With all the vertical building projects rising in Metro Manila, and even in other major cities in the county, you’d wonder if all of these would be put to good use.
Not only are there new residential condominiums being pre-sold to overseas Filipinos and young starting families, buildings for business processing offices (or call centers) and incentivized cyber parks are mushrooming right and left.
The Philippine property market continues to be robust, with new projects still being unveiled every month. You’d wonder next if there would be any end in sight to this invigorated building optimism.
Bubble burst phenomenon
Doomsayers are always nary of the so-called bubble burst, a business phenomenon that always threatens the life cycle of any industry experiencing double-digit growths.
In the last two decades, this has happened to global banking’s leverage investments, the U.S. dotcom sector and Thai real estate industry, and had brought grief and much hair-pulling among investors, kibitzers, banks and even economies of countries that were closely linked to the affected industries.
The Philippines itself is no stranger to asset bubbles, the last native phenomenon was in the 80s when golf club shares were so much in vogue that everyone with spare cash went on a buying spree hoping to cash in on promised escalation of real estate prices adjoining the golf clubs.
Turning ugly
In short, what this tells us is that when there is so much vigorous investing going on, when prudence is forgotten and people start to be become greedy, and when regulation becomes the weakest link, there is always the risk that things will turn ugly and bad.
This is why the current boom in the country’s real estate sector is giving some people, including our local and international regulators, butterflies in their stomachs. A bubble that bursts, as experience has taught us, indiscriminately negatively implicates anything that crosses its path.
Up till today, many of our countrymen are still waiting for the value of some golf shares that they had bought three decades ago to rise to some decent level, hoping that they can sell them, definitely at losses that are best not calculated for sanity’s sake.
More reassurances needed
That local banks are being cautious these days about lending to the real estate sector is reassuring news. It helps also that Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. has been monitoring closely banks’ lending portfolios, specifically the amount of loans extended to real estate.
Both are necessary to ensure that the real estate sector will not overheat and ultimately damage the Philippines’ chances at sustained economic growth. The trick, as our regulators often say, is to prevent any bubble from forming.
But still …
Would it be too much to ask just how resilient (or oversubscribed) the market is? At this point in time, the strong presence of private sector organizations is not helping assure the public since most of their press releases are self-serving.
It would help if we have a housing and land use regulatory agency that has a firmer grasp of where all of these building projects are moving towards. More importantly, if there is a regulator who can help chart where these real estate endeavors should lead to.
A good case in point is the fact that most of the high rise housing projects being built are being bought more as speculative investments rather than homes for the millions of Filipino families who need decent shelter at affordable prices.
With escalating land prices in the city, many families are buying or renting property outside of the main metropolis. This only increases the cost of mobility and negates whatever earnings that a household makes.
This partly explains why the Philippines’ middle class is having a hard time to transform into a sector that can contribute to creating more wealth for the country.
Slow pace of infrastructure development
Dante Yglopaz from UP Diliman, sent his comments about the slow pace of infrastructure development in the Philippines. Here’s what he wrote:
“For 55 years of my professional practice as a surveyor (geodetic engineer) in the Philippines and foreign countries, I have never seen the slowest turtle pace of the major infrastructure is going on in our country for the past three years of P-Noy administration.
“Ex-president Marcos could have been the most corrupt President of the Philippines, but he built most of the major infrastructures we are benefiting today. And one of them is the Bataan Nuclear Plant which was mothballed by President Cory in revenge to what Marcos did to Ninoy.
“At the end of the day, the Filipino has to suffer for the high cost of power (the highest in Asia) we are now experiencing.
“The only major accomplishments of P-Noy in his three years stay are:
1. Jailed his former predecessor and professor, Gloria Macapagal Aroyo;
2. Humiliated and impeached the Chief Justice, Renato Corona;
3. Initiated and signed ASAP the RH Bill which is contradictory to the Catholic Church. (Marcos is wise enough not to have a head-on collision with the Church.); and
4. Sacking of the only Doctorate in Meteorology in the Philippines, Dr. Nilo of PAGASA.
“It is noteworthy to say that he is the only president of this country from Aguinaldo to GMA that was able to do the four accomplishments mentioned above. There is nothing more to add or lessen to these accomplishments.â€
A Thank You note for MVP and SBP
Together with thousands of basketball fanatics, I would like to extend my thanks to Manny V. Pangilinan for his efforts to bring the FIBA Asia championship back to the Philippines and ensuring its huge success. Hats off too to the officers and staff of Samahang Basketbol ng Pilipinas (SBP) for all the hard work during the tournament. All arrangements went smoothly and based on feedback, all the visiting FIBA representatives were very appreciative with the hospitality and efficiency of the SBP team.
And of course, congratulations to coach Chot Reyes and the entire Gilas Pilipinas team for bringing the country back among the elite teams in Asia. Spain, here comes the small (in height basketball-wise) but gutsy Gilas Pilipinas.
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