Will the Philippine real estate market ever recover?

[Snowy79]

43 minutes ago, RBM said:

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.

 

It would be interesting seeing the actual finances of some of these companies and where their profits come from.  I know the President has commited billions to infrastructure projects, maybe that's funding some of the developments.

The media reports of price rises I'd take with a pinch of salt depending where they get their advertising revenues from. I know in Scotland my good friend worked for a massive solicitor and property group that during the banking crisis threatened to pull a multi million pound advertising campaign if the national newspapers never printed positive reports on house values increasing. 

[Freebie]

9 hours ago, Dave Hounddriver said:

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.

There very much is a BIG safety aspect to owning a condo. Firstly if one buys from a "proper" developer there's no/less  issue with the title, whereas with land , especially when a buyer /seller knows theres a poriner involved there can be and have been a great many issues with titles, real fake or otherwise.

Secondly the condo owner can clearly state whose name should appear on the title and assuming its one person, can then take care of the title accordingly. Mine is in a safety deposit box.

And then when the selling time comes, the titles provided can be very clearly documented and identified assuming one uses a reputable realtor.

I sold one BGC condo to a very cautious couple, so cautious they even bought their own " title expert" to verify that the title to the condo I owned was legit.

But searching for legit titles in provinces, wher you dont know all the language, you dont know if you can trust your realtor, your lawyer, and please, said with no offence  intended not knowing if you can trust your own wife can be a whole other ball of wax.

And youtube can show a great many expats who were scammed into buying houses and land for which there was no title. And if they objected, well some of these were " offed" as @Dave says. Due diligence folks !

[gbmmbg]

Location,location,location......I will always take a shack in a good neighborhood over the"palace" someone built in the wrong place. Sadly you see them all over the province.

Edited November 5, 2020 by gbmmbg

[hk blues]

11 hours ago, Gandang Smile said:

 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.

Yes...there is a vested interest in inflating house prices for all involved - except buyers and sellers.  Any property is worth what someone is willing to pay. 

[Gandang Smile]

7 hours ago, RBM said:

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.

 

I have been asking myself the same questions: the market always seem buoyant, every developer boasts that every unit gets sold within the first year after launch (assuming 3 or 4 years of off-plan sales) and everybody is jolly happy.

My theory is that sales aren't always followed by successful ownership. When the interest-free period expires and the prospective owners are required to have their mortgages in place, how many of them are actually able to get it and pay the unit in full?

Case in point, my development Aeon Towers. It's around 365 units and they told me that, despite all units being completed and ready for turnover, only about 10 people have taken ownership of their units. That can mean only one thing: that despite the massive 3-year-plus delay, very few people who were "sold" the unit have their unit paid in full (cash or mortgage).

I know that FIlipinos are a bit like the Americans, they love to dream big and get convinced that owning a condo is a bit of a status symbol. Yet, without the easy credit culture of the US (home credit is much harder to get here), I am sure many of them wil fall short of that dream. I am wondering how many Aeon units will never be turned over and eventually resold "for assume" or repossessed by the developer.

 

Edited November 5, 2020 by Gandang Smile

[Gandang Smile]

59 minutes ago, gbmmbg said:

Location,location,location......I will always take a shack in a good neighborhood over the"palace" someone built in the wrong place. Sadly you see them all over the province.

I guess many foreigners have the opportunity to build on a land owned by their wife's family. But you're right, I would be wary of a big beautiful house rising in a poor neighbourhood in the province, where it will be everybody's envy. And envy is not always a good thing in the Philippines... 

[Gandang Smile]

2 hours ago, Snowy79 said:

It would be interesting seeing the actual finances of some of these companies and where their profits come from.  I know the President has commited billions to infrastructure projects, maybe that's funding some of the developments.

The media reports of price rises I'd take with a pinch of salt depending where they get their advertising revenues from. I know in Scotland my good friend worked for a massive solicitor and property group that during the banking crisis threatened to pull a multi million pound advertising campaign if the national newspapers never printed positive reports on house values increasing. 

The problem I see with building plenty of new, good quality infrastructure is: people must be able to afford it. It's not just real estate, take the spate of new toll highways and superhighways to be built. They are all for-profit private projects and when people will start to commute on them and will be smacked with a 300, 500, even 1000 pesos a day, for a two-way journey, their finances will suffer.

Just like with China and Malaysia, I really can't see the benefit of transitioning to a middle-class country without salaries reaching that level fast.

[hk blues]

19 minutes ago, Gandang Smile said:

... I really can't see the benefit of transitioning to a middle-class country without salaries reaching that level fast.

Again, the "build it and they will come" philosophy doesn't necessarily work here. Most people simply don't have money despite outward appearances i.e. big cars, fancy phones etc.  Add in their weekend millionaires outlook to life and you can see why property purchases become problematic - especially in the mass market sector.

[Snowy79]

4 hours ago, hk blues said:

Again, the "build it and they will come" philosophy doesn't necessarily work here. Most people simply don't have money despite outward appearances i.e. big cars, fancy phones etc.  Add in their weekend millionaires outlook to life and you can see why property purchases become problematic - especially in the mass market sector.

It stinks of the sub prime mortgage issues of old.  I'm sure we all know the 24hr millionaires here and the general tendency to view a loan as a gift, it's got disaster written all over it. The only saving grace I think is the buildings are priced for Western wages but built using 3rd World wages.  I'm sure the large contractors have healthy bank balances that could tide them over for a few years. Even renting them out cheap will cover the construction costs. 

My concern is will the maintenance still get carried out or put on the back burner to save overheads? The general build standard and quality of materials are very poor. I'd hazzard a quess a property here wouldn't last half the life of an average Western house.  I've seen some pretty run down properties that are only a few years old.

[Freebie]

6 hours ago, Gandang Smile said:

I have been asking myself the same questions: the market always seem buoyant, every developer boasts that every unit gets sold within the first year after launch (assuming 3 or 4 years of off-plan sales) and everybody is jolly happy.

My theory is that sales aren't always followed by successful ownership. When the interest-free period expires and the prospective owners are required to have their mortgages in place, how many of them are actually able to get it and pay the unit in full?

Case in point, my development Aeon Towers. It's around 365 units and they told me that, despite all units being completed and ready for turnover, only about 10 people have taken ownership of their units. That can mean only one thing: that despite the massive 3-year-plus delay, very few people who were "sold" the unit have their unit paid in full (cash or mortgage).

I know that FIlipinos are a bit like the Americans, they love to dream big and get convinced that owning a condo is a bit of a status symbol. Yet, without the easy credit culture of the US (home credit is much harder to get here), I am sure many of them wil fall short of that dream. I am wondering how many Aeon units will never be turned over and eventually resold "for assume" or repossessed by the developer.

 

It also means in many cases that some of the units have been given to the developer in lieu of cash payment . Its a common way of paying the major contractor. The contractors problem is then to onward sell such places which is why even in the most premium of properties, some condo units appear and are empty and untouched for a few years. The developer always hopes/gambles that it will be worth more later than when turnover has occurred.

Megaworld, SM and Ayala certainly all give units to developers instead of paying in cash. I understand there are also tax considerations in this practice.