Rent or Sell? What to Do When You Leave Your Home.

You've decided to move, but you have a home to consider. Do you sell or rent? While an investment property can generate a nice income over time, you have to figure out if keeping this home is part of your long-term financial plan and if you want that added responsibility.

“There are so many considerations if you’re looking at renting or selling your home,” says Allison Turk, realtor associate at EWM in Miami Beach, “and it comes back to the data.”

Having a tenant pay your mortgage is a great way to build equity, but home prices may not increase in years to come, which can be a problem once you do sell. Sometimes, depending on your financial goals and how long you plan to live in a new area, selling the home is a better choice.

What's important here is to take your emotions out of the decision. Instead, here’s what to think about as you go through the process:

1. What are your goals?

Owning an investment property isn’t just about collecting an income -- you have to budget for maintenance, repair and carry costs. No matter how easy the home is to manage or how much income it generates, consider how this fits into your financial plan and whether you have the time to manage the property.

“You have to weigh the cost of future appreciation and the [rental] income you’re getting now, or if it’s better to get the money from your house [by selling] and put it in your bank account,” says Cara Ameer, broker associate and Realtor at Coldwell Banker Vanguard Realty, based in Ponte Vedra Beach, Fla. “In most cases, the money you’d get from a rental is more than [you'd get] if you put that money in a CD.”

2. How’s the real estate market?

Your home’s location is key, since this is what will attract buyers or renters, depending on what you decide, and how much people will pay for your home. Homes in areas with good schools, shopping and other amenities will likely attract strong tenants who will pay enough to cover your costs.

Research your market and how fast homes sell -- if you can break even or make a profit, you may want to sell. On the other hand, “If the selling conditions aren’t great, renting could offset your expenses,” says Turk.

3. Do you want to buy a new home?

A mortgage on your old home is considered debt as part of a lender’s debt-to-income (DTI) calculation, but any rental income that you currently receive can offset this debt. Unless your income is high enough to afford both mortgages, selling your old home will wipe the slate clean when it comes to your mortgage debt.

Owning a rental property also means other expenses, and your budget needs to be prepared for them. “Add into your emergency fund six months of mortgage payments for your second home in case the home is empty [because you can’t find a renter] or someone trashes your home and you have repairs,” says Kelley Long, certified public accountant in Chicago.

4. Will you recoup your costs if you sell?

Depending on how long you’ve lived in your home, if home prices haven’t appreciated enough, turning your home into an investment property may be a good idea for the short term. “How long you have to hold a home to [get to] break-even depends on how much you’ve put down and your purchase price,” says Ameer. In most markets, the break-even time period is seven to 10 years, but this time period could be shorter or longer, depending on how fast or slow prices appreciate in your market.

Even so, there’s risk that you may not break even no matter how long you wait to sell an investment property. “You can’t predict what the market will look like when you need to sell,” says Turk, “and you can’t think about money you may lose because the home hasn’t appreciated.”

5. What do the numbers look like? 

If you decide not to sell your old home, you want to make sure that the rent you collect is sufficient to cover your expenses, which will include your mortgage, property taxes, any home ownership association (HOA) fees, certain utilities and maintenance.

Investment property has different tax considerations from a primary residence too, and the accounting can be complicated. Your mortgage payment, property expenses and rent play into your cash flow and whether you have taxable income or a loss. “The math isn’t always that simple when you want to figure out how much income you’ll have to report for taxes with rental income,” says Long.

Keeping accurate records, then, is key to making sure you know what deductions you can take. Deductions include the depreciation, since you can write off a portion of what you paid for the home every year; mortgage interest; property taxes; any HOA fees; and other costs associated with maintaining the home.

6. Who will rent your home?

“You are taking a risk on somebody [when you rent your home],” says Ameer. “You have to worry about the financial stability of someone else. Just because they signed the lease doesn’t mean they’ll make good on their rent.”

Consider the profile of potential tenants -- you'll want to find someone who earns enough to afford the rent you’re planning to charge. You can enlist the help of a real estate agent to find and vet potential tenants and check their credit, verify their income and employment, conduct background checks for any criminal or civil arrest and check references. Or you can do this work yourself.

7. Will you be able to sleep at night?

Investment properties are great ways to build long-term wealth, but only if owning a home in another city won’t cause you stress because of the maintenance and repairs involved. It’s also a commitment, and you have to stick it out until the mortgage on the property is paid off and the home makes you money every month.

“Before you do anything, do a gut check,” says Long. “What price would make you happy if you sold your home today? See if you can get it. You may still decide to sell it at a lower price, too.”

source : https://www.entrepreneur.com/article/253612

The 7 Tips Entrepreneurs Need to Know Before Investing in Real Estate

Why should entrepreneurs invest in the first place? The answer is: to have enough money to live on when we no longer can or wish to work. To put that money aside, however, we have to accumulate enough to offset inflation and the taxes that erode our savings. And for that purpose, real estate is an excellent solution.

The great thing about real estate is that even in a bad economy, it will usually fare better than stocks. Land, after all, is a finite resource. People need a place to live, work, shop and play -- so real estate is really just a matter of supply and demand. 

What's more, real estate will continue to appreciate despite occasional slow-downs in the economy. In fact, it's proven to be the best way to create wealth, and an investor need not be a genius or a millionaire to succeed. Here are some tips, then, for entrepreneurs on getting started and succeeding in real estate investing:

1. Do -- plan your financial goals.

Before you buy that first property, or do your first analysis, determine what you expect from your investments. What are your financial goals?  We often discuss the “time vs. money” concept: The more you have of one, the less you need of the other to reach your financial goals. This means that you shouldn’t shy away from taking the time to understand your goals and make sure each investment is a step toward achieving them.  If you are unsure exactly how to create financial goals, meeting with a financial advisor is an excellent first step. 

2. Don't -- spend a fortune on books, tapes and seminars, then just put all that information on a shelf. 

You absolutely do need to learn some basics before venturing into investing. So, be sure to do some studying, but don’t let “buying and collecting” information become your endgame. Again, having goals in mind will make the process much more straightforward. It’s easy to get so tied up in the “research” phase that you never actually take action. Instead, write down specific questions you want answered or goals you want to meet before delving into the latest book/seminar/etc. 

3. Do -- look at plenty of properties. 

Don’t just grab the first property you look at. Too many investors buy properties because they “look nice,” or the investors don’t want to put the work in to look at what’s really out there. Remember, you won’t be living there, so don’t make your investment decision based on your personal preferences. While you shouldn’t fall into the trap of analysis paralysis, make sure you are thorough in looking through properties. Give yourself a wide range of options, then narrow them down based on the criteria (goals) you have set for yourself.

4. Don't -- postpone starting your investment program because you’re waiting for that perfect “unicorn” deal.

That’s the flip side to number 3, of course. Plenty of beginning investors suffer from “a-better-deal-may-be-just-around-the-corner” syndrome. This can backfire in a big way, and you could potentially let a great deal slip just because you’re holding out for something better. Your task may feel difficult if this is your first property, but you must realize that the “perfect deal” rarely (if ever) exists. Better to execute on a deal that meets most of your criteria than wait for another that may never come. 

5. Do -- a thorough financial analysis.

Be realistic. Look at different alternatives to determine which makes the most financial sense. And never buy property at a higher price or on less attractive terms than your analysis says made sense. Be wary of sellers that try to over-estimate the value of the property through pro-forma (estimated) data. While you can certainly use a pro-forma to start the conversation, make sure you know the real numbers before closing. Look at previous years’ tax returns, property-tax bills, maintenance records, etc. to get a good idea of the real income and expenses.

The most important figures you should know are: 

• Net income (income/expenses) 
• Cash flow (net income/debt financing payments) 
• Return on investment (cash flow/investment)
• Cap rate (net income/property price)
• Cash-on-cash return (cash flow/investment)
• Total ROI (total return/investment)

In each case, “investment” refers to how much you invest in the property. "Debt financing" refers to any loans you may have to take out to buy the property. And "total return" refers to cash flow, equity accrual (i.e., equity gained from your tenants paying their rents), appreciation and taxes.

Once you have understood these figures, you should have enough information to determine whether or not acquiring the property fits with your financial goals.

6. Don't -- try to buy property that the seller is not motivated to sell.

If the seller is motivated to sell, you’re not likely to get the price best aligned with your financial goals. So, how do you know if a seller is motivated? Look at the asking price. For example, If the property has been on the market for a year for, say, $200,000, with little-to-no price reduction, the seller is clearly not very motivated to move the property. However, if that same property has been on the market for a year and has had its price moved down considerably, the seller most likely wants to do whatever it takes to get the property off his or her hands. Of course, this raises the question of how to find motivated sellers. There are many approaches, and not all of these will work for you, depending on what property you want. But a few trusted methods include: 

• Attending open houses 
• Looking for vacant/unattractive properties that are for sale 
• Spreading the word about yourself and what properties you are looking for -- truly 
• Going the old-fashioned route and looking in the classifieds of your local paper 

These are just a few ways to find sellers, but there are potentially dozens of other methods, depending on what type of property you’re looking for.

7. Do -- know the difference between real estate investing and the business of real estate.

As an entrepreneur, you already have a business, and real estate investing is best used to support that business, not replace it -- unless that’s your intention. In other words, don’t get so caught up in executing transactions that your core business falters. If that happens, you’ll be facing a bumpy road to get back to stability. Unless your business is itself real estate, or you’re looking to get into the business full-time, always remember that pursuing these deals is a means to an end, not an end unto itself. 

So, if you’re interested in staying ahead of taxes and inflation while building security for the future, real estate investing may be for you. What are you waiting for?

Source : https://www.entrepreneur.com/article/248350 

BUY-SELL-RENT PROPERTIES visit www.PropertyDepot.PH

Battle over Cagayan de Oro airport: US base or new city center?

NEW CITY CENTER. Engineer Isidro Borja (left), Cagayan de Oro’s top planning and development officer; and Eileen San Juan, the city’s chief for Local Economics, Investment Promotion, discuss the planned Cagayan de Oro city expansion. Photo by Bobby Lagsa/Rappler.

CAGAYAN DE ORO CITY, Philippines – Is there a looming battle over the use of the old Lumbia airport?

The national government is not the only one eyeing the old airport, reportedly for use by the US military under the Enhanced Defense Cooperation Agreement (EDCA). The Cagayan de Oro city government has also expressed interest in developing 106 hectares of prime airport property in Barangay Lumbia.

The city’s top urban planners, with the help of the United Architects of the Philippines, created the Planned City Expansion (PCE) in Barangay Lumbia, an expansive uptown village deemed suitable for expansion as it is not prone to flooding and has potential as the new city center.

Cagayan de Oro Mayor Oscar Moreno said the PCE was conceptualized under the United Nation Habitat’s Achieving Sustainable Urban Development (ASUD) project with the assistance of Arcadis, a global design, engineering, and management consulting company.

The PCE covers 820 hectares of land including the Lumbia airport which is now under the control of the Philippine Air Force’s 10thTactical Operations Group, though the land is owned by the Department of Transportation and Communications (DOTC).

New growth area

Moreno said that the prime land, which is 180 meters above sea level, is a strategic area since future expansions under the Mindanao Logistics Infrastructure network (MLIN) pass through or near lumbia.

The MLIN is a long-term development plan for the road network in Mindanao. It includes new construction, and the upgrade and improvement of existing national roads and local roads.

All agencies, including the Department of Public Works and Highways, should use the MLIN plan as a guide for their own long and medium term development plans in the area covered by the plan.

EXTENSION. The conceptual plan of the planned Cagayan de Oro city extension. Map courtesy of the CDO government

The MLIN is intended to be used as a reference for agencies involved in the development of the Mindanao transport network.

A new national road is being constructed that will connect Iligan City to Bukidnon.

Engineer Isidro Borja, chief of the City Planning and Development Office, said that the PCE will be the new growth area of the city with its cluster of areas for development.

“It is like a self-contained community where everything is there, without having to go to other places to work or study,” Borja said.

Last year, Christopher Rollo, ASUD country program manager for UN Human Settlement, said that if the expansion of the city is left unplanned and unchecked, it is likely to be driven by real estate market that favors development for the rich.

“In Lumbia, it is where everything can be put in place like public spaces can remain public, road network connected to other districts without being blocked by private ownership of lands,” Rollo said.

Mixed-use modern district

Eileen San Juan, the city’s local economics and investment promotions chief said that she met with defense officials on January 11, 2016, to present the city’s PCE, which includes the Lumbia airport.

Moreno said the PCE was presented to President Benigno Aquino III and Cabinet officials as early as 2013 as part of the city government’s bid to promote the city.

San Juan said that the PCE is an exercise in urban planning which the city badly needed.

Under the PCE, there are 5 proposed clusters – Lumbia airport is under Prime Cluster A where local and national government offices are located.

“We will also replicate ‘Plaza Divisoria,’ which is a unique feature not found in any other city,” San Juan said.

Plaza Divisoria is a strip of 5 parks with statue of national hero Dr Jose Rizal, Andres Bonifacio, president Ramon Magsaysay, and mayor Justiniano Borja who first planned the city’s business district which Divisoria will be part of.

San Juan said the city wants a strategic and sustainable development node, a model for adaptive reuse, providing rural areas easy access to economic opportunities and social services.

“We want an institutional landmark with wide public parks and open space in harmony with medium to high density residential and commercial development which would showcase the city for livability and resilience,” San Juan said.

Borja said the PCE conforms with the approved Comprehensive Land Use Plan (CLUP).

“With the diverse housing market, low, medium, high end suitability for resettlement, this project will answer the housing shortage in the city,” Borja said.

Clusters

San Juan said each cluster under the PCE is designed according to use.

• Cluster A: Institutional and mixed use
• Cluster B: Farmstead/homestead villages
• Cluster C: Medium-density residential with community facilities, health and education, low intensity commercial area with at least 20% social housing with connection to town center and public spaces
• Cluster D: Residential villages in terraced fields, water retention ponds, soil erosion control and tourism activities with ecotourism (biking, trekking, adventure sports), mountain view resort with convention and meetings facilities
• Cluster E: Agri-processing Complex with waste management facility, mixed use Low–medium end housing, commercial, community facilities, value chain-considered efficient access to raw materials and markets

CLUSTERING. Cluster A is where local and national government offices would be located. Courtesy of the Cagayan de Oro city government

Borja said the PCE was designed considering road traffic. “All major roads will be 30 meters wide, while other roads will be at least 10 meters wide, both with provisions for pedestrian and cycling lanes.”

“We wanted the PCE is to be as walkable as possible; we want it to be environmentally and people friendly,” Borja added.

Adjustments

If EDCA enters into the picture and the airport is used by the US military, city officials said they would have to just adjust the design accordingly – but not without first exhausting efforts to convince the national government to favor the PCE.

Moreno said the long-term plan is for the common good.

“It is up to the national government if they’d allow the local government’s initial plan. We need them (national government) to cooperate because basically, the land belongs to to the Civil Aviation Authority and we cannot plan without them involved,” Moreno said.

Moreno added that the city government is taking steps to convince the national government on the expansion, as it is for the common good.

In its plan, residential areas will get 19.72% or 177.62 hectares; commercial area, 2.04% or 18.35 hectares; institutional 4.6% or 42.1 hectares; agro-industrial 2% or 17.87 hectares; mixed-used 15.8% or 142.9 hectares; commercial and transport facilities, 0.91% or 8.19 hectares; roads, 15.96% or 143.76 hectares; public spaces, 38.83% or 349.72 hectares.

“We will be expecting adjustments and needs to revisit the planning and resources needed to achieve our goal of the PCE,” San Juan said. – Rappler.com

Source: Bobby Lagsa/ http://www.rappler.com/nation/120224-battle-lumbia-airport-us-base-cagayan-de-oro-city-center

Affordable financing drives growth

“Housing demand is always determined by housing finance,” said Januario Jesus Gregorio Atencio, III, 8990 Holdings,Inc. president, in defending  developers’ need to have in-house financing for their projects. 

 Earlier, property consultant KMC-MAG expressed concern about the threat posed by developers’  focus on financing when their expertise is in construction. 

“When you build an econometric model for housing, on top of that is finance. The more accessible housing finance is, the more housing (projects) there will be,” said Atencio. 

“Finance is dictated by affordability. If housing finance is stopped, interest rates are high, entry requirements are high say at 20 percent down payment, then demand will be very small,” he added. 

Antton Nordberg, KMC MAG Group Inc.head of research, said apart from finance not being a core competency of developers, there is also no clear picture on the size of the in-house financing market which remains unregulated. 

“Overall, it’s been increasing quite fast,” he said, noting  the Central Bank’s policy to scale back bank’s lending activity may have also contributed to the rise of in-house financing. 

“Why this is a problem (is because) developers’ core expertise is not necessarily in the financing of products but rather in the development. So there might be some serious underestimate(ion) in the credit worthiness of the home buyer since (this is)  more of risk management than project development,” he added. 

Nordberg, however, was quick to point out that the risk is not an immediate threat. Still this could pose a problem should some external shocks arise. 

“It’s not really an issue right now but if there are some external shocks, it might cause some problem,” he said. 

Atencio said while developers should not be bankers, as KMC-MAG, they will undertake initiatives  to move housing forward. 

Atencio said state-housing fund Pag-IBIG had been successful in lowering the cost of housing for buyers through lower interest rate and lower premiums, making housing more affordable,” 

By ALBERT CASTRO/January 28, 2016/ http://www.malaya.com.ph/business-news/special-features/affordable-financing-drives-growth

Affordable housing finance remains a key in propelling the growth of the housing sector. 

9 trending local cities this year

Property analysts and experts forecast that developers will continue to pursue township developments in and outside Metro Manila in 2016. Now, where could these, and other types of developments be? Here are the nine likeliest urban locations:

1 Cavite. Colliers International Philippines cites three reasons Cavite is on developers’ maps:

• Cavite has been known as a suburban support area to Metro Manila. With its relatively cheaper housing costs, Cavite has drawn within its boundaries hundreds of thousands, who still commute daily to their workplaces within Metro Manila.
• Numerous infrastructure projects recently launched will allow Cavite to flourish. The LRT-1 extension project will end in Bacoor; the government has now started the bid for LRT-6 which will further extend the LRT line from Bacoor to Dasmariñas City. Furthermore, the 44-kilometer Cavite-Laguna Expressway (Calax) project will provide necessary access to growth areas in Cavite.
• With the completion of the Muntinlupa-Cavite Expressway (MCX), a toll road which connects the South Luzon Expressway (SLEx) to Daang Hari, property values in the area are foreseen to escalate rapidly. The new toll road will spur rapid development in emerging master-planned communities such as Vista Land’s Vista City and Ayala Land’s Vermosa Estate, which have the potential to establish themselves as full-blown central business districts (CBDs).

Property portal Lamudi Philippines, in its 2016 top cities list, shares eight more locations that will benefit from real estate investments.

2 Quezon City. The population of Metro Manila’s largest city is projected to grow to more than 3.5 million by 2020, with many looking into relocating there. Quezon City properties are relatively more affordable compared to Makati and Taguig, and offers plenty of options to homebuyers.

3 Makati. The country’s foremost financial and business district won’t be outdone, even if the average rental rate in its CBD is expected to decrease 3.39 percent year-on-year by the third quarter of 2016, vacancies to increase to 10.19 percent across all condo grades. Fringe areas, however, are starting to see an uptick in real estate activity, particularly Barangay San Antonio, near Ayala Avenue. “Worsening traffic conditions in Metro Manila are making these areas attractive to renters and homebuyers,” said Lamudi.

4 Taguig. “Taguig’s population is projected to reach almost one million by 2020, which will make it the National Capital Region’s fourth more populous (after Quezon City, Caloocan and Manila) and the country’s 9th. The city’s real estate sector has been on an upswing ever since Fort Bonifacio was privatized,” noted Lamudi. It added that several projects now are underway: Megaworld’s McKinley West and Ayala Land’s Arca South. Access to and from the airport (particularly Terminals 1 and 2) and to Coastal Road will also improve when the flyover connecting CP Garcia Avenue to the Moonwalk Access Road and West Service Road is finally completed.

5 Pasay. This city is gaining prominence because of: 1) Bay City—the reclamation area along Manila Bay housing the Mall of Asia Complex, Entertainment City—and Aseana City; 2) The SM group has already incorporated office and residential components in the MOA complex; 3) Federal Land is set to complete its Six Senses Residences in 2016 and its first tower in the Palm Beach project in 2017; 4) Improved infrastructure when the Naia Expressway connecting the Metro Manila Skyway to the Manila-Cavite Expressway and Entertainment City, is finally completed.

6 Bacolod. In mid-2015, Lamudi data showed that Bacolod had become among the most popular cities among online property hunters. In fact, real estate giant Megaworld announced in late 2015 that it was building two integrated townships in the city (the 50-hectare Northill Gateway and the 34-hectare The Upper East), while Ayala Land has sealed an agreement with the provincial government of Negros Occidental to build the mixed-use Capitol Central.

7 Davao. Davao remains southern Philippines’ economic and business center, and one of the most searched cities in the Lamudi website in 2015. Its population is projected to balloon to 1.83 million by 2020. Davao is also consistently among the most searched by online property hunters, and the sixth and third most searched city by property hunters based in the United States and Saudi Arabia, respectively, according to Lamudi data.

8 Cebu. Cebu City is one of Tholons’ top 10 outsourcing destinations in the world (and second in the Philippines behind Metro Manila). According to CB Richard Ellis Philippines, exciting expansions and new developments are coming in over the next few years. In 2015 alone, two new large malls opened in the city, SM Seaside City Cebu and Robinsons Galleria Cebu. SM Seaside alone has an area of 10-15 hectares devoted to commercial development, similar to the E-com office towers in the MOA complex, while Robinsons Galleria will have entire floors dedicated to BPO offices.

9. Muntinlupa. The south of Metro Manila, specifically Muntinlupa, is also projected to perform well this year, with the launch of several high-profile projects from the country’s biggest developers, one of which is Avida’s South Park District, a mixed-use development sitting on the former Nestlé plant in Alabang, in addition to the established Filinvest and Madrigal business districts. Further, in anticipation of infrastructure projects expected to ease travel to the south, property developers, including Rockwell subsidiary Rockwell Primaries, and Vista Land are now eyeing Muntinlupa as their next focus area.

Source: By: Tessa R. Salazar / http://business.inquirer.net/206043/9-trending-local-cities-this-year

Construction in full swing: Commercial sector shows no signs of slowing down as developers off to a strong start this 2016

IF the latter part of 2015 and the first quarter of this year would be any indication of how busy and vibrant the entire 2016 will be for the Philippine real-estate sector, it would be safe to say that we’re likely bound to surpass the milestones of the past year.

While the residential sector has been reaping the fruits of continued investments over the past few years, players within the commercial development sector, most notably, are now starting to enjoy an increasing growth momentum as more and more developers venture outside of Metro Manila.

ArthaLand and Robinsons Land Corp. (RLC), for example, have both began strengthening their presence in Cebu, which has earned the reputation as the most vibrant investment destination in the Visayas. ArthaLand plans to promote its sustainable building culture by putting up an “energy-efficient and environmentally sustainable office building” also in Cebu City. The company recently acquired a property in Cebu via its subsidiary, Cebu Levana Land Corp., and plans to offer approximately 51,000 square meters of office space for the region’s offshoring and outsourcing sector (O&O) players.

Meanwhile, the latest Philippine Property Market Monitor from Jones Lang LaSalle reported that RLC is set to inaugurate an office building in Cebu City, which will take up about 30 percent of its 4.6-hectare property that also houses the recently opened Robinsons Galleria Cebu. This is deemed to be a welcome development for commercial locators in Cebu, particularly for those engaged in its O&O, as the facility will be offering a GFA of close to 9,500 sq m.

Booming growth beyond Metro Manila

Back in Luzon, developers are also keen on building the next thriving investment districts outside of Metro Manila. In Clark at Northern Luzon, construction activities will likely hit a record high in the months to come following the recent announcement of two massive development projects: Global Gateway Development Corp.’s (GGDC) Aeropark Campus and the 35,000-hectare Clark Green City.

The $150-million Aeropark Campus, one of the more remarkable investments initiated by Kuwaiti investors GGDC, promises to be a major development that will help shift the focus of growing industries away from Metro Manila. The project, which will host more than 5.8 million sq m of premium office, logistics, retail, hotel and residential space, is expected to generate at least 10,000 jobs during the first few years of its operations. That number is seen to balloon to at least 300,000 jobs once the entire project is completed. Clark Green City (CGC), meanwhile, is seen to lure more foreign investors as state-owned Bases Conversion and Development Authority (BCDA) continues to facilitate development for the 9,450-hectare master-planned property inside the Clark Special Economic Zone. Once completed, the entire CGC has the potential to generate a gross output of at least P1.57 trillion annually, apart from facilitating the continued growth of more areas in Northern and Central Luzon.

Supply more than meets current demand

The abundance of office spaces in other areas within Metro Manila continues to complement the increasing demand and confidence of local and foreign investors.

A recent insight shared by experts from Jones Lang LaSalle revealed that, as we speak, there’s a total of 1 million sq m of available office space spread out among areas like Makati City, Ortigas, Bonifacio Global City, reclaimed areas in Manila Bay, and Alabang in Muntinlupa. Of this grand total, at least 15 percent to 20 percent will be taken up by business-process outsourcing (BPO) companies, as established firms expand their operations and new players come in. All of these developments confirm the earlier analysis made by Lamudi Inc. Founder and Managing Director Jacqueline van den Ende, who was among the thought leaders I spoke to for one of my trend reports prior to the end of 2015. “Developers are looking to go provincial due to the increasing scarcity of available land.

A couple of very big projects are being launched, especially in Cebu and in other provinces.…The office market in Manila will continue to be very strong. We see a lot of strata-titled office developments launched this year, which I think will be huge in 2016. Metro Manila’s office market is tight with very few properties coming online.

This is especially true in non-BPO-type offices. This presents an opportunity for investors.” We’re definitely on the lookout for how all these exciting developments will shape up this year. Great times ahead, everyone!

Source: http://www.businessmirror.com.ph/construction-in-full-swing-commercial-sector-shows-no-signs-of-slowing-down-as-developers-off-to-a-strong-start-this-2016/

LESSONS LEARNED IN 2015

Property portal Lamudi said  2015 was a good year for Philippine real estate. 

In the first part, we gave a rundown of 12 of the 25 lessons in property development in 2015.

The remaining 13 are as follows:

13.  Forbes Park is the most expensive subdivision in the Philippines
Average monthly rents in the very exclusive Forbes Park—home to business tycoons, foreign dignitaries, and boxing icons—stand at Php402,459, making the enclave the most expensive area to rent a
house anywhere in the Philippines.

15. Filipino-Americans prefer houses
Despite the condo boom happening in Metro Manila and other major cities across the Philippines, it seems that many Filipinos based in the United States still prefer to purchase houses, at least according to
January–June 2015 search data from Lamudi. More than half (57.83 percent) of all searches in the Lamudi website were for houses, followed by condos (16.58 percent). The most searched cities? Quezon
City, Makati, Manila, Tagaytay, and Baguio, in this particular order.

16. Cities affordable for first-time homebuyers
There are cities surrounding Metro Manila abound with affordable options for first-time homebuyers. These cities include San Jose Del Monte, Bulacan, where average home price stands at Php495,999; and followed by San Mateo, Rizal (Php549,259); Dasmariñas, Cavite (Php1.189 million); Imus, Cavite (Php1.858 million); Bacoor, Cavite (Php2.777 million); Antipolo, Rizal (Php3.668 million); Santa Rosa, Laguna (Php4.16 million).

17. Condos close to train stations are more expensive
An average condo located within 100 meters of an MRT station is at least Php16,645 more expensive per square meter than a similar, newly built condo situated more than 500 meters away, according to
listings data from Lamudi.

18. Ayala Center, Century City, and Rockwell Center lead most expensive list
Ayala Center—the commercial core of the Makati CBD—commands the most expensive condo rent per sqm than any area Metro Manila. Living in the area, which is within striking distance of Greenbelt, Glorietta, and most of Makati’s luxury hotels, can set a renter back Php1,144 per sqm per month, meaning a 100-sqm condo here can command monthly rent of more than Php110,000. Following Ayala Center are Century City and Rockwell Center in Makati’s Poblacion area, where condos command monthly rents 
of Php986 and Php973 per sqm, respectively.

19. Pricier condos are not necessarily bigger
On a per-square-meter basis, more expensive condos do not necessarily mean bigger space. Areas where condos are on average bigger are actually cheaper on a per-sqm basis. These areas include Ayala Triangle/Apartment Ridge, where condos average 275 sqm and where monthly rents average Php568 per sqm. This area is followed by Salcedo Village, where the average size of condos is 126 sqm and average monthly rent stands at Php652 per sqm. In contrast, in the Mall of Asia Complex and Newport City, the average sizes of condos are 34 and 50 sqm, but monthly rents average Php850 and Php785 per sqm, respectively.

20. Caloocan will be the second most populous city by 2020
The City of Manila will be overtaken by nearby Caloocan as the Philippines’ second most populous city by 2020. This is according to an analysis by Lamudi using the annual average population growth rate issued by the Philippine Statistics Authority in 2010. Caloocan’s projected 2020 population will be 1.88 million, compared to Manila’s 1.72 million.

21. Eleven PH cities will have populations of more than 1 million by 2025
Using the annual population growth rates recorded in 2010, 11 cities in the Philippines are projected to have populations of more than 1 million. These are Quezon City (3.95 million), Caloocan (2.115 million), Davao City (2.056 million), Manila (1.76 million), Dasmariñas (1.27 million), Antipolo (1.25 million), Zamboanga City (1.25 million), Cebu City (1.14 million), Taguig (1.12 million), Bacoor (1.11 million), and Pasig (1.022 million).

22. Can BPO workers afford condos?
With an average monthly salary of Php22,500, entry-level customer care representatives cannot afford to rent a condo in either of these “affordable” areas: Eastwood City, Pioneer-EDSA, Poblacion (Makati), and San Antonio (Makati), where average rents range from Php19,838 to Php22,563 per month. Using the 30 percent rule (spending not more than 30 percent of one’s monthly income on housing), only those working as managers, with an average compensation of Php75,000 per month, may only afford to rent a condo in these select areas.

23. How long Filipinos should work to buy a home
A salaried Filipino with more than 20 years of work experience and earning Php1.43 million per year may need 128 years’ worth of his salary in order to afford a house in Makati where average home price stands at Php184 million. In contrast, this same person needs 4.16 months’ worth of his annual salary in order to afford a home in San Jose Del Monte, Bulacan, where the average home price is Php495,999.

24. Are Filipinos buying or renting?
Based on its third quarter 2015 search data, Lamudi found that there is an almost equal proportion of renters and buyers among 18- to 24-year-old online property-hunters (50.2 percent for rent versus 49.8 percent for sale). Quite interestingly, there is a tendency for property-hunters to check out for-sale properties online as they get older. Among 25- to 34-year-old users, 57.3 percent are checking out for-sale properties. In the 35–44, 45–54, and 55–64 age groups, it is even higher; 70.8, 72.6, and 71.1 percent of the website’s users, respectively, are checking out for-sale properties.

25. Most sought-after locations for land
Quezon City, Tagaytay, and Baguio are the top three most popular locations among property-hunters looking for land online. These cities are followed by Davao and Antipolo. “Clearly there are cities preferred by people researching about land for sale online, and we hope these findings will give real estate developers insight into how to properly plan their next projects,” said Lamudi. In addition, the fact that only five Metro Manila cities were in the top 10 indicate that Filipinos are not too keen into buying residential land within the National Capital Region, either due to lack of supply, unaffordability, or both.

Source: http://www.malaya.com.ph/business-news/special-features/lessons-learned-2015

PROPERTY SECTOR GROWTH SLOWDOWN SEEN

Brokerage firm Colfinancial.com  sees a slowdown in the property sector in 2016 after years of robust expansion.

The online brokerage firm noted this is particularly true in the residential market.

“Take-up sales of residential properties continue to grow annually. However, the pace of growth has been slowing down since 2014 given the high base effect,” it said. 

“This year, we expect growth to remain slow as take up sales in 2015 remain substantial. Aside from high-base effect, as risk to growth this year is the slowing growth of OFW remittances,” it added. 

Colfinancial.com noted that in the first 10 months of last year,  remittances from overseas Filipinos increased by only 3.7 percent to $20.6 billion from an average of around 7 percent in the past five years.

 This should a big consideration in the property market, according to the brokerage firm, given that the average contribution of OFW sales to take-up sales is around 31.5 percent. 

“Another possible, albeit small, risk to demand is higher interest rates. Local bond yields have increased following the rate hike by the Federal Reserve of the United States in December of 2015 and
expectations of more rate hikes,” Colfinancial.com said.

 “However, according to our banking analyst, lending rates are not expected to mirror the increase in bond yields due to ample liquidity conditions and intense competition among banks. Moreover, the Federal

Reserve has repeatedly said that the rate hike cycle will be slow,” it added.

 Colfinancial.com said any increase in lending rates will be very small and not enough to significantly dampen demand for real estate. 

The brokerage firm also assured that the risk of a glut is low.

 “For the first nine months of 2015, takeup sales of leading property developers outpaced launches. This indicates that sales are not primarily driven by new launches and that there is enough demand to
absorb developers’ existing inventory. This also indicates that developers are disciplined enough to continuously monitor the demand- supply situation and are careful not to flood the market with supply,” it
said.

 The office space segment meanwhile continues to benefit from the good prospects of the business process outsourcing sector. 

“The depreciation of the peso last year also gives international companies greater incentive to move backroom operations to the Philippines,” it added. 

Colfinancial.com said the growth in demand will be able to absorb incoming supply. 

“According to Colliers, office supply will grow at a CAGR (compounded annual growth rate) of 8 percent from 7 million sq uare meters in 2014 to 9.5 million sqm by 2018. Meanwhile, IBPAP (Information

Technology Business Processing Association of the Philippines)  expects the BPO (business process outsourcing) sector to have 1.3 million full-time employees by 2016, up by a CAGR of 14 percent from 1 million in 2014,” it said.

 “Even if growth rate of full-time employees drops to half in 2017 and 2018, we believe it will still be enough to fill the incoming supply,” it also said.

 Colfinancial.com meanwhile said outlook for the commercial leasing segment remains positive as retailers continue to expand, creating demand for retail space. 

“The improvement in the economy is also resulting to an increase in the number of casual dining outlets. Economic growth and stability has led to the increase in the frequency of people dining out rather than
eating at home, thus creating demand for more casual dining outlets. This serves as a big driver of demand for commercial space,” it said. 

“With this in mind, we expect vacancy rates to remain low and same store/ mall sales to remain on an upward trajectory,” Colfinancial.com added.

Source: By ALBERT CASTRO  / http://www.malaya.com.ph/business-news/special-features/property-sector-growth-slowdown-seen

No real estate bubble – BSP

MANILA, Philippines - Initial results of stress tests conducted by banks validated the assessment made by the Bangko Sentral ng Pilipinas (BSP) that there are no risks from the real estate market.

BSP Deputy Governor Diwa Guinigundo said initial results of the real estate stress tests conducted by banks showed the capital adequacy ratio (CAR) of banks would remain above the central bank requirement even if 25 percent of their real estate loan portfolio turns sour.

“At this point we don’t see any signs of stress in the real estate sector,” Guinigundo said.

The central bank has asked banks to submit data on their real estate portfolio to include exposure in socialized housing as well as debt incurred through the issuance of bonds to finance real estate activities.

“We now have a more comprehensive definition of the exposure to real estate. It’s more dependable,” he said.

Based on the new definition of the exposure of banks to real estate, Guinigundo said stress tests conducted by big banks showed that their CAR would still be above the 10 percent requirement set by the BSP and the eight percent threshold set under the Bank for International Standards (BIS).

“Even if they factored in a 25 percent souring of the loans on real estate, they are still above the 10 percent regulatory capital that we imposed on the banks,” Guinigundo said.

Aside from the BIS methodology, he said the BSP also used the International Monetary Fund (IMF) identification of asset bubbles.

“Those two tests will show that we are far from the so-called danger level,” he added.

The CAR of big banks stood at 15.48 percent on a solo basis and 16.42 percent on a consolidated basis as of end-June last year reflecting their continuous efforts to maintain adequate capital buffer against unexpected losses that may arise during times of stress.

The BSP stepped up its watch over the real estate sector as early as 2012 by ordering banks to disclose more comprehensive reports on their exposures to property industry.

The pre-emptive macroprudential policy measure approved by the BSP required stress tests for banks to determine if their capital will be enough to absorb credit risk that may arise from their exposure to the property sector.

Banks’ exposure to real estate jumped 21.8 percent to P861.22 billion in end-November from P708.88 billion in end-September last year. The sector accounted for 17.5 percent of banks’ total loan portfolio of P4.91 trillion as of end-November.

The BSP has set the cap on real estate loans at 20 percent of the bank’s total loan portfolio.

Guinigundo added that real estate developers are now more prudent after learning their lessons during the Asian financial crisis in 1997.

“We can also say that we are in touch with various real estate developers, the bigger ones, and it is very comforting to know that our developers have become more prudent, more discreet with respect to their expansion plans,” he said.

Source: By Lawrence Agcaoili (The Philippine Star) / http://www.philstar.com/business/2016/01/12/1541553/no-real-estate-bubble-bsp?nomobile=1