I got the chance to sit in last Saturday's board meeting of the Philippine Allied Chamber of Real Estate Brokers and Licensed Salesmen (Philacre) to take advantage of getting a glimpse of what the future holds for the real estate sector in Cebu after the collapse of the US subprime which led to the impending global financial crisis.
Interestingly, the board is split as to the possible scenario for the next two years. Philacre president Anthony "Tonton" Leuterio predicts a slowdown for the next eighteen months in which "Real estate will start to recover on the last quarter of 2010." Ernesto Gacrama, the board's treasurer shares the same forecast however, sees it as an "opportunity to buy" because of falling prices. On the other hand, Elizabeth Ong, the group's VP remains optimistic that real estate will continue to be "brisk" in spite of the recession.
From the view of the developers, Ayala Land in their website (www.atayala.com) says that "the situation is bad" although it still sees some growth in the property sector due to its strong economic and financial fundamentals. Thus, "the outlook for Philippine real estate is equal or still positive in the next 12 to 24 months or until the next national elections here." the site adds.
I am neither optimistic nor pessimistic. Cebu's real estate may not be as good as it was five years ago, but we can still expect some slight growth in this sector this year and forward.
Cebu's economy has been known for its resiliency. If you remember the Asian Financial Crisis in 1997, Cebu was the first to recover quickly from that slump. Cebu's real estate growth will be primarily driven not by buyings from foreigners married to a Filipina but by Cebu's new growth area -- the BPO sector. "A number of Western firms have already shifted their operations in the Philippines" says MarketResearch.com due to the country's educated pool and cost effective wages and operations. If the Cebu Investments and Promotions Center have to say it, Cebu is going to be the world's most inevitable choice for doing BPO business for its labor pool, business friendly LGU and infrastructure. This could mean that there is still hope for developers to sell their projects to people employed and those to be employed in the future in call centers or IT companies.
Another factor is the OFW remittances. Money sent by OFWs already reached $17 billion in 2008 which is the highest in history according to the Bangko Sentral. OFWs spend much of their earnings in building or buying houses. But for the typical Cebuano OFW, he looks at buying a property beyond the need for shelter. He sees it as an investment opportunity. And in a crisis, hunting for a bargained property is an irresistible business proposal.
The reason why the Ayalas are also bullish about the property sector amid the crisis is because "There is also a cultural factor behind the strong demand for residential properties among Filipinos even during a crisis. Home ownership, for Filipinos, is the best hedge during critical times. A home serves as a refuge - it is where families run to during bad times." which I have to agree.
Source: Philstar.com/business
