Will the Philippine real estate market ever recover?

[graham59]

I guess it's the old story.  People will always need homes (and land), but not necessarily the services of estate agents/property developers, who thrive on escalating prices (currently having put generations of young people out of the property market in the UK) .  Pisses me off no end, that does... as a parent. 

[Shady]

8 hours ago, Gandang Smile said:

I have noticed that all the investors, Filipinos and foreigners alike, do have something to worry about, especially if they are still paying their mortgages for a property that it is harder to rent or rents at a 30/50% discount, or is very hard to sell off.

But do you see decreasing prices? Maybe for rentals, but not for condo or house sales. In the entire country, there is only a handful of big cities that foreigners and wealthy Filipinos want  to live, so demand will always outweigh supply. And the ones who own the supply have old money to last through any temporary setback. 

[Gandang Smile]

7 hours ago, OnMyWay said:

I have been predicting a decline for several years, based on the POGOS leaving, for whatever reason.  Add in the Covid issues and it seems to make sense for a downturn.  You may see other nationalities leave as well if business does not pickup quickly.

It is not really seen in the asking prices yet.  They will keep on asking high prices in Subic and Clark, while the property sits.  I was just looking at listing on an agent's website  and they are asking 50 million for a double spider house in Cubi.  And you are just buying the long term lease, not the land!  They will never get that, but they try!

https://subicrealtyph.com/property/gorgeous-4-bedroom-3-5-bathroom-cubi-house-on-sbma-close-to-beaches-and-shopping/

Why would I buy that when for 48 million I can buy a muscle car business that includes 16 muscle cars?

https://subicrealtyph.com/property/property-and-muscle-car-restoration-business-for-sale-angeles-city-clark-philippines/

Note that both ads have something like this:

Highly Motivated Seller will meet the market in this current economic climate of uncertainty.

The owner acknowledges the current “virus market “.   Very realistically priced for immediate sale.

Before COVID-19, valued at 65 M php, approx 1.28 M USD Now is sacrificed for immediate sale at for 49 M PHP, approx 967,000 USD, and approx 1,500,000 AUD.

I have never been to the Subic area. Is it really the kind of dreamland where houses like the one in the first link above can cost 48M? And if the title is not for sale, that's even more insane. True, a foreigner can't buy land but I guess many of the foreigners who would be interested in a property like this would have a Filipino wife who could be sold the land.

This latter is very possible, as I was enquirying about some houses in Mandaluyong and the split can be done, no excuses to sell just the building without the land.

[Gandang Smile]

6 hours ago, OnMyWay said:

This one is far better.  His website has the price at 35 but it is 30 k now.  I know the owner, a Kiwi.

https://subicrealtyph.com/property/classical-luxurious-colonial-mansion/

30M including the sprawling garden around it might be a good deal. I would personally pass on it, as it's not really my style 

[Gandang Smile]

3 minutes ago, Shady said:

But do you see decreasing prices? Maybe for rentals, but not for condo or house sales. In the entire country, there is only a handful of big cities that foreigners and wealthy Filipinos want  to live, so demand will always outweigh supply. And the ones who own the supply have old money to last through any temporary setback. 

On paper no, I don't think anyone will want to swallow the bitter pill and admit to themselves that they have to resign themselves to a decreasing price and/or property value. The problem is when they try to rent or sell at their dream price and they see their "investment" sitting idle for months, perhaps years.

I had some extra funds after buying the condo we live in, in Ortigas, and bought a smaller 1BR unit. We put some quality furniture and appliances, including TVs and washing machines. We were targeting foreigners wanting to live very near the Asian Development Bank. Unfortunately, by the time we put it on the market, Covid lockdown happened and no foreigner was allowed in the country anymore. Our target had to become a Filipino single or couple.

In the end, after 6 months and changing brokers twice, we did find an ADB employee, but a Filipino, with a maximum budget of 30K. That is, less than half of what we would have been hoping to rent, based on similar properties (size, location, quality etc.) on estate websites and listings. And they have been telling me that I have been lucky to have found a Filipino with a great, stable job, instead of someone who will want to live in style but will stop paying after a couple of months.

I think wealthy "urban" Filipinos usually have enough money to live in pricier condos and they would probably prefer Makati and BGC over Ortigas or other less-beaten areas. Filipinos are a different market. Had I known we had to rent to Filipinos, I would have bought 2 mediocre SMDC units at the same price and had a slightly higher rental yield than what I have now.

All in all I don't want to sound like I am complaining all the time. I am just a bit disappointed because I had to make some sacrifices to come up with a part of the cash needed to buy this second unit outright. Well, c'est la vie...

[OnMyWay]

18 minutes ago, Gandang Smile said:

30M including the sprawling garden around it might be a good deal. I would personally pass on it, as it's not really my style 

It is a beautiful house and all the good quality imported furnishings are included, but the price is still over the top.  I think the guy bought it for 17-18 and put a lot of work into it.  The previous Korean owners had done no maintenance so it needed a lot of cosmetic work.

When I moved here in 2012, there was nothing priced like that.  The nicest houses might have been 10 mil.

24 minutes ago, Gandang Smile said:

I have never been to the Subic area. Is it really the kind of dreamland where houses like the one in the first link above can cost 48M? And if the title is not for sale, that's even more insane. True, a foreigner can't buy land but I guess many of the foreigners who would be interested in a property like this would have a Filipino wife who could be sold the land.

This latter is very possible, as I was enquirying about some houses in Mandaluyong and the split can be done, no excuses to sell just the building without the land.

No dreamland.  That house is an absolute joke for that price.  Unheard of.  That other house was the most expensive around until I saw that.

[Gandang Smile]

5 hours ago, Freebie said:

Im not sure there is /has been a bubble. At least not in my Manila experience.

Bought 2 good condos in BGC (Manila ) sold them both for good appreciation, approx 70% over 9 years.

Bought another one in a very good location in Makati, from a high end developer during pre construction and its up about 100% over past 5 years since I purchased. There were very few chinese renting /buying here so they werent a factor. Prices , as per my real estate friend seem to be holding here. The mass market properties that were built for OFWs seems to have declined a lot as these were being rented to POGO chinese, who have said goodbye to Philippines.

I dont see a bubble in my type of condo and hopefully there wont be.

 

I don't have direct experience of buying high-end condo in Manila. The ones I bought are good quality but from a small and virtually unknown developer, tucked away on a side street near Robinson Galleria.

I did have a look at high-end condos while looking for a place to buy. I was honestly taken aback at the price/space ratios. 9M in Rockwell would have bought us a cute 37 sqm loft-type studio, great for one of those Ateneo law school kids but a bit too small for a work-from-home guy like me. My budget was too low to buy anything new and spacious enough in Makati or BGC. We even looked at some large townhouses in Mandaluyong, around Greenhills and San Juan, but the quality was a hit and miss and they were quite far from any source of shopping or nightlife.

100% appreciation in 5 years sounds great, buying off-plan is usually the fastest path to that kind of trend. I did the same with my Davao condo and I have effectively gotten 100% or more in 5 years. Trouble is, you can rake in the profit only if you find a willing buyer. That seems to be the problem, at least during these Covid & lockdown times...

[Gandang Smile]

4 minutes ago, OnMyWay said:

It is a beautiful house and all the good quality imported furnishings are included, but the price is still over the top.  I think the guy bought it for 17-18 and put a lot of work into it.  The previous Korean owners had done no maintenance so it needed a lot of cosmetic work.

When I moved here in 2012, there was nothing priced like that.  The nicest houses might have been 10 mil.

No dreamland.  That house is an absolute joke for that price.  Unheard of.  That other house was the most expensive around until I saw that.

My wife is usually the source of wisdom on that. Her family used to live in one of these large mansions in Alabang. These 400+ sqm houses are too big for a working family to take care of. One usually needs at least 2 servants, lodged in their designated room or rooms. C is very disillusioned about the prospects of finding good servants who will not take advantage of you and the house at the first opportunity. A house that's too big is too hard to maintain.

My ideal size would be 150 sqm, no more, but I would put a premium on location, construction quality and amenities. Some of the older condos in Makati do have those kinds of spaces but a quick look around betrays a lot of decay, due to lack of maintenance and poor foresight during design and construction.

 

 

[Dave Hounddriver]

6 hours ago, graham59 said:

Can't go far wrong with land/bricks and mortar...has been my experience

I agree, and yet this comment set off an alarm in the back of my head.  I have known at least 3 expats who were murdered over land/bricks and mortar and I have not know any expats to get murdered about a condo.  Thus there may be a personal safety bonus to condo living.

[RBM]

16 hours ago, Snowy79 said:

It makes sense prices dropping a lot due to Covid and desperation. I think there are still a few places to make money but very frew.  Talking Boracay or Coron as they have limited build potential. The main cities even a few years back had part built condo developments sitting empty.

Snowy I have only read articles to the contrary, amazing as it seems. We used to laugh at the many condos being built in Cebu when there around 6 years ago......How can they possibly be sold.....Now its about tripled at least.

Here in Bacolod a good mid sized city, there are at least 6 major condo projects going full pace, including Mega Worlds huge 36 Hectare township development.  The same company latest results were very strong, again amazingly so. I just scratch my head and wonder how can this be.

Perhaps the world wide trend of low interest rates helps, anyway not enough years left to buy and wait for capital gain.