8 Out of 10 Filipinos Eye Property Investment
DUBAI: Eight out of 10 Filipinos in the UAE plan to buy properties back home within the next two years, including those who already own homes, amid favorable return of investments in the horizon as the Philippines posts positive economic growth.
In a survey conducted by The Filipino Times with 1,000 respondents, more than 80 percent said they intend to buy properties back home within the next two years.
In the TFT 2014 poll, only 43 percent indicated interest to invest in properties within two years, with the bulk wanting to buy projects costing between PhP1 million to PhP2 million only.
Of the figure, 3 out of 10 prefer to buy a condo. About 60 percent favor a house and lot and 10 percent intend to invest in lots only.
Forty-six percent, on the other hand, want to invest in property within the next 12 months, more than double the figure last year.
This year, the majority still opt for the PhP2 million price ceiling for their property investment. Those who indicated preference to buy high-end properties costing above PhP5 million, however, significantly increased at 13 percent, from 7 percent in 2014.
Analysts said the sharp rise on the number of Filipinos in the UAE seeking to invest in any properties − house and lot, townhouse, lot, condominium unit or even agricultural lands − could be attributed to their better wages, improved financial literacy and the developers’ aggressive campaign to promote their housing projects in the Middle East.
OFWs account for 20 to 70 percent of the market for some major developers because they have higher disposable income than those who live in the Philippines.
Philippine Ambassador to the UAE Grace Relucio Princesa, who introduced the Pinoy WISE (Worldwide Initiative for Investment, Savings and Entrepreneurship) program in the UAE, said a property is something that every OFW should prioritize as well as savings to cushion them from rainy days.
Edgar Bacason, partner at the Dubai-based Lifestyles Middle East who is also a finance manager at a law firm, said the Philippines is considered a renter’s market, thus, any land investment is guaranteed to grow.
Bacason said many Filipinos still don’t have their own properties and opt to rent. Additionally, young students from the provinces who study in different cities in the country are guaranteed to rent out while finishing their university education.
“As Overseas Filipino Workers, we have the means to invest in a property. This is the right time to invest because we now have what we call the self-liquidating scheme. When we buy a property (condominium unit), we just pay 20 percent of its value and we can already rent it out. Property developers also have brokers who can look for renters to make sure that our assets are earning,” he said.
Joan Bacudia, a Filipina entrepreneur who has been in the UAE for the past 17 years, also strongly recommends investing in real estate.
She currently owns eight condominium units in different cities and other real estate properties which she either sells at a higher price or rent out. Apart from generating her extra income, the rents she collects every month also pay for the mortgages of assets she has bought.
She began investing in properties in 2004 when her salary was only Dh4,500 a month. After renting and reselling, some of those properties generated her 300 percent ROI.
“The Philippines is in a great economic position and best time to invest. How I wish I started investing when I was 25 but then again at whatever age it is never too late,” said Bacudia who owns the confectionery and cake shop Mimoza Cakes & Chocolates as well as several salons and other businesses.
Timothy Yara, a business executive, who already owns a property, said he wants to buy another one in the range of PhP4 million as investment.
Eduard Cleofe, owner of Atlas Cargo, said he will buy another condo unit soon because “property is a safe investment.”
For HR Manager Lowel Dalisay, investing in agricultural properties outside of the city is the best because it is cheaper and could yield more ROI in the future.
“Nowadays, the market value of any property, regardless of its location, appreciates fast, especially condominiums located in Manila, Makati City or Quezon City. However, investing in agricultural lands is my priority,” said Dalisay.
POSITIVE FORECAST
The International Monetary Fund projects the Philippine economy to grow by 6.5 percent this year after posting real GDP growth rates of 6.1% in 2014, 7.2% in 2013 and 6.8% in 2012.
This early, the rosy forecast has already translated to .91 percent q-o-q increase in housing prices in the country during Q2 2015, according to the latest report of Global Property Guide.
Colliers International echoed the same positive output in its Q2 2015 housing report. The firm pointed out properties located in the Makati Central Business District benefitted the most with the average price of a luxury 3-bedroom condominium going up by nearly 8 percent (6.61% inflation-adjusted) to PhP149,300 (US$3,179) per square meter.
The Bangko Sentral ng Pilipinas (Central Bank of the Philippines) said the housing demand in the country remains strong, noting that its residential real estate loans soared by 25.9% y-o-y to PhP411.44 billion (US$8.76 billion) in Q1 2015.
Filipinos heavily rely on commercial private banks to finance their long-term housing debts apart from the Philippine Home Mutual Development Fund better known as Pag-IBIG Fund.
Colliers reported lending to the country’s property sector posted a 26 percent growth in March 2015 causing the bank exposure in the property market to rise to PhP1.92 trillion compared to the same period last year.
Residential mortgages posted the strongest growth as the demand for more houses in the Philippines continue to grow.
More towering condominium buildings will be built around Metropolitan Manila starting this year, both from major national developers and smaller players.
Experts said people who want to invest in properties should thoroughly examine the background of property developers to avoid problems in the future, especially if they are buying in the pre-selling stage as there could be delays in the construction phase if the builders don’t have enough funds.
BE PRUDENT
Rob John Valencia who keeps a real estate blog said property investors should only buy from reputable developers to avoid problems in the future.
“Buy from reputable developers. Consider their number of projects, their history of delivering quality properties on time and their years in operation. Verify if they are licensed to sell pre-selling properties and if the project is registered with the Housing and Land Use Regulatory Board, a government agency that manages the real estate industry in the Philippines,” he said.
Tom Mirasol, president of Ayala Land International Sales, said every buyer should carefully assess his or her need for a property before making a decision. And like other experts, it has to be done with a trusted developer.
Lamudi Philippines, a subdisiary of the global property consultant, said rich people do not grow their assets by spending but rather by making prudent investments like buying properties.
The firm said the first home is the most challenging to acquire but it’s a step toward more opportunities.
Typically, an investor can live in it for no more than two years after rehabilitation and then sell for a profit.
“After the home’s rehabilitation, you can sell it for a profit, which then can be used toward the financing of a newer home (perhaps again an affordable distressed property) and repeat the rehabilitation process. You may also opt to lease out your first home after buying another primary residence,” Lamudi said in its portal.
“There is a saying: “don’t put all your eggs in one basket.” Similar to stocks and shares, an investment portfolio with more than one type of real estate has better chances of weathering financial challenges than one that relies on a single investment,” it added.
New Perspective Media is organizing for the second year in Dubai the Philippine Property and Investment Exhibition (PPIE) onOctober 23-24 at Jumeirah Emirates Towers.
Admission is free with lots of freebies and prizes to be won.
Project Manager Reggie Altera said the event is an opportunity for OFWs seriously considering to buy properties to shop around for options and to learn ways to easily finance or cash in from their investments.
Ayala Land, SMDC, DMCI Homes, Greenfield Development Corp., Ortigas & Co., Home Edge which will showcase projects from Primary Homes, Phinma Properties and Panglao Beach Resort & Co. are participating.
Altera said participants will get the chance to win gold jewelry from Jewel Corner, restaurant vouchers, iPads, silver accessories from Pandora and lots of other prizes.
The event is open to the public with free valet parking, snacks and Wi-Fi.
Tag 91.1 DJs Bluebird, Bob Kebab and Chikay will host the two-day PPIE-Dubai now on its second year. (With reports by Charmaine Mateo, Henri Abenis-Macahilo and Anne Lora Santos)