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Will the Philippine real estate market ever recover?


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I am picking up from the latest few posts on @Tommy T.'s thread about his new Davao home (which shouldn't be hi-jacked :ohmy:) and moving the convo here.

Basically the question is: in Davao as much as in Manila and Cebu, the real estate market is quickly showing itself as a bubble. Too many condo units have been built, especially in Manila, especially to low-to-mediocre standards, hoping to attract urban dwellers and obviously foreign "investors". As many of you know, many areas of Manila have been benefitting from the "bulk investing" (another euphemism for "money laundering") activities of mainland Chinese companies, especially those involved in online gambling (aka "the POGOs").

With the lockdown hampering much of this activity, the Chinese bias is gone and the condo market is showing itself for what it is: a bubble not dissimilar to that happened in China. Of course things are not to those dramatic levels, but I have noticed that all the investors, Filipinos and foreigners alike, do have something to worry about, especially if they are still paying their mortgages for a property that it is harder to rent or rents at a 30/50% discount, or is very hard to sell off.

I see the combined effect of the Covid pandemic, an overheated real estate market and decreased economic activity in the Philippines, both in terms of foreign investment and domestic consumption.

The usual aye-sayers reckon the economy and the market will recover and be great by 2022. I am not that optimistic.

What do you guys think? Any opinions welcome! :shades:

Edited by Gandang Smile
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I guess it's the old story.  People will always need homes (and land), but not necessarily the services of estate agents/property developers, who thrive on escalating prices (currently having put gene

I was able to quick sell and get back the cash I had put into it but not a profit.  That was fine though.  It meant I had free rent for those 5 years.

I think I had a lucky escape with Regatta Bay in Puerto Princesa, Palawan.  A good 5 yrs ago maybe 6 I looked into buying what looked like a beautiful apartment off plans.  I visited the site before d

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I have no insight into the real estate market in Philippines it makes little sense. Prices rise year after year to the point property in many of the larger cities is as expensive as found in the USA.

We have viewed water front raw land online at Bantayan Island and Southern Leyte the prices are all over the place. Some large lots are near a million USD.

 

Edited by Old55
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46 minutes ago, Gandang Smile said:

Basically the question is: in Davao as much as in Manila and Cebu, the real estate market is quickly showing itself as a bubble. Too many condo units have been built, especially in Manila, especially to low-to-mediocre standards, hoping to attract urban dwellers and obviously foreign "investors". As many of you know, many areas of Manila have been benefitting from the "bulk investing" (another euphemism for "money laundering") activities of mainland Chinese companies, especially those involved in online gambling (aka "the POGOs").

I have been predicting a decline for several years, based on the POGOS leaving, for whatever reason.  Add in the Covid issues and it seems to make sense for a downturn.  You may see other nationalities leave as well if business does not pickup quickly.

It is not really seen in the asking prices yet.  They will keep on asking high prices in Subic and Clark, while the property sits.  I was just looking at listing on an agent's website  and they are asking 50 million for a double spider house in Cubi.  And you are just buying the long term lease, not the land!  They will never get that, but they try!

https://subicrealtyph.com/property/gorgeous-4-bedroom-3-5-bathroom-cubi-house-on-sbma-close-to-beaches-and-shopping/

Why would I buy that when for 48 million I can buy a muscle car business that includes 16 muscle cars?

https://subicrealtyph.com/property/property-and-muscle-car-restoration-business-for-sale-angeles-city-clark-philippines/

Note that both ads have something like this:

Highly Motivated Seller will meet the market in this current economic climate of uncertainty.

The owner acknowledges the current “virus market “.   Very realistically priced for immediate sale.

Before COVID-19, valued at 65 M php, approx 1.28 M USD Now is sacrificed for immediate sale at for 49 M PHP, approx 967,000 USD, and approx 1,500,000 AUD.

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1 hour ago, OnMyWay said:

I have been predicting a decline for several years, based on the POGOS leaving, for whatever reason.  Add in the Covid issues and it seems to make sense for a downturn.  You may see other nationalities leave as well if business does not pickup quickly.

It is not really seen in the asking prices yet.  They will keep on asking high prices in Subic and Clark, while the property sits.  I was just looking at listing on an agent's website  and they are asking 50 million for a double spider house in Cubi.  And you are just buying the long term lease, not the land!  They will never get that, but they try!

https://subicrealtyph.com/property/gorgeous-4-bedroom-3-5-bathroom-cubi-house-on-sbma-close-to-beaches-and-shopping/

Why would I buy that when for 48 million I can buy a muscle car business that includes 16 muscle cars?

https://subicrealtyph.com/property/property-and-muscle-car-restoration-business-for-sale-angeles-city-clark-philippines/

Note that both ads have something like this:

Highly Motivated Seller will meet the market in this current economic climate of uncertainty.

The owner acknowledges the current “virus market “.   Very realistically priced for immediate sale.

Before COVID-19, valued at 65 M php, approx 1.28 M USD Now is sacrificed for immediate sale at for 49 M PHP, approx 967,000 USD, and approx 1,500,000 AUD.

I have to say it doesn't look very high end for 1m USD, at least not from the photos.

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It makes sense prices dropping a lot due to Covid and desperation. I think there are still a few places to make money but very frew.  Talking Boracay or Coron as they have limited build potential. The main cities even a few years back had part built condo developments sitting empty.

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35 minutes ago, hk blues said:

I have to say it doesn't look very high end for 1m USD, at least not from the photos.

This one is far better.  His website has the price at 35 but it is 30 k now.  I know the owner, a Kiwi.

https://subicrealtyph.com/property/classical-luxurious-colonial-mansion/

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18 minutes ago, OnMyWay said:

This one is far better.  His website has the price at 35 but it is 30 k now.  I know the owner, a Kiwi.

https://subicrealtyph.com/property/classical-luxurious-colonial-mansion/

That's more like it for circa. 600k USD.  

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Im not sure there is /has been a bubble. At least not in my Manila experience.

Bought 2 good condos in BGC (Manila ) sold them both for good appreciation, approx 70% over 9 years.

Bought another one in a very good location in Makati, from a high end developer during pre construction and its up about 100% over past 5 years since I purchased. There were very few chinese renting /buying here so they werent a factor. Prices , as per my real estate friend seem to be holding here. The mass market properties that were built for OFWs seems to have declined a lot as these were being rented to POGO chinese, who have said goodbye to Philippines.

I dont see a bubble in my type of condo and hopefully there wont be.

 

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Where I live, a shack is a shack, but ours is getting larger each year, and our land has quadrupled in value this past 3-4 years.

No rent no debt (and not much money . lol) . 

Can't go far wrong with land/bricks and mortar...has been my experience,  since I bought my first house 42 years ago, anyway. In the Phils or anywhere else.

Just make sure you can afford to pay for it, in the bad times.   

Edited by graham59
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14 minutes ago, graham59 said:

Can't go far wrong with land/bricks and mortar..

 I Totally agree with this, Our Land and Build has Grown well over the 13 years we have had it. I tend to think that it is the Larger Cities, CEBU MANILA that has had a Bubble Burst ( I think we all knew this would/could happen) In December we had a revaluation done for Insurance and was quite surprised to see that the prices  in the Provinces are not seeing the devaluation that the Cities are suffering, Condos are in the Main on leased land whereas Our Home and many others here are on owned Land that is escalating in Price

 

Edited by Jack Peterson
error somewhere
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