CEBU, Philippines — Property buyers are cautioned to anticipate a surge in real estate prices in 2019 caused by the upward movement of interest rates, changes in government policies, and the influx of Chinese buyers.
Both property buyers and developers may face a different texture of industry’s path this year. However, buyers’ interests are expected to keep its stability amid rising cost, said property market specialist and broker Anthony Gerard Leuterio.
According to Leuterio, price adjustment of monthly amortizations of residential units across segments will reflect in the bills of buyers, and this is only the effect of several changes in the market, including the tax reform, interest rates, among others.
With expanding middle class and the improving buying power among Filipinos and the high interest of foreign buyers to own properties in the Philippines will strengthen the real estate’s lead as one of the country’s top sunrise industries, Leuterio added.
STABILITY
Notwithstanding the unease of the otherwise smooth sailing sector, market analysts are seeing promising outllook for the sector. In fact, its growth is seen to make stable stride in the next 20 years.
“The Philippines is in a tremendous boom in real estate,” noted Leechiu Property Consultants chief executive officer (CEO) David Leechiu.
The Philippines’ real estate boom trail will be experienced by the country in the next 20 years.
The property explosion is seen to be fuelled by Chinese investors (from mainland China) who are now zooming in their interest in investments in the Philippines.
Aside from the improving per capita of Filipinos, the entry of Chinese nationals to the Philippines—either as tourists or investors will push up the sales of real estate products here across segments.
Leechiu is optimistic that the 1.4 billion China market will play a critical role in the Philippines property boom in the next two decades.
“The Philippines is in a tremendous beginning of what could be another 15 to 20 year boom,” Leechiu said expressing confidence that the boom will be led by real estate sector and this will have significant positive effects on the country’s over-all economic posture.
The threats of tax reform, the implementation of TRABAHO Bill, new policies of Board of Investments, interest rates, and some changes in government agencies’ policies in housing, and real estate regulations, may “rock the boat” of real estate, but these will not stop the industry from growing.
Chinese buyers
While the Philippine real estate industry has been warned to be extra careful in dealing with Chinese property buyers, this single market alone is expected to bring real estate industry in the Philippines to its surprising 20-year boom, added Leechiu.
Just like what China did in other economies like Middle East and Africa, and other countries in Asia, Philippines will take its center stage now as the new playground of Chinese investors, including the property speculators and market players.
“China will single-handedly bring the Philippines property market to 20 years of boom,” Leechiu reiterated.
Although the influx of Chinese property buyers in the Philippines provides good business for developers, it is also seen as drawback to the local market.
Leuterio believes that the growing interest of Chinese nationals to buy properties in the Philippines, specifically condominiums, is something that should be monitored because the bulk-buying trend will push up real estate costs further.
This development is seen to deprive local or Filipino buyers to buy the real cost of the properties, and the high demand (created by Chinese buyers) makes real property cost higher.
Leuterio, who founded the Filipino Homes Group of Companies, warned that Chinese buyers are buying condominiums by bulk (like one floor or more), as investment for renting or re-selling purposes. These buyers are paying spot cash.
While the existing 70-40 rule applied to foreign buyers are properly complied by developers, Leuterio said some buyers are clever enough to break the rule by using local dummies.
“This is loss of income opportunities for Filipinos,” said Leuterio. If not being monitored well,
Chinese capitalists will dominate the property selling and rental business in the Philippines, including Cebu.
Property developer, HT Land Inc., which is partly owned by a HongKong based conglomerate, is already trying to address this particular issue.
“We are limiting our selling of properties to Chinese buyers. We are much more strict in our requirements especially those who buy in bulk,” said HT Land Inc., project director Gilbert Ang.
HT Land Inc., which develops the 20-hectare township called Mandani Bay at the Mandaue Reclamation Area, said the company is not short in telling Chinese buyers from China what they can do or cannot do after buying the properties.
This avalanche of Chinese national buyers that will intensify this year will also put more pressure to the already rising cost of properties here.
More houses for middle class
The expanding middle class segment in the Philippines will also encourage developers to build more residential projects this year, regardless of price adjustments, said
Marcelino Mendoza, president of Organization of Socialized and Economic Housing Developers of the Philippines (Oshdp).
Mendoza expressed unrelenting optimism of the industry’s industry’s growth in this particular segment saying the momentum would continue for middle to high-end developments in real estate.
Sustained and growing inflow of OFW remittances, the improved affordability of Filipinos (with more employment, business opportunities) will fuel the demand for middle income residential units, he added.
However, this year will also start massive building of gated-subdivisions in countryside areas, due to limited properties available for horizontal residential projects, said Leuterio.
In the Metropolitan cities like Metro Cebu new dwellers have no choice but to adopt the condominium living.
Those who may want to live in sprawling spaces of living, are forced to pick an address a bit farther from Metro Cebu, Leuterio said.
Ray Patrick Manigsaca, AppleOne Properties Inc., assistant vice-president said while the company is interested in developing middle-income subdivision projects within the metro areas, it’s impossible to get the right location and ideal property.
The rising cost of living may be the new normal for 2019, but Leuterio hopes that the spike will settle on its real level, as the artificial demand brought about by the influx of Chinese buyers will bring prices to an exaggerated high. (FREEMAN)