an interview with Alejandro Manalac, president of the National Real Estate Association, we found out very positive statements from him to support the claim that our property sector is still in good shape.

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This is VERY interesting news in the lights of these times: Banks actually LENDED MORE to Philippine Property Developers this quarter! Bangko Sentral ng Pilipinas reports that “exposures of universal and commercial banks to the real estate sector — mostly in the form of loans and investments — reached P223.9 billion in September, 5.1% higher compared to the previous quarter’s P213.1 billion.”

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A Friday article from Philippine Inquirer reports that worldwide property consultant CB Richard Ellis has stated that the Real Estate Philippines sector is still a safe haven for property investments. Due to the fallout of financial instruments and diversified portfolio investments in the U.S., people will now learn their lesson and go back to traditional asset investments such as real estate.

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Two news articles just came out about Eton Properties, one from Business World (http://www.bworld.com.ph/BW122208/content.php?id=041) and one from Philippine Star (http://www.philstar.com/Article.aspx?ArticleId=425885&publicationSubCategoryId=66). The two have somewhat contradicting titles, with the one in Philippine Star saying that “Eton will not slow down” and the one in Business World saying that “Eton defers projects to test waters first”. Still, both articles are saying the same thing: that Eton Properties will definitely continue finishing the already started and sold projects like the Eton Residences Greenbelt in Makati, Eton Baypark Manila Roxas Boulevard, Eton Emerald Lofts Ortigas, One Archers Place DLSU, Belton Place Makati, Eton Parkview Greenbelt Makati, Eton Centris Quezon City, Eton Cyperpod Corinthian Ortigas, and the 1000-hectare Eton City in SLEX Cabuyao, Laguna.

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A new global accounting reporting system called IFRIC 15 (International Financial Reporting Interpretations Committee) has threatened to hamper Philippine Real Estate developers by using new accounting rules to realize income from property sales. Under IFRIC 15, which the Philippines agreed to comply with, Filipino developers must only recognize revenues from pre-selling activities once the project is completed.

Since pre-selling is very common in the world of Real Estate Philippines, this would force all Philippine builders to report losses instead of profits starting this coming January of 2009! And what’s even more damaging is that IFRIC 15 should have a retroactive application even to the previous financial statements of the past year!

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Based on this article in the Philippine News website (http://philippinenews.com/article.php?id=3157) that says Philippine Real Estate still have good value because of the single-digit interest rates and the prevailing demand for Philippine Properties; — all this despite the recent global economic downturn. This came from an interview BPI Family Bank’s Vice President of the retail mortgage division, Ms. Jocelyn Sta. Ana.

Perhaps some would like to argue against her claims, but in my humble opinion, she is right for the simple two-word truth prevailing here in the Philippines – POPULATION GROWTH.

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Here’s another encouraging follow-up note for the resiliency of Real Estate Philippines amidst the global crisis:

Hongkong Shanghai Bank (HSBC) sees developing countries in Asia in a much better position to withstand the current global financial turmoil than during the 1997-98 regional currency crisis. While emerging Asia would slow down alongside the global downturn triggered by the US credit crunch, the region–the world’s fastest growing in the last few years–would likely remain resilient, HSBC group chief operations officer Michael Geoghegan said in an international teleconference late Monday.

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In light of the current global slowdown brought about by the U.S. financial crisis, which originated from sub-prime property loans by the careless U.S. banks, we now reflect on the lessons that we Filipinos learned from our past. Builders have already started to review their plans amid fears that the huge Overseas Filipino Worker contingent that last year sent home more than 14 billion dollars, could shrink as jobs are lost in the recession-hit West. Two major players in Philippine Real Estate have already made some trimming moves to adapt to the current headwinds.

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