Using Economic Theories, Trends and Analysis are the tools for Forecasting: In these write-up, I used simple Logic, Reason, Common Sense and “Gut Feel” Experience..
We are beginning the new year. As a tradition, I write my Forecasts, on what we can expect this year. I can’t help stating, a typical “economist” conditional statement, or making excuses for a miscalculated projection; even the fear factor of being mistaken requires to qualify a fearless “forecast” with a defensive statement like.. “Taking all this equal”.
This is quite understandable, because in reality, there are hundreds and one factors, inputs , variables, unpredictable human reactions to Events that happen. There is the complexity of Human Behavior, Political Agendas, the Hidden Dark Side of those in Power & Authority… And Worst of all, NATURAL & PHYSICAL Forces beyond the Control of man.
However, if i were to “take all things equal”, then my role as a Real Estate Consultant & Economist will come up to just “an educated guess work” or based on anecdotal experience, hear say, or a speculative wild imagination, that in some probability may hit the “Bulls Eye”.
Therefore, what I did, short of a grand econometric mathematical model, I used “all of the above” Qualitative arguments; meaning analyzing Data and a Synthesis of Information.. it is No Rocket science, but I used Regression and Correlation Analysis for making a simple trend projection. This is one of my favorite mathematical tools. It is simple and accurate.
I learned This Approach from Economist, Dr. Robert ” BOB” A. PALUZKA , my professor , from the Center for Research and Communication ( CRC), He was a U.S.A. Marine, and Founder of ECONOTEC, (1970’s – 1985) Bob was the Publisher et. al. with a Staff of two young Economists, Manny Lim and Wellington Ong. They, were ahead of time, and had then the Real Estate Price Index, and The Philippine Real Estate Monitor.
Dr. PALUZKA in his Research, discovered that Land Values or Prices, are indicative and a summation of all Economic variables that will determine a projection of Positive Economic Trends, Opportunities and Threats.
One of his discoveries was the Correlation of Land Values with Commercial Bank Deposits. Whereby, a commercial Bank showed growth in deposits within a time cycle of say 10 years. The regretion analysis of bank Deposits, correlated with Real Estate Market Values and prices of The bank Branches. The correlation of deposits to land values or prices, was almost perfect that of .9++!
My objective is to open the minds, imagination, creative ideas, and advice my dear fellow Real Estate Practitioners, as to which areas we can focus to best benefit the Quantum Leap of 2014.
There are several roads to take, all depends on one’s personal strengths, weaknesses, area of expertise, location, and so many other unique individual conditions, that we find ourselves in. However, no matter the limitations, there is a wide range to choose from in benefiting from the Quantum Leap forward in 2014.. there are Business Opportunities, Investments to profit from, and with Prudence, one can take advantage by positioning with a strategic action plan.
The entire Industry has so much to do.. but no matter what, it’s important that a Specific Market and Feasibility Study be done with actual Surveys and First hand Research, which is essential for success. The Market is very competitive. I would shy away from residentail condominiums in the CBD’s. We see an over-supply.
Real Estate Developers, must focus on Urban Renewal, Pocket Developments, Affordable ” Walk-up Condos” in the City center, downtown areas and Revitalize Urban Decay.
To illustrate, the Ayala Land Development of Santa Anna and Makati will be a winner. Just like what was done in San Lazaro by SMDC and Ayala Land. Also worthy of praise, and I salute is PHINMA, a pioneer in Affordable Urban Living.
I also congratulate, DMCI for their World Class Quality Developments with Affordable prices.. these are but a few examples of Developers who are contributing to Urban Renewal of Metro Manila.
If I have failed to mention other Very Good Developers, Please I beg your forgiveness, it is no intention of mine to “single out” the few. But I am just giving examples. If you wish me to give you special mention on your Urban Renewal Projects , kindly Email me : firstname.lastname@example.org and I will be more than happy to share these information in my future blogs.
For the end user Market, the buyer is “King or Queen”. There is so much to choose from, with good offers of discounts, creative financing packages and flexibility. Now is the time to go Bargain Hunting. Inflation will go up, my best guess is that it may hit the 5% mark by the end of this New Year. So, if you can afford, now is the time to buy.
Real Estate Investors on the other hand, must take advantage of low interest rates, and the liquid economy. Rental Yields range from a low of 4% for Raw Lands, to as High as 12% per annum, on gross rentals from retail and commercial establishments.
Industrial Parks for Warehousing, Manufacturing, Logistics, are the fastest growing in Demand by foreign Industries who are hot about setting up facilities in the Philippines. This is another area were Real Estate Practitioners can focus for this year.
There we have a “snap shot” as to Where, How, When and Why Real Estate is expected to go on a Quantum Leap not just in Metro Manila but all other regions of the Philippines. In fact, it will be a wise move to venture in new teritories, growth areas like the provinces, around the Subic Clark Corridor.
If i were to summarize in one word, what is this Quantum Leap for 2014 is all about, in terms of a Macro-Economic point of view, it’s going to be in INFRASTRUCTURE – Supper Boom all the way to Pre-Election year 2016.
Well, if I had a chance, I would like to go back into Construction, or set-up a Hardware Business Trade, supplying construction materials, manufacturing Furnitures and Fixtures, etc.
These are all with in the “Backward & Froward ” linkages to INFRASTRUCTURE 2014, Our Philippine Quantum Leap to Growth and Development.
For every Crisis, there is Opportunity. When I predicted in my blog last year that 2013, will be a Year of “FIRE & RAIN” I was right. It was based on some Geo-hazards Readings that showed a probability of a Major Earthquake, and a Super Storm that will hit the Philippines.
In fact, I was not the only one who made this prediction. Dr. Rene Gayo of MFI Foundation. wrote and published in Business World, months before Yolanda, that there is a Danger that we will experience a “Storm Surge”. Unfortunately, no one then had an idea of what a Storm Surge was all about. Now we know, know too well, and we dread it.
So, here we are, supporting and tying to help out with, Senator-Secretary Ping Lacson, with my Amigo, Undersecretary , Real Estate ” GURU” Danilo Antonio and the Legendary, World Class, City Planner, Arch. Jun Palafox who “hitting the road running” started a consultatory multisectoral forum last December 30, 2013 at the Asian Institute of Management organized in a very short notice by ACCED General Manager Ms. Frechie Nieva. It was a bit success and an excellent event.
The forum, was for the Reconstruction of the VISAYAS region and other parts of the Philippines affected by natural and man-made disasters, like the bloody Muslim-Extremist terrorists who destroyed parts of Zamboanga.
It is with optimism, positive hope, and trust in the leadership of Secretary Ping Lacson and USEC. Danny Antonio together with the almost 500 strong support from multi-sectoral groups, professionals, business leaders, Developers, NGO’s, Planners , Architects, Contractors, Doctors, Geologists and Scientists, Medical Doctors and Trauma experts, Religious Groups, Educators and Teachers.. Real Estate Experts, etc.
The Volunteers, who made specific commitments to contribute in Cash, or Professional Services, Supplies and whatever Material or Technical Resources that will be useful in the Restoration, Re-Planning & Design, Redevelopment, Reconstruction and Revitalization of the Visayas region. I would like to call this project the “R-5 Program”.
The VISAYAS REGION, being one of the poorest areas of the Philippines, particularly, Samar and Leyte, will experience an impetus of Growth and Development such as, housing and shelter, Agri-marine production, trade and commerce, Job Creation, Education, Health Services and social welfare.
With the active participation of the Private Sector, LGU’S, NGO’s, International Relief, and the Generous Grants, Donations and Contributions of the International Community. We are “hitting the road running”, eager to work and serve, with the BAYANIHAN Spirit, and in Solidarity to the needs of the Visayas.
To end, I wish to qoute, part of a New Year Greeting that I receiver via Facebook , from RE/ MAX Realtor Engr. Nelson L. Salazar. He shared with me a nice advice.. “The Best way to Predict the Future, is to CREATE it yourself!” this is so true, we can not allow, any form of “disaster” to break us. For, we are a Strong People, The Guapos y Guapas for the Globe.. ( MALAKAS na, MAGANDA pa) We are RESILIENT like the Filipino Bamboo, we bend but will not break..No matter what adversity, Crisis, and Difficulty. The Filipino Spirit and Soul is deep with Faith in GOD, Divine Providence and therefore is Blessed with Filipino Values and Virtues of Fortitude, Courage, Industriousness, and a very special Good sense of Humor,with the ability to Smile, even in suffering or pain.. This is why the Filipino is indeed Unique, in all aspects. A Legacy to the World, and a Good Example to Humanity.