Barker, James R. Estate to Utterback, David M., 20858 Camden Ave., Fuerstenau, Elroy A. Estate to Fuerstenau, Morgan E., 1428 S. 54th St., $81,000.
Philippine Real Estate: The Industry and What It Lacks – An Introduction
A question was recently asked:
And in that, my answer contained something disturbing:
the years 2014–2015 and now 2016, can be distinguished and considered as the transitional years from a 3rd world industry to a 2nd world industry.
Sadly though, this industry has a long way to go to become 1st world, maybe 10 more years.
I’m writing this blog now to expound on that thought. I will write candidly, if you, my reader would not mind. I will also apologise in advance if I make grammatical mistakes, in this piece or in the other pieces that will follow. I’m pretty lazy double checking my work so when I feel like it, I just publish without any second thought.
The real estate industry have slowly been developing and as I have mentioned, 2014, 2015 and 2016 can be considered as the transitional year, the renaissance period, the bridge between the “old 3rd world” and the “modern, new world”.
Although the real estate without licenses.from the jurisdiction of DTI, it was only in 2014 that, changes were truly felt. From 2009–2013, many still practiced
2014 was the year when the Philippine government truly started to make milestone developments, one crucial example is the revision of the implementing rules and regulations (IRRs) for Presidential Decree 957.specifically mandates brokers and their agents to get an HLURB license before being allowed to sell “project” properties.
When used in this Rules, the word “project” shall include the following which are required by law to be registered with the HLURB:
2.1 All subdivisions, including residential, commercial, farmlot, and industrial subdivisions;
2.2 All condominiums, including residential and commercial condominiums;
2.3 Any other similar projects, including cemeteries, memorial parks, and columbaria.
This forced the real estate developers to really comply. Before (<2013), they could easily circumvent the rules and regulations. They can use anyone without a license, to sell their projects-if and when these individuals get caught, the developers would easily justify that those individuals were merely “marketing” their projects and “not selling it directly”.
And that’s how the real industry was being run-if rules and regulations can be circumvented-then they’ll do it. Believe me when I say even the top 5 developers in the country were guilty of this practice.
2014 started the ball rolling, the year saw a significant decrease in unregistered sellers.
// I personally had the experience of being recruited by a group of salespeople operating under a developer. This group wanted to use my broker’s license (since by rule, 12 agents can work under 1 broker license).
The deal was, the group will work under my license and in return they’ll take care of my HLRUB registration (payment & processing) and I’ll receive a monthly proceed of Php 10,000 (without doing anything).
It was interesting but the deal did not push through. So no PHP on my end//
2015 was were things truly picked up. Even though there was an increasing number of unsold & resale condo units in the low and mid-end segment, rentals/leasing was picking up demand.
Never mind the fact that there was a supply bubble forming in the low & mid-end segment, the high-end sale and rental market was piping hot!
Okay, don’t get these things confused. Yes, there was and still is a supply bubble forming. How? Do you see those low and mid end condominiums located outside the Central Business Districts? Most of those condominiums have already been turned over for more than 12 months! But just observe: you can still see sales agents manning the booths inside the malls and outside the gates of the developments trying to sell condo units!
Also, you have to understand, when developers report that they have “sold out” condominiums projects, these reports don’t account for:
- those buyers that were not able to start their mortgage (meaning they were only able to pay the downpayment but did not have enough funds to pay for the balance);
- those that defaulted on their home loans;
- those trying to flip (sell) even though they have not fully paid their unit.
The high-end projects in the CBD’s are fine, they are really in all terms almost always sold out. It’s the low and mid end segments that are in a “soon-to-be” state of crisis.
Let’s focus our attention to the high-end rental market. The rental demand in residential and commercial units were being flamed by the on-going economic rise of the country. The and this Q1 of 2016, it hit 6.9%. The country is now hailed as the .
GDP measures a country’s total economic production and performance.
Foreign companies & governments have started sending more and more delegates to work inside the archipelago. This influx of delegates correlates directly to the increase in rental and leasing demand.
To put it simply, these people needs a place to live and work in!
The second source of demand comes from creation of more white-collar jobs; managers, supervisors & even c-level executives. These are being filled by men and women from the provinces and like the foreign delegates, these people also need a place to live in.
Sustainability is the keyword that best describes the 1st and 1/2 quarter. All the energy from 2015 have been transferred to the first 5 months of 2016. Potential tenants who were not able to rent in 2015 have started or even already finished moving in to their new residence.
June is only 8 days away and there seems no slowing down.
More and more brokers, agents and leasing professionals are feeling the pressure to provide supply to this ever growing demand.
It is in this paragraph that we will end this introduction and where the premise of our 2nd piece will begin. If you liked this article, do subscribe.
See you in my next post. Cheers!