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WHY INVEST IN REAL ESTATE:

1. Rental income from properties is a stable source of cash flow.

2. Property value increases over the years as proven over the past 50 years.

3. Collateral against loans for emergency funds or fresh capital to sustain their business.

FUNDAMENTALS OF REAL ESTATE:

• Philippine Real Estate experienced 20 years of continuous growth. 

• The Philippines is among the top 3 countries in Asia with growth opportunities compared to other countries where prices are either high or unstable because of its mortgage system. 

• The majority of the homes in the Philippines are fully paid, compared to other countries that are on a mortgage. 

• The stable banking system and low-interest rates. 

• The growing young population of the middle class and working abroad. 

• There is a backlog of more than 1.5 million homes and are still renting.

• Filipinos overseas realized the value of owning a property and make an emotional decision to save for investment rather than lose their hard-earned money on unnecessary expenses. 

• Q1 2020 office space and leasing gradually improved by 3.91% or 1.18M sqm.

MINDSET OF THE MARKET:

• Common concerns before were the dollar rate and inflation compared to the crisis.

• The crisis is part of life, we always tell our investors we never expected the global crisis to happen, all you can do is to prepare or be prepared. 

• Filipinos abroad learned to put their hard-earned money in real estate, not business handled by relatives. 

• The psychology of the market is when there is a crisis there is fear, the attitude then is to freeze and postpone buying. But after they assess, they balance the situation. Fear becomes neutral, and confidence to invest comes back to positivity. Then fear turns to aggressiveness, buy now so we won't be left behind. The decision now is to secure a home so they won’t have to rent during times of crisis.

REAL ESTATE DEVELOPMENTS, STRATEGIES AND OPPORTUNITIES

• The crisis is temporary and it will pass. Construction was delayed due to government compliance but it will resume. 

• Each company or Real Estate developer would need a business recovery strategy: To focus on income-generating activities or reserve cash flow by reducing areas in CAPEX to prepare them for the transition for the next 6 to 12 months. The rule for companies is to survive with a sustainable plan. 

• Real Estate developers will implement efficient operations through critical operations such as safety protocols and sanitation because the market is now health-conscious. 

• Focus on customer needs than wants. Affordability or convenience.

• Landlords showing flexibility for tenants to recover.

• Priority is to have buildings to be compliant with sanitation and hygiene standards.

• Cost-cutting measures by outsourcing businesses. Initial increase for residential tenants as some companies assess to maximize their office space.

• Expanding requirements for leasing in the industry of Healthcare, Medicine, Delivery, Online marketing.

PERSPECTIVES ON REAL ESTATE IN THE PHILIPPINES:

• Real estate is a proven asset that will never depreciate. A source of recurring income.

• Those who are renting will realize the need to own instead of renting. 

• The growing demand with the work from home set up will increase real estate purchase rather than renting a place near their office. 

• Insurance, health, IT, and online entrepreneurs who will work from home.

• Office demand will slowly bounce back due to the increase in online business.

• Every business will need to improve their business model. 

• Review your risk management approach in business or investment. Real Estate is one of the safest investment one can make.

• Invest on Real Estate assets that are high in demand by the market such as residential.

• We recommend Real Estate developers to reserve available cash resources or assets they have. Secure good deals with other developers, or release more inventory for cash flow. Be sustainable and live to fight another day. 

• Tourism will slowly recover due to huge number of local tourism compared to international travellers coming to the Philippines.

• Change is inevitable and crisis is only temporary. 

ERIC MANALO REAL ESTATE INSIGHTS:

Based on my 15 years experience in Real Estate marketing, my approach to closing investors is in 2 parts, first is the fundamentals of the Philippine economy, second is the historical performance of the Real Estate industry. 

A house in Bel-Air Makati in the early 1960s was about P450,000 and today valued at P45M. At that time, Escolta, Manila was the Central Business District of the Philippines, and Makati was just in its early stage and not many believed it will grow because Salcedo and Legaspi Village was originally designed as a residential area, not CBD. 

A studio in BGC in 2005 was around P2.9M and today valued at P8M.

From an average price of P85,000 per square meter in 2008 to more than P246,000 per square in 2020 in at Bay Area which consists of office, commercial, and residential units.

How you see the future depends on what you firmly and clearly believe today.

Real Estate investment is all about who gets the best price, especially in a downtime market as proven for the past 50 years.

As I mentioned in my webinars, the secret to great Real Estate returns is all about belief. While the average investors are still skeptical or continue to procrastinate, the real deal investors take advantage of opportunities because they have a belief mindset that everything will bounce back.