Catering to the “need market,” the low cost housing segment of the real estate industry is not looking at a possible slowdown next year despite threats brought about by the current global financial crisis.
“The low cost housing segment caters to a need market so there is very little speculative buyers because most of our buyers buy a house to live in and not just as investment. There is a deeper and basic purpose on why they buy a house so we remain bullish with this market segment,” said 8990 Housing Development Corp. chairman and president JJ Atencio.
Atencio, who is also a member of the Subdivision and Housing Developers Association (SHDA) believes that the segment in the housing sector that could be hit by the current global financial crisis is the higher to mid-end markets.
This is because these segments exhibit a larger portion of the speculative buyers who invest on real estate according to the cycles of the economy, said Atencio.
“When the economy suggests that it will be risky to invest, these markets usually cancel or pull-out their investments. With today’s crisis, they rather stay liquid because credit is tighter and foreign exchange is volatile so cash is the key so they veer away with real estate investments. Those who can afford would rather hold on to their cash,” he explained.
He said that one major reason why the upper scale and mid-end segment of the housing sector would experience slowdown of sales is that there is a larger degree of foreign-based sales composed of homebuyers from OFWs and foreign residents.
“More than 50 percent of the foreign-based sales are from the US and it’s going to be telling next year especially that the US government has recently accepted and announced that their economy has been under recession,” said Atencio.
He said that this situation will inversely throw a negative effect to the high-end segment but they are not afraid it could trickle down to the low cost housing segment.
“We still have to find out to what extent this crisis could affect the real estate sector but it will not trickle down to our level because we cater more on the domestic market. In times of global crisis, the domestic market will save you,” he added further.
He said that for their company, only less than eight to five percent of their sales could be directly attributed to the OFW and foreign-based sales.
He said that despite the glooming crisis, Cebu is still one of the growth markets in the country for real estate especially the low cost segment because there are still a lot of people who do not own their homes, said Atencio.
“There are still a lot of people in Cebu who do not own a home and our mission is to provide affordable homes so that everybody could be called a home owner and so that they can make a move and not rely into just renting for all their lives. The earlier they do it, the better especially that present interest rates for a Pag-Ibig loan could not go any lower,” he added. — Rhia de Pablo
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