Have Condo or House Pasalo ring a bell to your ears?
It has been a recent phenomenon for investors in the past year since we went to a standstill a year ago, those initial investor who wish to immediately divest their real estate properties particularly residential condominiums, townhouses and homes in National Capital Region (Metro Manila) and elsewhere in the Philippines. In this topic, we will focus more on residential condominium which played a significant number of cases for assume balance. A condo unit's assumption of balance (known as Condo Pasalo) from banks or other financial institutions where unit owners are currently struggling to keep up their payments of this supposed income producing investments as they became white elephants when the pandemic hit the country. The real estate sector almost near rock bottom where the residential condominium segments were the hardest hit at - 15% drop with residential leasing for condo significantly drop because of many factors but there were definite increase in sales on residential properties outside of NCR and the townhouses in the city.
"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.
Residential Real Estate Prices Declines
In the recent BSP Residential Real Estate Index Q3 2020 report, there is a sharp decline of properties particularly residential condominiums by -23% with many investors affected with the pandemic and the decline of foreign workers of various Philippine Offshore Gaming Operators in Metro Manila which have become the renters of these properties. With high vacancies and non-payments of loans. Majority of owners have decided to sell off their condominiums for other interested buyers particularly real estate speculators due to possible circumstances such as non-availability of credit from financial institutions because of stringent requirements against risks and defaults with a slow economy in recession.
The Year 2020 has passed over the past few weeks and we have survive another year under fear of the pandemic which has brought a lot of challenges over the past month after the COVID 19 SARS-COV 2 in December 2019. As we Filipinos are hopefully awaiting the arrival of the Anti-COVID 19 vaccine to our shore which is one of the key factor to help jump start the economy again to recovery. Although, the vaccine is NOT a magic pill or a silver bullet to annihilate this disease. It will tremendously help of those infected with better chance of survival but surely challenging times lay ahead with new variants of SARS-COV2.
With the current situation of the country and abroad, the global markets have been affected with the COVID 19 pandemic effects to the World Economy. There are current job losses, missed opportunities and money being lost brought about by such health crisis. All industries are dependent on Real Estate Market and are heavily connected with the national economy. In our recent post last February on the Philippine economic outlook for 2020, The Philippines had slowed down and has dipped to -7.3 % based from reports from Asian Development Bank. Contractions have been seen and felt all throughout the closure of the archipelago since March 16, 2020 to June 30, 2020 (Enhanced Community Quarantine) and the post lifting of ECQ to Modified General Community Quarantine in July 2020. A lot of businesses were affected with closures particularly the Micro, Small and Medium Enterprises (MSME) sector, hotel / tourism sector, airline and travel sector. Other sectors have were also affected with this great pandemic which contributed to the negative dip of the world economy in general. These industries are co-existing and reliant with each other and the real estate sector at the same time. In a recent reports from PSA released last month, says "The Philippines records a GDP growth rate of -11.5 percent in the third quarter of 2020".
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| Photo by Hugo Heimendinger from Pexels |
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| Photo by rawpixel.com from Pexels |
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| Screengrab from Youtube |
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| Photo Courtesy from RTVM Malacanang Youtube Channel |
What Are Philippine Offshore Gaming Operators (POGOs)?
Philippine laws allows the creation of gambling and entertainment companies through the management of Philippine Amusement and Gaming Corporation (PAGCOR) a government owned enterprises which overseers and regulates these companies or corporation involved in this industry. There is an projected P 20 billion pesos revenue generated as stated by PAGCOR on the profits earned in this industry. Win-win Situation for Our Filipino Compatriots? For our local real estate professionals / property owners, it had given them prosperity as the demand of residential housing is rising, driving the market into overload with residential condominium units and office buildings. For examples: Those located in one floor in the Bay Area - SM Mall of Asia is being leased by these foreign workers or in McKinley Hill / West (BGC, Taguig City) to their Chinese locators with Filipino contacts. Filinvest Land Inc and Megaworld Corporation are the biggest winners or could be the biggest loosers? at the same time in terms of office leasing for these foreign companies that are located on commercial or office buildings in their estates or owned by these real estate development companies around Metro Manila. SM Development Corp projects located near SM Mall of Asia are mostly on the leasing of commercial with majority in residential properties by private unit owners or handled private property management hired by private unit owners may or may not be associated with these developers. In Paranaque alone, there were complaints from local residents of intrusion and being offered money by these foreign locators with their local counterparts in order to acquire a property of the said residents driving the fair market value of prices too steep for ordinary Filipinos to buy or own or even rent a home that led to local renters being driven away further from this area because of increase in rent or lease of residential apartments or homes. There was also an incident of Chinese only food park in Las Pinas with no business permits and unsanitary practice operating around the area which received a lot of attention from local residents and social media. Action was taken by local government unit of Las Pinas on this incident on complaints of the local populace of such illegal operation happening around their community.
Why Chinese workers are here?
Similar to Overseas Filipino Worker (OFWs) they are working overseas in order to fulfill their needs and at the same time provide to their families left behind in mainland China. The recent events in US-China Trade tensions, have caused unemployment and layoff in China's manufacturing sector with the economy falling and the Chinese government creating a stimulus in order to maintain the economy with last year's GDP performance of 6.4% growth. Plus the compensation for a hired POGO workers who are compensated with P 80,000.00 to P 130,000.00 per month as a "data analyst" per se with free living accommodation and allowance and return ticket to China who would grab an opportunity or refuse an offer for job like this. The POGO workers age usually in their early 20s to late 30s or some in their 40s. There was also rumors or speculation from other foreign communities / expatriates about POGO managers mainly that they earn at least P 1,000,000.00 to P 4,000,000.00 per month on managing a firm in the Philippines which is unverifiable?
External Security Threat?
Recently, Secretary of National Defense Delfin Lorenzana and other politicians in congress were alarmed with the possibility of external security threats of these POGOs sprouting near military bases and other important government installations. It has become a threat for local security forces against foreign intrusion with the possibility of espionage in our country by these foreign workers who are of military age men (MEM) in military lingo.  |
| Screen Grab from former Sen. Rafael Alunan's Facebook |
People think that paying estate tax is a burdensome process
but to relieve yourself from stress one should pay the right amount just to
comply tax law's of the land. The prior
to the implementation of Republic Act 11213 (Tax Amnesty Act of 2019), payment of estate tax is at a rate of up to 60% and is very steep for many ordinary Filipinos.
