Monday, March 1, 2021

Buying Real Estate Amidst COVID-19 Pandemic in the Philippines

 


"The Time To Buy is When There's Blood in the Streets."  - Baron Rothschild

With the ongoing pandemic and the disruption of business and everyday lives,  In the past few months, there are a lot of negative news being reported from negative economic growth that lead to recession, inflation of basic commodities including food and rising fuel costs, and the rising unemployment brought about by this sad ordeal in our country because of complacency and lack of foresight among key leadership. There are still opportunities arising from the sudden halt of our existence. People have learned to adapt in such events and scenario for the good or bad.

Land and  Property Values Rising

Land remains number one investment for speculators with big capital. Either to be used for different purposes like, agricultural, industrial, residential and commercial use or just for plain speculative purposes of buy, hold and later sell-off it has become lucrative for many. Many developers have been doing land banking for more than two or more decades before developing the properties from "urban planned townships" complete with residential neighborhoods, commercial shops, industrial sector for manufacturing, warehousing and a lot more which were written in our previous article "A Look Back on 2020 and Beyond: The Philippine Real Estate Sector".

Rising Foreclosures and High Defaults

There are a number of residential condominium owners who are selling off their property due to loss of tenants coming from the POGO sector which are mainly employing foreign workers from China. Property rentals have artificial growth over the past three years and have normalize recently. While residential condominium felt the effect of economic loss. Recently, bank have tightened their loan requirements because of the rising cases of real estate defaults and foreclosure due to P 7.7 billion economic loss and the current recession ordinary Filipinos are experiencing. We have written an article on "Getting Your Hands on Foreclosed Real Estate Properties: An Investment Strategy" a few years ago and still relevant with current situation.

Demand For Provincial Residential Properties Growing

With National Capital Region still the center of commerce and trade of the Philippines, people who previously migrated for work and career are moving back to the provinces. With the growth in communication and technology that many have opted to work from their homes with the current setup of 50% operation among private and government offices with less face to face interaction in their offices.

Growth areas like Central Luzon have been trending over the past few months as people are looking for better places to live, work and relax with less stress and pollution unlike in Metro Manila which is overpopulated, polluted and have bigger disparity in cost of living among rich and poor.

In Understanding Real Estate Markets & Cycle amidst COVID 19, the current situation in Central Luzon is mix of buyers market for residential homes, warehousing and information technology and communication sector while sellers markets among commercial and offices properties. While in National Capital Region there has been a lot of downtrends due to job losses and closure of companies because of poor planning and leadership. On the other hand, the agriculture sector might grow to 2.5% in 2021 as foreseen by the Department of Agriculture.

Conclusion

For speculators, investors or those who still have liquidity on their hand, opportunities abound the bold person with real estate as a connecting factor to one's fortune. Some financial advisors who have no knowledge of how real estate work would might argue that real estate is not liquid - meaning hard to sell off or dispose this asset but it truly beats inflation.

For our country to recover, an implementation, execution of the roll-out of vaccines would be needed to open up the markets and move the economy again. 

 

Sources: 

DA targets 2.5% growth in 2021 shorturl.at/knNW2
Contrarian Investing: Buy When There's Blood in the Streets https://bit.ly/37Gzg15
3 ways COVID-19 has affected the property investment market https://tcrn.ch/3bqZnu8
Photo Credits:  Image by Tumisu from Pixabay
 

 About the Writer


 CRB Benedict Baluyut is a professional real estate broker, real estate appraiser and associate of C. F. Baluyut Realty. He is currently the Vice President for External Affairs, Real Estate Brokers Association of the Philippines, Inc. (REBAP) - Pampanga Chapter. You can get in touch with him at https://www.cfbaluyutrealty.com.





 

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