The year 2016 will be a very challenging yet exciting year for the country’s property sector as real estate developments shift its focus on catering to the specific needs of investors, as well as end users.
The challenge lies on several factors such as the current “over supply” of inventories as property investments and developments flooded the market over the past few years.
Andy Manalac, former chairman of the president and Chairman of the National Real Estate Association (NREA) one of the most active executives in the field of real estate sales and marketing, remains optimistic despite persistent predictions of some economic experts about the impending glut in the residential property section of the industry.
“Yes, there may be some locations that may have more than enough supply of residential units and may take a few years to have these absorbed by actual occupants, there are still a lot of areas not only in Metro Manila but actually all over the country that presents a lot of potential”, he said.
Manalac told The Standard that investors are currently starting to realize that the actively growing market for tenants to lease their units are the BPO workers and no longer limited to the expats, although they are still the ones patronizing the high-end and luxury condominium projects.
The industry is now generating almost the equal amount of dollars as our OFW and the number of their employees is multiplying faster than originally expected, he explained.
Manalac, a prime mover of “Think Invest”, also stressed that these new breed of condo dwellers are now appreciating the convenience of living within walking distance from their place of work.
“Now, there are actually projects where these workers can live, work and play within the same building thus making traffic, flooding and security concerns practically irrelevant” he said.
Developers will also be offering more practical projects with lesser amenities to keep not only the selling price low but the monthly dues as well.
Other industry experts said that major players will definitely be more active this year in affordable horizontal developments and even low-cost housing all over the country.
Rick Santos, founder, Chairman and CEO of leading real estate advisor C.B. Richard Ellis (CBRE) Philippines supported this claim as he cited that “from Clark up north to Davao City down south, the playing field is becoming more exciting especially for the BPO sector which will sustain the momentum and drive for the coming years”
“We are very positive on the way things are going for the real estate market,” he said. “As we have noted before, the transformation of areas outside of the central business districts are continuously creating more investment opportunities.”
On the residential condominium projects that continue to mushroom particularly in Metro Manila other industry players shared that there will be a lot of RFO (ready for occupancy) units that will be available in the market not only from resellers but also from the developer’s inventory as well.
But despite the supposed “over-production” the residential condominium will still remain “very attractive” to foreign investors particularly to those who either have the funds to pay in cash, or are qualified to get housing loans.
Low Cost housing
Demand for low cost and socialized housing is actually increasing faster than what the Developers can deliver. Thus, expect more major players, especially the top developers, to have more projects in this sector while they are slowing down on the middle to high-end developments.
“The demand is so big and still growing that it will be very difficult for them to catch up even with their combined production. However, buyers’ financing for these will be another story” Manalac said.
For the office spaces, developers will remain prudent in their approach and pre-leasing has been proven to be a working formula that has kept the vacancy rates at very low levels. But from all indications, the demand for office spaces, mainly from the Offshoring & Outsourcing companies are expected to continue to rise.
The current and forecasted strengthening of the US Dollar may be another motivation for our OFWs to invest in Philippine properties.
NEDA chief Arsenio Balisacan despite predicting “a steady and continuing growth” for the country’s real estate sector, at the same time pointed out late last year that “major challenges” needs to be addressed to maximize the property sectors full potential.
Weak public infrastructure, low property market transparency, and restrictive ownership rules continues to hound the country’s property sector’s otherwise steady and upward growth trend, Balicasan said.
The socio-economic chief has said that “there is a constant need for the infrastructure system to keep up with rising demands in the “fast-growing economy, especially these days as new property investments flood the market.”
He said that stable laws and regulations surrounding the investments of developers and real property investors remain wanting. And as a result, property buyers face high transaction costs, petty corruption and red tape, and substandard building practices.”
Balisacan also cited the country’s “under-developed” financial markets just like a few other countries in South East Asia.
Balisacan believes that the growing population of the country’s young professionals will be a source of future demand for residential properties, “as population projections point to an increasing share of the population aged 30-49 in the next couple of decades.”
“The property sector in the Philippines is at the forefront of Philippine growth in the medium and long term. Rapid urbanization plus the accompanying rise of the residential sector are key sources of growth for the property market,” he added.
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