Cebu Property Boom: Condos Running Out

[Medic Mike]

Developers are experiencing an inventory shortage because of high demand for middle market condominium units in Cebu.

They are running out of units to sell especially those properties in the P60,000 to P75,000 per square meter range, said Anthony Leuterio, president Leuterio Realty and Brokerage, last Saturday.

“The market is desperate to buy a property, and developers are scrambling to develop more projects. They (developers) are now developing more new concepts for the market, but they will need the help of government for infrastructure support,” said Leuterio.

With Cebu being a top tourism destination, many foreign nationals are now looking to buy properties here for retirement.

“What’s happening now is that foreign developers are now coming here and partnering with local developers to develop properties for their own market, like the Japanese and the Koreans, and the best property for them is the condominium because these foreign nationals cannot own a house and lot here,” he said.

Leuterio said that there are many lots in Cebu that can still be developed for condominium projects but need roads and other infrastructures which he said the government should support.

“The demand now is about 150 to 190 buildings for condominium at the P60,000 to P75,000 per square meter range and 150 to 200 subdivision projects. The projects that aren’t selling are those that were priced wrong,” said Leuterio.

Mid-Range

Leuterio described the Cebu market as five percent rich and 95 percent mid-range, which is why developers, like Primary Homes and Cebu Landmasters Inc, offer more midrange products.

“They (Primary Homes and Cebu Landmasters) ran out of inventory, and they are now doing double time to develop more. Primary Homes’ walkup condo project The Courtyards at Banawa which they recently launched is basically sold out. That’s how desperate the market is,” said Leuterio.

Even high-end products, which cater to only five percent of the market, like condominium projects at Megaworld’s The Mactan Newtown Center is also experiencing the same robust takeup of units.

They currently have three projects launched which includes 8 Newtown Boulevard, One Pacific Residences and One Manchester Place which now have a limited number of units available, said Sunshine Roxas, Megaworld’s sales manager.
“To also cater to those who wants an easier means of payment, we offer special packages because we saw the interest and we want them to be able to invest in a quality product like ours,” she said.
Leuterio said that brands like Megaworld and Ayala Land are also successful in penetrating the five percent market because “first they already have the track record, and second, they offer good packages for their market.”
OFWS
He said that the market is dominated by overseas Filipino workers (OFWs) now wanting to invest in real properties, local investors and the “flippers” or those who buy properties and then sell them when the value of the property increases.
“Real estate is a by-product of tourism, and Cebu is a top tourist destination that is why we are getting a lot of interest from buyers around the world. We should take advantage of this trend which is expected to continue until 2016 or up to 2020 if the government is supportive,” Leuterio said.

 

http://cebudailynews.inquirer.net/2014/06/17/cebu-property-boom-condos-running-out/
 

[MikeB]

I saw this adverti article in the paper last week.

They are running out of units to sell especially those properties in the P60,000 to P75,000 per square meter range, said Anthony Leuterio, president Leuterio Realty and Brokerage, last Saturday.

Stopped reading right there.

[Geoff Thomas]

Very true, there are no condos in this price range.

[Jack Peterson]

We should take advantage of this trend which is expected to continue until 2016 or up to 2020 if the government is supportive,” Leuterio said.

 

 

Unfortunately, this can be where, a big problem, starts. This same thing happened in spain not so many years ago, low interest, buying off plans etc etc. Many urbanisations began to spring up. Inner City developments began. Then bang. What was a shortage, became an overload. on the Costas, in Southern Spain there was  reportedly over 16,000 units unfinished, no financing to complete and Interest so high they will never be sold. I am no Real Estate expert but you do not have to be a brain surgeon to understand, that even in the real estate regime, the bottom can and is falling out.

 

 

:tiphat:

[robert k]

I for one hope they catch up with the demand for condos because it will keep those renters and buyers out of the segment i am looking in thus keeping my costs lower and selection higher, a win win all round. Build baby build! :)

[Thomas]

Several say it's real estate BUBBLE boom in Manila.  Now it seem to have arrived to Cebu city too...

 

We should take advantage of this trend which is expected to continue until 2016 or up to 2020 if the government is supportive,” Leuterio said.

 

Unfortunately, this can be where, a big problem, starts. This same thing happened in spain not so many years ago, low interest, buying off plans etc etc. Many urbanisations began to spring up. Inner City developments began. Then bang. What was a shortage, became an overload. on the Costas, in Southern Spain there was  reportedly over 16,000 units unfinished, no financing to complete and Interest so high they will never be sold. I am no Real Estate expert but you do not have to be a brain surgeon to understand, that even in the real estate regime, the bottom can and is falling out.

:tiphat:

Jack (Englishman)

They show at Swedish TV a reality serie where Englishmen go abroad to buy properties, because the prices in UK are crazy high. In several programs they find UK properties cheap, although it's sheds/(almost) ruins for houndreds of thousands of pounds!!!

So it's not odd Englishmen going abroad to buy buy properties, finding "everything" cheap - yes, in compating with UK...  - destroying the realistic pricing where they start buying in rest of Europe too    :boohoo:    :)

(E g in one place in France, which Englishmen had got their eyes on recently, they had pressured up the prices 30 % in ONE year...)

But sadly no Englishman offered a to high price for my house in Sweden   :bash: :hystery:    (I had to agree to a Rent-to-buy deal to get a bit OK price at all, but it's still bad  (The price is only decent pay for the shimneys, land and the new roof, but nothing for all the rest (6 rooms)... Them, who have lots of money, want fancier, while them, who love my house, don't have money   :th_unfair:     :lol:

[JJReyes]

Before deciding to purchase a condo, one piece of important information is the percentage of owner occupied and renter occupied units. The problem with the large number of rentals or investment properties is the owners could walk away if market conditions change. Assuming your purchase is for lifestyle reasons (i.e., you will occupy the unit), what happens when a significant number of other owners fail to pay their monthly mortgage and association fees? 

 

In our real estate practice, the rule of thumb we follow is a minimum 55% owner occupied units. Unfortunately, they don't provide this piece of important information in the Philippines.

[scott h]

I am no Real Estate expert

 

I also am waiting for the bubble to burst, every where you look in southern Manila there seems to be a condo going up. A year ago every mall had kids handing out fliers. Now they are handing them out in the Pelenki and outside the 7-11. Sooner or later they will reach market saturation. One of my major concerns would be upkeep. As has been mentioned in other business related posts. Long term vision is not a strong point here. Once the condos are sold and the investors get their money and upkeep relies upon the home owner association dues...........watch out.

[Thomas]

Long term vision is not a strong point here. Once the condos are sold and the investors get their money and upkeep relies upon the home owner association dues...........watch out.

Yes. I suppouse developers show "happy calculations"  ,  "forgeting" to count some costs. And I suppouse the condomium assosiations don't put anything/to litle to repair funds...

[scott h]

And I suppouse the condomium assosiations don't put anything/to litle to repair funds...

 

Well Tomas, I believe they try, but collecting the fees at times is hard. Example: My brother in law lives in a gated community with fixed fees. With these fees they pay for the guards, trash pick up maint. etc. Problem is that due to a large amount of houses not being occupied by the primary owner(visiting/working overseas), living in the province etc. and the folks that rent the houses won't pay them, they just pay the rent to the landlord, so lots of the fees are never collected. Hence only one gate is open.

 

Yes theoretically all the owner signed a contract and a lien could be placed on the property (condo?) for failure to pay the fees. But with the state of the Philippine court system it is pretty much an empty threat and the people know it.