Avoid hous­ing melt­down, go to the coun­try­side

Cebu Daily News - - FRONT PAGE - RE­PORTER DE­VEL­OP­ERS

Lo­cal de­vel­op­ers are en­cour­aged to ex­tend their fo­cus to the out­skirts of the metropoli­tan to avoid a pos­si­ble hous­ing melt­down.

Lawyer Amay Ong Vaño, past na­tional pres­i­dent of the Philip­pine As­so­ci­a­tion of Real Es­tate Boards (Pareb), made the call in an in­ter­view on Tues­day es­pe­cially since Cebu City has be­come more sat­u­rated with condominium projects.

Ong Vaño warned that un­less de­vel­op­ers are al­ready as se­cure as “the likes of the Ayalas, Henry Sy, or Lu­cio Tan,” they must slow down on the con­struc­tion of condominium units or else suf­fer a melt­down like what hap­pened in the US a decade ago.

The US hous­ing bub­ble af- fected over half of the coun­try where hous­ing prices peaked in early 2006, started to de­cline in the same year and in 2007, and even­tu­ally reached new lows in 2012.

A hous­ing bub­ble is a run-up in hous­ing prices fu­eled by de­mand, spec­u­la­tion and ex­u­ber­ance. It usu­ally starts with an in­crease in de­mand, in the face of limited sup­ply, which takes a rel­a­tively long pe­riod of time to re­plen­ish and in­crease.

Spec­u­la­tors enter the mar­ket, fur­ther driv­ing de­mand. At some point, de­mand de­creases or stag­nates at the same time sup­ply in­creases, re­sult­ing in a sharp drop in prices – and the bub­ble bursts.

Ong Vaño is en­cour­ag­ing de­vel­op­ers to spread their projects to the out­skirts of the city and fo­cus on the eco­nomic hous­ing seg­ment where the need is greater.

Res­i­den­tial stock

Real es­tate con­sult­ing ser­vices firm Pin­na­cle es­ti­mated the res­i­den­tial stock in Cebu at 22,284 condominium units as of end2016, re­flect­ing a 148-per­cent growth from about 9,026 units in 2013.

In ad­di­tion, an av­er­age of 5,000 units will be de­liv­ered in the next cou­ple of years. In terms of take up, the av­er­age take up is 6,000 condominium units an­nu­ally in the last four years.

Pin­na­cle said the pro­jected in­crease may be com­fort­ably ab­sorbed by the mar­ket while sta­ble in­crease in prices shows the sound­ness of the sec­tor.

With new res­i­den­tial condominium projects sprout­ing all over Cebu City al­most ev­ery year, one might sur­mise that there is a glut in terms of hous­ing units within this mar­ket seg­ment.

Prop­erty sup­ply

But Ong Vaño said there is no ex­cess sup­ply of th­ese kinds of prop­er­ties and only a glut of peo­ple who can­not af­ford them.

“That is the danger, so much that de­vel­op­ers have amended or changed their mode of pay­ment,” the cer­ti­fied in­ter­na­tional prop­erty spe­cial­ist said.

Years back, buy­ers were re­quired to pay a 30-per­cent down pay­ment in cash, but this has since evolved to an in­stall­ment ba­sis rang­ing from 36 months up to 60 months to pay with some de­vel­op­ers of­fer­ing no in­ter­est at all.

Even then, many Ce­buanos still can­not af­ford to pay for th­ese prop­er­ties since most of the af­ford­able units in the lo­cal in­ven­tory have al­ready been taken by in­vestors, both for­eign and lo­cal.

Hous­ing is­sues

Wil­liam Floresta, cur­rent pres­i­dent of Pareb, said that many peo­ple are left with higher-priced condominium units be­cause in­vestors are given the op­por­tu­nity to buy one or two floors of th­ese prop­er­ties.

“We learned that Malaysia does not al­low for­eign­ers to in­vest in the low-cost hous­ing or low-cost condominium units. They can only buy prop­er­ties there if they in­vest what is equiv­a­lent to P11 mil­lion to P12 mil­lion here,” he added.

Floresta said com­ing up with a sim­i­lar law in the Philip­pines would help meet the de­mand for

hous­ing here.

Fur­ther­more, he said that the gov­ern­ment should also step up its com­pre­hen­sive land use pro­gram be­cause only a few lo­cal gov­ern­ment units have an up­dated Com­pre­hen­sive Land Use Plan (Clup).

The Pareb pres­i­dent said the Clup is a use­ful tool de­vel­op­ers that can take ad­van­tage of the pro­gram to de­ter­mine where to put up their projects.

Aside from a shift from high-rise build­ings in the city to eco­nomic sub­di­vi­sions in the coun­try­side, real es­tate prac­ti­tion­ers are also see­ing a rise in other seg­ments such as com­mer­cial and in­dus­trial.

Busi­nesses, growth

Au­gusto Agosto, an ap­praiser and a mem­ber of the real es­tate man­age­ment fac­ulty at the Univer­sity of San Car­los (USC), said that they no­ticed a rise in the num­ber of com­mer­cial es­tab­lish­ments in Cebu City.

He said this could be at­trib­uted to the growth of the lo­cal econ­omy, with the gross re­gional do­mes­tic prod­uct (GRDP) of Cen­tral Visayas recorded as higher than the na­tional gross do­mes­tic prod­uct (GDP) in 2016.

This could be owed to the in­flux of busi­ness process out­sourc­ing com­pa­nies here, among oth­ers.

Agosto said real es­tate work­ers should also start con­sid­er­ing spe­cial­iz­ing not only in the res­i­den­tial seg­ment but com­mer­cial and even in­dus­trial as well.

BPO, tourism

Sa­muel Lao, Pareb na­tional di­rec­tor and vice pres­i­dent for the Visayas, for his part, said they are bank­ing on four fac­tors that would fur­ther drive the real es­tate in­dus­try in Cebu.

One would be the con­tin­ued ex­pan­sion of BPO and re­lated com­pa­nies here, which at present con­trib­utes mil­lions of pe­sos to the lo­cal econ­omy through the salaries of over 140,000 work­ers.

An­other fac­tor they are look­ing at is the prov­ince and re­gion’s thriv­ing tourism in­dus­try, ca­ter­ing to reg­u­lar tourists, med­i­cal tourist and even for­eign re­tirees.

Lao said the man­u­fac­tur­ing sec­tor is also poised to help fuel the growth of real es­tate in Cebu, with more Ja­panese and Chi­nese in­vestors eye­ing set­ting up op­er­a­tions in other parts of the prov­ince since ex­port pro­cess­ing zones on Mac­tan Is­land are al­ready fully oc­cu­pied.

He added that Cebu’s grow­ing pop­u­la­tion due to its at­trac­tive­ness as a des­ti­na­tion to work and study was also seen to in­crease the de­mand for real es­tate here.

Fur­ther­more, the Duterte ad­min­is­tra­tion’s am­bi­tious in­fra­struc­ture pro­gram could also mean greater gains for the prop­erty sec­tor all over the Philip­pines.

“With all of th­ese in place, real es­tate in the coun­try as well as in Cebu will have a big fu­ture,” said Lao.

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