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BUBBLE Debate: Is there a Bubble in PH Property?

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CAN IT HAPPEN in the Philippines? 

Seems impossible now.  But is it?

Frank Zappa - It Can't Happen Here / Album:Freak Out! (1966)

Hong Kong Real Estate Prices Fall Most Since 2008

  • The monthly home price index fell 3.5 per cent to 366.3 in November, up from 2.56 per cent in October
  • Largest fall in a single month since November 2008

Prices of lived-in homes in Hong Kong saw the sharpest decline in a single month in November since the global financial crisis in 2008.

HK$ per sq ft of saleable area : Nov 2018 HK$22,714 : 


Source: Midland Realty

The monthly home price index, which represents movements in the secondary property market, fell 3.5 per cent to 366.3 in November, compared to the 2.56 per cent slide in October, 1.27 per cent in September and 0.05 per cent in August, according to data from the Rating and Valuation Department.

Home prices have slumped 7.2 per cent after peaking in July following a 28-month surge starting in April 2016,

. . . “It is the largest fall in a single month since November 2008,” said Derek Chan, head of research at Ricacrop Properties.

Home price plunged 8.22 per cent in November 2008 and hit the year’s low of 104.8 in December. After a three-month decline, home prices began to rebound in January 2009.

A number of investment banks and analysts have forecast that property prices will continue to fall, with some predicting declines of as much as 25 per cent next year.

Denis Ma, head of research at property consultants JLL, expects home prices to fall at least 15 per cent in 2019.

(PRIMARY Prices UNDER Second hand):

“Part of the reason why prices fell at a faster rate in November was because developers started putting more projects on to the market in the previous months. The flurry of new launches has seen sell-through rates fall as developers also scrambled to find buyers,” Ma said.

Buying interest also remained weak.

“Home sales in the secondary market plunged 67 per cent over the weekend with just one flat sold,” said Willy Liu, a director at Ricacrop Properties, which monitors 10 major housing estates in Hong Kong.

Sino Land has been offering flats at its Grand Central development in Kwun Tong at prices that are 14 per cent lower compared to those nearby, luring home seekers away from the secondary market.

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Falling Libor rates "saved" Philippine Property stocks

: Update : Propx3 : SMPH: P39.00 / ALI: P44.35 / MEG: P5.00 / DLBR: 18.80


SMPH: P39.00


Foreign investors looking to invest in the Philippines will be very aware of Libor rates.

And there will be a correlation between US Libor and interest rate pressures in PHL.

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POGOs to drive PHL property mart, but challenges seen

REAL ESTATE consultancy JLL Philippines said China’s contributions to the Philippine real estate market are critical, noting how the presence of Philippine Offshore Gaming Operators (POGOs) offset the slowdown of business process outsourcing (BPO) companies’ expansion in 2018.

+ increasing presence of Chinese nationals employed by POGOs in the Manila Bay Area. With more POGOs operating in Metro Manila, their employees have also started occupying nearby residential developments.

+ a surge in demand for residential properties in the Bay Area and nearby business districts, panelists during Lamudi’s round table discussion noted

+ taking in POGOs as tenants has been challenging.

“It’s true that the POGO employee is not necessarily the most dedicated, most likely don’t speak English….Ultimately you need a certain discipline,” Mr. Vicic said.

For Anchor Land Holdings, Inc. (ALHI) President Digna Elizabeth L. Ventura, having Chinese tenants means cooperating with POGOs to ensure their workers comply with building rules. “We’re working closely with the operator and making sure that the property management controls the situation and makes these people follow the rules,” Ms. Ventura said during the round table discussion. Mr. Vicic said they are recommending that landlords keep a balanced mix of tenants in their properties, given the challenging nature of POGOs.

+ RENTS & ...

Prices have accordingly risen following the surge in demand for residential projects in the Bay Area. With this, JLL Philippines Head of Research and Consulting Janlo delos Reyes said that local property buyers are being pushed toward the fringes.

“Prices are at around P300,000 per square meter, and that’s comparable to Makati and Bonifacio Global City. What’s happening is the Bay Area is pushing the domestic market away from that community, not only in terms of the sale but also in terms of the rents,” Mr. delos Reyes said.

“The local market is unable to keep up with that kind of pricing. Some of them are being pushed toward the fringes and other areas.”


> SO: Old MOA tenants are moving to "fringe" places like Taft Avenue, where prices & rents were lower.  Avida has a big project there called PRIME TAFT

Lamudi Philippines Chief Executive Officer Bhavna Suresh said that moving toward the provinces will be good for the country in the future.

“The only flip side there is infrastructure needs to catch up, we need to move our offices to these outskirt areas too,” Ms. Suresh said.

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Strong demand for condos, worker dorms seen this year

BusinessWorld Online-1 Jan 2019
The worsening traffic in Metro Manila is pushing young ... Meanwhile, the luxury condominium market shows no signs of slowing, ... business districts such as the Manila Bay Area,” Mr. Bondoc noted. ... a volatile interest rate environment should entice local developers to ... 2018 BusinessWorld Publishing.

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DANGEROUS CRACKS in New buildings? 

Expert warns Australia could turn into slums in 20 years | 60 Minutes Australia

"there was a threat of it maybe falling over... just 4 months after it opened"

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It seems PH property is becoming more difficult to acquire for foreigners from PH developers as the above link

seems to indicate that all foreign slots for all Megaworld buildings (except Madison) are occupied now

so nothing available from the Megaworld.


It is the same thing that I read about Avida Southpoint. I believe all foreign slots also gone.


So PH property is getting more attractive for foreign buyers.


SMDC Sail residences. Just launched. We can just bet on it that within 20-30 days

all foreign slots will be gone as well.


Just my two cents.



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" It is the same thing that I read about Avida Southpoint. I believe all foreign slots also gone. "

I was told last week that Southpoint Tower-1 had sold out its 20% allocation for Mainland China, but not for all foreigners

MEG stock : chart : at P5.80, it looks like an interesting Selling point - unless you think it can breakout


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SKepticism & Chaos

(Thanks to ECB who found this):

Why own a condo in the Philippines? Does it make sense?

How do you look at the economics of buying a condo? This will explain the condominium buying process in the Philippines, as well as explore a foreigner’s view of the financial benefit of condominium ownership.

MEANTIME... If THESE protests spread, it will not bode well from PH property

1,000 Filipinos protest against China 'invasion'

Anti-China protesters raising clenched fists and national flags while shouting slogans during a protest in front of the Chinese embassy in the financial district of Manila yesterday, as policemen stand guard. The marchers, numbering about 1,000, disp
Anti-China protesters raising clenched fists and national flags while shouting slogans during a protest in front of the Chinese embassy in the financial district of Manila yesterday, as policemen stand guard. The marchers, numbering about 1,000, dispersed peacefully after the demonstration.

They oppose Beijing's growing sway amid South China Sea tensions

MANILA • Protesters descended on the Chinese embassy in Manila yesterday to oppose the Asian superpower's growing sway in the Philippines and as tensions rise over Beijing's presence in the disputed South China Sea.

Filipino flag-waving marchers chanted "China out" and brandished a banner saying "Defend our sovereign rights", referring to Beijing's expansive claims to the resource-rich waterway.

"The government headed by President (Rodrigo) Duterte is not responding. What China is doing is almost an invasion," marcher Alex Legaspi, a 53-year-old teacher, said.

Mr Duterte has been criticised at home as being too eager to grow ties with Beijing, and giving up too much leverage on the South China Sea issue.


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More warnings:

"POGO, relying on overseas demand for online gaming, may be subject to disruption if foreign governments begin regulating the players and facilities or even restricting capital flows into this business. More directly, if the large number of foreign workers in POGO and other sectors are prohibited from working in the Philippines, then the residential property market would lose a significant pool of clients.


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Chinese Money Triggers a Dizzying Rally in Manila Property


In Manila’s main financial district and its fringes, signs of the new inhabitants are everywhere: the restaurants serving steaming Chinese hotpots and dumplings, the Mandarin broadcasts at the Mall of Asia, and the soaring property prices.

An estimated 100,000 migrants, mostly Chinese, have flooded into pockets of the Philippines capital since September 2016, and the deluge is rippling through the city’s real estate market in ways that are unique among the world’s urban centers. While Chinese investors have been snapping up big swathes of high-end housing in Hong Kong, London and New York for years to move their money offshore, this new rush is motivated by something different: Manila’s booming gaming industry.


More than 50 offshore gambling companies that cater to overseas Chinese punters have received permits to operate in the city since President Rodrigo Duterte’s government began awarding licenses 19 months ago. While bets are placed remotely, the operators need Chinese speakers in Manila to handle everything from marketing and customer queries to payment processing for overseas clients.

The resulting migration, while only a fraction of the metropolitan area’s 12.9 million population, is propelling home prices to record levels in neighborhoods favored by Chinese workers. It’s reinvigorating Manila’s commercial property market as owners convert offices and shops into gaming centers with card tables and webcams. And it’s boosting the bottom lines of local developers including Ayala Land Inc. and SM Prime Holdings Inc.

. . .

The influx promises to boost the nation’s economy and is helping to strengthen ties with China -- a priority for Duterte. Yet it leaves the property market vulnerable in the event of an abrupt shift in online gaming or immigration policies from either country.

The perils of relying too heavily on Chinese buyers became painfully obvious last year in the Malaysian enclave of Johor Bahru, which has been grappling with a glut of vacant homes after China imposed controls on investments in overseas property and demand abruptly dried up.

“Concentration risk could be a potential concern,” said Emilio Neri, an economist at the Bank of the Philippine Islands in Manila.


Fast Facts on Philippine Offshore Gaming Operators

  • Also known as POGOs
  • Such operations were limited to three provinces north of Manila before Sept. 2016 decision to expand them to the capital region
  • 55 permits for POGOs have been awarded since then
  • 14 of those are engaged in sports betting
  • Revenue from POGOs quintupled to 3.57 billion Philippine pesos ($70 million) in 2017 from a year earlier

Source: Philippine Amusement & Gaming Corp.

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I posted on a viber chat:

"The more I look into the charts, the more Dangerous I think this setup looks!"

PSEI - vs. SMPH, ALI, MEG ... from 8/2016 : VIX : 10d / Last: 7,947, smph: 38.80, ali: 49.00, meg: 4.86 (agi: 11.74)

Why is this Dangerous?
PSEI looks weak, barely holding up, on the bottom of the long term upwards channel.

The upmove in Property stocks, to a likely cyclical peak in JULY, gave PSEI a Right Shoulder (RS#1= "Prop.Peak")

Many Stocks appear to be running out of momentum.
+ After the July peak, MEG stock collapsed as fear of a loss in POGO demand hit the market
+ MEG and PSEI made a low in Sept.  MEG fell xx% (P6.xx > 4.xx), and PSEI fell xx% (0,000 > 0,000)
+ Some of the fears were dismissed, and PSEI rallied back, led by a few "front-liners", like SMPH and ALI.
+ Many other stocks, and PSEI as a whole remained weak. (I made some money trading a bounce in AGI)
+ The front line property stocks appear to be losing momentum

What is NEXT?  
Another drop very possibly, and if this one is sharp enough, it will break the uptrend in PSEI
BE CAREFUL; Take some profits maybe, use some stops (if you like that technique), & hold off on new Buys.

MORE charts & comments at the Link below - scroll down!


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Guest Whacky

Smooth living is a smart choice that is the offer of <a href="https://smdc-philippines.com/">Condo unit for sale in ortigas</a> . Business and lifestyle meets halfway, with Mall of Asia CBD being home to the country’s BPO giants at the E-Com Centers. S Residences gives you that perfect balance of work and play.

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Ah,  An SMDC ad.

"The Good guys" or the DARK SIDE.  Time will tell... months & years after you buy

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The price growth in residential developments, particularly condominiums in Metro Manila, are seen slowing down in the next few years following recent record-high upticks due to the surge of demand from employees of Philippine offshore gaming operators (POGO).

Property consultancy firm Jones Lang LaSalle (JLL) Philippines’ director for research and consultancy Janlo de los Reyes said this is due to the overlapping price points and shifting market segments in residential developments, particularly in the luxury and upper-middle segments.

From this year through 2022, JLL estimates residential prices to grow at a slower pace of 3.1 percent. Comparatively, data collated by JLL show that residential prices particularly in Makati and Bonifacio Global City have been growing an average of 8.5 percent annually since 2008 until 2019.

> https://tribune.net.ph/index.php/2020/01/24/condo-prices-cool-down/

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BREAKDOWN?: PH STOCKS, including Property stocks are showing signs of Breakdown

Only SMPH, of the top 3, have held up well (so far)


PSEI Index vs- SMPH, ALI, & MEG ... 5yr : 3yr: from Aug.2016 / PSEI peak=early 2018. Property peak= July 2019



With the Property stock peak now about 6months ago, we may soon be seeing some declines in the physical market;

Assuming the property stock peak is indeed in place,

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At current price levels, in this challenging environment...
I have become Bearish... and Three Key PH Property stocks have confirmed that view

PH Property Stocks


Will we see LOWER PH Property PRICES?? 

The supply of Properties for Sale is going to surge because:

1. Properties still being delivered, and new ones started.  Few projects will be stopped. 

2. People who are afraid will stop buying,

3. Banks will not finance large final payments, when the what is left to pay is BELOW the realistic marlet value of the property, This will force those who cannot make the last payment to sell

4. Flippers will aim to flip to exit their property speculations, if they can,

5. Chinese buyers, who cannot get back to PH will try to unload what they have bought/  

WHERE ARE THE BUYERS who will absorb all this supply?

Even if they are there, what price will they be willing to pay now??

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(Starting NEW thread):

PROPERTY PEAK IN PLACE for PH - major price declines ahead in per Sqm Prices

#1: I made the following post on Aug. 31st, 2019: here

PSEI Index vs- SMPH, ALI, & MEG ... 3-years : from 9.2016 / PSEI peak=early 2018. Property stock peak= July 2019


"If the August low in PSEI gets taken out by a meaningful amount, then it would be a very bad sign for Philippines stocks

The recent serious weakness in Property developer stocks is a sign that an important downturn may be underway"

# 2 :

Just posted this comment on a Viber chat

"I have said in books, interviews, and many times online that...

The Peak in Property stocks,. like above, normally comes 6-12 months AHEAD of the Peak in the physical market.

We are now right in that time frame- the time frame for  the beginning of a big drop in per sqm valuations."

"Within the next 1-2 quarters we are bound to see a very serious drop in Per sqm property prices begin to materialize. 

That is my strong view. And I would expect it to persist for years - maybe into 2023-24"

Here's an UPDATE on the chart above - Starting from Sep.2016 : PSEI vs- SMPH, ALI, MEG



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Guest Alda

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