Property Sales Continue to Rise | Business 360

Summary

Despite challenges such as a slowing economy, weak global demand, and rising inflation, the Philippine real estate market remains resilient. David Liu, CEO of Liu Property Consultants, discusses the market's strengths, particularly in the luxury segment, and emerging opportunities in areas like Batangas, Bohol, and Palawan. He highlights the transformation in Makati due to new zoning laws and rising interest in mixed-use developments. While the mid-income sector faces oversupply and pressures, the growing demand for data centers and tourism-driven projects signals positive long-term potential for the sector.

Takeaways

• 😀 The Philippine real estate market is showing resilience despite global economic challenges like inflation, weak global demand, and rising oil prices.
• 😀 The mid-income condo market in Metro Manila and certain office spaces in Cebu and Makati are struggling due to oversupply, rising interest rates, and inflation.
• 😀 Developers are shifting focus to the luxury market, as middle-class buyers are being hit hard by interest rates and inflation, leaving them with fewer purchasing options.
• 😀 Makati is undergoing a significant transformation with new zoning laws that will allow for mixed-use properties, increasing flexibility and encouraging development in the area.
• 😀 Batangas, Palawan, and Bohol are emerging as real estate hotspots, driven by infrastructure development and tourism growth, with high-end projects like JW Marriott in Palawan.
• 😀 The Philippines' real estate market is considered counter-cyclical, meaning that when global markets face difficulties, more jobs and investments are created locally through the BPO sector.
• 😀 Despite political instability, such as the potential impeachment trial of Vice President Sara Duterte, local investors remain confident, with foreign investors more cautious.
• 😀 Interest in real estate remains largely local in the residential sector, but foreign investors are actively driving demand in the office and commercial real estate markets.
• 😀 The Philippine real estate market is benefiting from a shift toward vertical developments and the expansion of data centers, which are expected to thrive due to increasing demand for IoT and AI infrastructure.
• 😀 In addition to brick-and-mortar property investments, opportunities are emerging in real estate stocks, which are undervalued compared to the physical property market, particularly in large developers like SM Prime and JG Summit.

Q & A

What is the current state of the Philippine economy, and which sector is showing resilience?

The Philippine economy is facing a slowdown, with growth weakening, investment softening, and global demand remaining weak. However, the real estate sector is showing resilience, with property sales continuing in areas such as Makati and Palawan.

Why is the real estate market in the Philippines performing relatively well despite global challenges?

Despite global challenges like the oil price shock, interest rates, and geopolitical risks, the Philippine real estate market is faring well due to factors like a relatively stable economy, a large demand for housing, and the country being less affected by the downturn seen in markets like Hong Kong.

What is causing trouble in the mid-end condo market in Metro Manila and Cebu?

The mid-end condo market in Metro Manila and Cebu is struggling due to factors like high interest rates, inflation, and the loss of demand from the POGO sector. Additionally, many frontline businesses serving the middle class have been compromised.

How is oversupply affecting the real estate market in the Philippines?

Oversupply is primarily affecting the mid-end condo market. Construction delays during the COVID-19 pandemic led to an influx of completed units, creating a glut in the market. However, the office market is showing a slowdown in new supply, which may help balance the situation in the coming years.

What changes are happening in Makati's real estate market, and how will this impact development?

Makati is undergoing a transformation with new zoning rules that will allow for mixed-use properties, including more office and residential developments. This change is expected to spur a renaissance in Makati, making it a more flexible and profitable place for developers and offering more options for consumers.

Why is Batangas becoming an attractive real estate location?

Batangas is gaining popularity as a real estate destination due to its proximity to Metro Manila, ongoing infrastructure improvements, and developments like Rockwell's beach project. These factors make it an appealing location for both residential and commercial investments.

What role do Palawan and Bohol play in the future of Philippine tourism?

Palawan and Bohol are poised to play a key role in the Philippines' tourism industry due to their stunning natural landscapes and accessibility, including new international airports. These areas could become the country's answer to Bali and Phuket, attracting more high-end tourism projects.

What political changes are needed to support the real estate sector in the Philippines?

Key political changes include protecting property rights, improving the court system, and enabling foreigners to lease land for up to 99 years. These measures would help secure investments, particularly in areas like Palawan, where infrastructure development is needed to support real estate growth.

How does the political situation, like the potential impeachment trial of Vice President Sara Duterte, affect foreign investments?

While political instability may raise concerns among foreign investors, most are familiar with the Philippines' political environment and focus on economic fundamentals like price yields and location. Locals are generally less concerned about political changes, focusing more on market conditions.

What trends are developers currently following in the Philippine real estate market?

Developers are focusing on preserving cash, becoming more reasonable with their asking prices, and targeting higher-end residential markets. They are also moving into data centers and industrial markets, as well as adjusting to a more cautious investment environment following the pandemic.