Rising demand for low-cost housing remains unserved

CEBU, Philippines - Brokers in Cebu are encouraging the developers to build more affordable house and lot or town units, rather than building more condominiums, as a huge part of the market is demanding for this kind of products.

The Philippine Allied Chamber of Real Estate Brokers and Licensed Salesmen (PhilAcre) president Anthony Leuterio said that while the sales of condominium is still upbeat, developers should also consider the increasing demand for affordable housing packages that will be priced between P22 thousand to P28 thousand per square meter.

“Everybody is doing condominium projects,” he said although condominiums that are located in the inner city locations are selling, the real demand now is for the middle earners needing housing units that will give them amortization of P4,500 to P7,500 per month.

Economic housing, or affordable town house are the residential projects, which the market is needing right now. Leuterio hopes that developers will be able to see this serious need, otherwise they will also suffer from inventory glut, if they continue to build projects that are not needed by the market.

In a separate interview with economist Winston Conrad B. Padajinog, senior economist and dean of the school of management at the University of Asia & the Pacific (UA&P), he said that the reason why condominium projects are “selling like hotcakes” today, is not because developers are addressing the need, but they are providing the needs of the “investors” who are buying condominium units for investment and second home purposes.

However, he said buying condominium units as an investment may not be a good idea, as assessment value of this particular product differs depending on the marketability, and other factors.

While renting is a good way to make money out of condo investment, he said renting rates is also under pressure, depending on the demand, and location of the unit.

While Leuterio is showing the real demand in the market today at least in Cebu, for the strong need of economic housing projects, Padajinog said that developers will have to think of innovative ways in addressing this need.

According to Padajiong the issue of lack of land for horizontal house and lot projects can be addressed by making partnership with the local government unit (LGU) in converting the old urban-poor areas into housing projects that will be made affordable to the existing residents.

Urban area re-development is one of the opportunities developers can tap, aside from building projects that can only be availed of the moneyed market, or those segments that do not really need shelter or housing units.

Developers may partner with LGUs in offering a subsidized rate for the urban poor, so that the existence of “informal settlers” will be minimized in the city.

Building medium-rise buildings also in the urban areas can help developers build affordable or economic condominium-type residential projects, Padajinog said.

The obvious bias of developers in building only projects for middle and high end markets should be addressed otherwise, the real estate industry will not achieve a balance growth performance.