RP real-estate boom over
Written by Writer on Monday, October 20th, 2008
RP real-estate boom over
Written by Dennis Estopace / Reporter
Business Mirror
Sunday, 19 October 2008 23:33
THE party’s over for the real-estate industry, according to the head of the European Chamber of Commerce of the Philippines, as indicated by the entry of speculation into the local property sector.
David Young, of real-estate and property consultant Colliers International Inc., presented an analysis of the sector to the chamber that concluded the Philippines has already met the supply for commercial and residential space required by business.
He said this is indicated by “a noticeable slowdown in demand….As you move around the city, you can see the new buildings without lights, signifying no activity in what were supposed to be hubs of business operations.”
“The boom’s over,” also concluded Henry Schumacher, European chamber chief, on Friday.
Young said the market would correct property values by 15 percent to 20 percent in the first quarter next year. “It’s not that investors don’t have money, but many are holding out and waiting to see how everything pans out. . .orders for space are now being recanted, adding concern on the demand side.”
“Many companies who requested for space in the fourth quarter have pushed their requests for the first quarter to the second quarter next year. There’s a marked slowdown in the whole industry,” he added.
But Young said the correction would also be beneficial to the market since “an amount of speculation has entered.” Speculators have either pushed up the demand, as well as prices of properties artificially high.
He added even if there’s money from overseas Filipino workers (OFWs), that only forms less than 50 percent of the industry demand. “Majority of the industry is still driven by the commercial sector. However, we’ve heard some residential buyers, some of whom are OFWs, are now having problems pushing through with their orders,” he said.
Young said after the meeting his gut feeling is that the C and D markets would be more affected by the industry slowdown as credit sources dry up or become constrained.
After the housing downturn during and a few years after the1997 Asian financial crisis, the Philippines property sector regenerated and in 2002 finally began to boom abetted by rising remittances from more than 8 million overseas Filipinos and the sunshine business-process outsourcing (BPO) industry.
Young said he still sees demand from the BPO sector as solid since most of the orders were sent to property developers years ago.
