This article is the second part of the first article “IS THERE A REAL ESTATE BUBBLE?”
Philippine Real Estate investors, both local and foreign, keep on chewing on prime real estate and their appetite remain bullish. This is the observation of Ramon C.F. Cuervo III of RACuervo Realty and Cuervo Valuers and Advisory.
Mr. Cuervo noted that it is in the commercial and retail sectors that the real estate investors achieve the yields of 5-10% from their investments. With interest below 10% per annum, easy term mortgage and loans, investors are out to gain profit in the ideal economic climate. With positive leverage cost of money, the demand to eat up the prime sites available remains very positive.
This phenomenon is not only in Metro Manila but has grown into other regions and provincial cities. “Imperial Manila is no longer the sweet heart of real estate investors,” Mr. Cuervo said during a round table meeting with real estate economists and consultants last October.
He noted that speculative prices of land are way above what normal values are ought to be. This is because buyers/ investors would rather pay more than lose out on opportunities on prime sites for retail and commercial developments.
Developers of malls, retails supermarkets, warehouse stores and the like are in stiff competition. These developers will grab, eat, and chew on prime sites. With a good humor, Mr. Cuervo stressed why prices of real estate have been growing above the normal 5% per annum trend and reaching over 12% on an average in most of the major cities of the Philippines.
Consistent to Mr. Cuervo’s analysis is Mr. Victor Asuncion who gave lecture at the National Real Estate Association National Convention last October 22.
Mr. Asuncion presented on Prospects on the Real Sector in 2012 and years to come. According to his presentation, the Philippines is one of the top performing economies in Asia. Citing the country’s favorable macroeconomic fundamentals and improved governance, the Philippines, as reported in the Wider World in 2050 Report, is set to be the biggest gainer and become the 16th largest economy in the 2050 with an average growth rate of 7% in the next 40 years.
While the Eurozone struggles with failing credit ratings and losses in property markets and the US grapples with increasing debts and a projected period of sluggish growth, an investment grade rating may just be within the reach for the Philippines.
Max V. De Leon of Business Mirror reported that Manila emerged among the best shopping destination in Asia Pacific region. Manila ranked 11th based on Global Blue’s Globe Shopper Index.
In Cebu, retail and commercial developers are expanding their territorial strategic positions, Mr. Cuervo observed.
The so-called “bubble” is nothing but a growth brought about by demand by frenzy of investors, buyers, developers, and even speculators who are capitalizing on the liquid economy.
“Well, yes. Only when I chew on a sweet and juicy real estate bubble gum,” Mr. Cuervo concludes when asked on the question- Is there really a real estate bubble?
With sources from:
THIS BLOG OR ARTICLE IS OWNED BY MR. RAMON C.F. CUERVO AND MAY CONTAIN LEGAL PROPERTY WHICH IS RIGHTS-PROTECTED. IT IS INTENDED FOR PUBLIC READING ONLY. COPYING, DISTRIBUTING, OR RE-PUBLISHING THE ARTICLE OR BLOG WITHOUT THE APPROVED CONSENT OF THE WRITER IS PROHIBITED. ANY ENTITIES WHO WANT TO SHARE THIS BLOG OR ARTICLE, PLEASE CONTACT THE WRITER AND ACKNOWLEDGE THE SOURCE: www.cuervopropertyadvisory.wordpress.com AND WRITER: MR. RAMON C.F. CUERVO, WITH MR. RAPHAEL D. TORRALBA