drbubb Posted July 7, 2016 Report Share Posted July 7, 2016 THE BUBBLE Debate: Is there a Bubble in PH Property? ==== Useful DEFINITIONS, added in edit, Feb. 2023 ==== My view is... There are THREE PRICES for Property in the Philippines Market:1. Developers REPLACEMENT value; Which includes all their costs, land, materials, construction costs plus marketing costs, and the developers profit margins. This price is “managed” by the developers, and will rarely be a bargain. The developer might sell at this price on an instalment basis, and even help the Buyer to obtain finance from an affiliated bank. 2. COMPARABLES price Based on what prices are achieved in the secondary market, where the Seller may wait months for the Buyer to get bank finance. This may require the seller to have a clean title, and keep the unit vacant while they search for buyer. (Often is near the Zonal valuation of the property, and it may be significantly below NEW List prices of nearby properties.) 3. (DISTRESSED) CASH SELLERS price The best price the buyer can obtain from Cash buyers within a limited time frame. The buyer may have to advance funds so the seller can repay the mortgage and then wait for the title. It may not be possible for the buyer to get bank finance, so they may need to have free cash available, The buyers are often investors, who will expect to achieve an Yield similar to what they can get from the REIT market (currently 6.5%), or higher than that, if the property is old and/or needs renovation, ( Please compare my detailed description here, with some vague and conflicting descriptions people may use for “Fair Market Value.” I do people hope people will spread this to add more clarity, for Buyers and Sellers. ) ==== http://i.imgur.com/zOoAza7.jpg At least one big media company (CNN Philippines) says: NO! What bubble? Analysts see sunny property sector By Paolo Taruc, CNN Philippines / Nov. 6, 2015 http://cnnphilippines.com/incoming/qmxf2n-buildings_construction_CNNPH.png/alternates/FREE_768/buildings_construction_CNNPH.png (CNN Philippines) — Despite fears of a growing real estate bubble, some analysts believe that the Philippine economy can rest easy for now. If anything, the property sector can look forward to more expansion — especially in cities. "There is no truth to the rumor that there is going to be a real estate bubble," said Board of Real Estate Service Chairman Eduardo Ong during this year's Asia Real Estate Summit. "We are in the midst of an urban revolution," explained Jeremy Kelly, director for global research of real estate services firm Jones Lang LaSalle (JLL). "[C]ities have become the heartbeat of the word... land and real estate are the heartbeat of cities." Related: Philippines has most resilient economy – study JLL's 2014 Global300 index reports that cities in the list account for roughly 40% of the world's gross domestic product (GDP). Over half of the total commercial real estate investment in the list landed in it's top 30 cities. That's good news for Metro Manila, which joined JLL's Top30 list in 2014. The firm said that such is symptomatic of a "steady shift in the balance of real estate activity towards the Asia Pacific region." Rising star Kelly noted that in 2010, Metro Manila ranked 28th in the world in terms of city GDP. He predicts the metropolis to rise to the 25th spot in 2020, and the 18th spot in 2030. "Real estate will play a key role in [Metro] Manila's success, and will be a driver of its success." He also pointed out that the market has one of the highest rates of absorption among its Asian peers, and is one of the most affordable in the world. Nevertheless, his praise comes with a caveat: Kelly stressed the need for the metropolis to adopt its own "foreign policy." "[Metro] Manila needs to assert its position more forcibly on the global stage," he said. Growing IT sector "Cities that are successful are specialists in certain areas," Kelly said. The analyst believes that much potential lies in Metro Manila's information technology (IT) sector. "Its economy is far more geared towards IT than its regional peers." In a Tech-Rich Cities index, Kelly pointed out that Metro Manila ranked 10th in the world from the first quarter of 2014 to the first quarter of 2015, above other cities such as San Diego, Osaka, Munich, and Beijing. Likewise, he has also noted the increasing role of the city mayor in a locale's development. "We are in the age of the city mayor." Kelly believes that a good mayor can be a catalyst of a city's success, granted that the politician is practical and closer to problems. Although urban planning poses immense benefits to a city, Kelly said that it can also go too far. He believes that cities should also allow room for organic growth, lest they lose their character and identity. "Over-planned cities lack a soul." === > http://cnnphilippines.com/business/2015/05/22/sunny-ph-real-estate-2015.html#.VV7KecmH0T8.twitter Well, that was written in late 2015, before Colliers reported a 1.6% drop in Rents, for 3BR flats in Makati in Q1-2016/ Link to comment Share on other sites More sharing options...
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