Phl needs measures vs property bubble
The upbeat real estate industry in the Philippines needs a good support policy system from the government to protect buyers as well as small and medium property developers from experiencing pains if in any case an industry crash happens.
World Bank senior country economist Karl Kendrick Chua warned that as early as now the government should provide policies that secure the real estate market players and their buyers, considering that 90 percent of financial crisis usually stems from the property sector crisis.
The hyperactive growth in the real estate sector in the Philippines which encouraged small and medium developers to venture into the fertile market should be watched closely by the government specifically the movement of the property prices.
“The concern now is to make sure this sector remains healthy,” Chua said in a recent economic briefing.
At present, he said small and medium developers do not have adequate protection from the government. In any case that the property sector will fall (just like in the United States), these developers, as well as their buyers will be left as victims.
With the low interest rates regime and the opening of the real estate sector to more relaxed financing systems for buyers, this development should be accompanied with sound policies to protect both small and medium developers and the buyers.
The rising middle-class population in the country, bolstered by the good economic prospects in the Philippines will make the property and real estate sector to flourish for the long run.
Meanwhile, real estate analyst Enrique Soriano earlier said that Cebu is far from experiencing a bubble as the market is still promising, fueled by the increased income level and purchasing power of Filipinos.
This means that real estate developments will continue to thrive in Cebu in the long term, while high-rise and condoliving style is seen to be more attractive for the buyers, and more profitable and attractive to developers.
However, Soriano said despite the encouraging environment for property development in Cebu in both residential and commercial projects, it could be a dangerous “business spot” for new entrants, as this industry is very biased in favoring the experienced players.
Although there is fast growth in the real estate sector in the Philippines, the country is suffering from “unreal estate” syndrome, while the low to middle-income market not being served well.
About four million demands is still not being served in the socialized and economic housing segment. While supply in the high middle to high-end market is profusely available in the market today.
In a separate interview, Philippine Allied Chamber of Real Estate Brokers and Licensed Salesman (PhilAcre) president Anthony Leuterio said that buyers now are demanding for house and lot products, specifically those that priced between PP1 million to P2.8 million, within the Metro Cebu area.
Although, there are still active interest from the market in buying condominium units, Leuterio said house and lot products are much in demand.
Because of this, Leuterio is urging developers to start off with pocket-subdivision projects to cater to the demand.
“We don’t have inventories to show to our clients next month. Everything is sold out already, from Liloan [north], to Minglanilla [south],” he said.
He said developers should have thought of this shortage ahead of time. Now, the market is very active, more buyers prefer to have house and lot, over condominium.
Although he said that while condominium take up rate is also speeding up, the challenge now is on the availability of good location and affordability of units.
All inventories in the good location areas for condominiums have already been sold, Leuterio said adding that the good performance of Cebu’s real estate market is seen to sustain in the long term, and impression to experience supply in condominium units is far-fetched.
Today, brokers are having problems in offering what the market needs. “We don’t have supply of affordable house and lot in Cebu.”