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Emerging property trends in 2007
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WILL OVERSEAS-BASED buyers continue their buying spree this year, or will local
and national elections spoil the fun? Will more malls sprout on the fringes of Metro
Manila this year? Will plans toward developing functional “retirement villages”
stay on the drawing boards?
Inquirer Property recently asked local property players about emerging and “breakout”
trends that could spur further developments in 2007.
Eric Soriano, ERA Philippines country president and CEO, predicts that remittances
will continue to grow. ERA Real Estate is a multinational real estate service provider
that manages Eastwood. Soriano stressed that real estate purchases by OFWs have
contributed close to 25 to 30 percent of the annual sales of big property players,
nearly doubling the 15 percent contribution by the offshore market in 2005.
Dollar inflows are projected to hit an all-time high of more than $12 billion by
the end of 2007, $3 billion of which will be invested in real estate.
Kit Vergara, Philtown Marketing vice president, agreed with this observation.
“In the United States, if the interest rates are lowered, there will be a return
to investing in the US market, thereby lowering their presence here. However, if
inventory levels remain high in the United States, asset appreciation of units in
Manila may be higher than those in the States,” Vergara says.
Joey Antonio of Century Properties Group says OFWs will remain strong so long as
we more than 10 million of them continue working abroad.
“In fact, as years pass, the average income level increases as these workers go
higher in the value chain, hence, they earn more the longer they stay abroad,” he
says.
Gibson Yu, GW Architects business development manager, says the stronger peso
will be good for the OFW market. “The stronger peso shows stronger property value,”
Ino Lao, marketing director of Antel Land, says that with a stronger peso,
the property market should perform better since investors would rather put their
money in property rather than speculate in foreign currencies.
Crown Asia president, Jerry Navarette, says the industry may even surpass its 2006
performance, given the new and aggressive moves of its players, especially in financing.
The thrust seems to lie in the effort to make more Filipinos capable of owning a
home.
The condominium sector is seen to continue its tremendous growth. Navarette predicts
that Philippine property’s “new and aggressive financing schemes will definitely
be a strength it will bank on to drive the growth in 2007.”
Vergara says that from a US perspective, Fil-Americans will still purchase in Manila
provided developers are transparent and, “more importantly, they are offered a chance
to earn more than investing in the States, e.g. asset appreciation.”
Strengths and weaknesses
Vergara says there will be continued strength in the high-rise residential and office
buildings sector. Horizontal projects will also continue to enjoy good sales, but
location of the projects will continue to be a key factor. Vergara says the few
weaknesses of the property sector would lie in industrial and farm lots.
Antonio considers these among the industry strengths: banks awash with cash; foreign
investors who have started looking at the Philippines again; and the continued strength
of the OFW market.
Antonio adds that the BPO (business process outsourcing) market will demand new
spaces that will strengthen the office rental and sale market.
“The Philippines is part of the whole Asian emerging market and will continue to
attract capital from foreign investors. Low domestic lending rates, which is (now)
in single digits and we have never before experienced, will expand the market tremendously,”
Antonio says.
Elections, politics
But he foresees that politics will play spoilsport again.
Navarette agrees with Antonio, saying the Philippine property may be affected mainly
by possible political problems brought about by the 2007 elections and the unending
saga of Charter change.
Lao cites people’s anxiety over election results as one impending weakness for the
property industry. However, the real estate industry’s new and innovative projects
should keep the public’s interest, he says. The market is becoming intelligent,
he notes, as “it starts scrutinizing products (even more closely).”
Soriano sees an emerging trend toward the development of community malls and recreation
and lifestyle centers.
“If you are not in the league of an SM, the key is to become a fully integrated
retail player where you synergize entertainment, a wide array of restaurants, and
a complete tenant mix,” he says.
Soriano adds that this is a pioneering concept similar to Eastwood City’s “live,
work, play model,” with a “walk-able” environment at the core of the developmental
landscape.
“Developers and marketers are now incorporating aspirational marketing in their
game plans,” he says.
Soriano predicts that in return, offshore buyers are now looking to purchase homes
in new and quality developments in nearby provinces like Laguna and Cavite in the
south and Bulacan and Pampanga in the north.
Aging population
He foretells the growth of specialty developments and “customized” developments
for the aging population.
Soriano adds that the growth of the global aging population is expected to influence
the way residential communities will be planned and developed in the Philippines.
“There is now a global expectation for developers interested to tap the retiree
segment to incorporate standard metrics in the physical infrastructure (facilities
and establishments) as well as the functional aspects (doctors on call, etc.) of
managing a village development dedicated to the retirement market.
Lao likewise predicts a growth in this market, especially in the areas that offer
medical or wellness packages.
“Considering that the country still enjoys a widely English-speaking population
and a fairly low cost of living, this becomes an attraction for foreign retirees.
Likewise, products for the expanded Filipino family, such as developments near the
place of parents, schools or workplace, as well as fairly priced high-quality condominiums,
will be a trend,” says Lao.
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