The Effects of Covid-19 in the Philippine Real Estate

 

We are all facing an invisible enemy. We are at war with the Coronavirus or COVID-19 which seemed to have plagued the world with its omnipresence in our lives and media coverage concerning it. It has changed our lives radically without ever revealing itself directly. The pandemic is now truly what we can call a global phenomenon. Imagine it has affected 2.6 billion people (roughly a third of the world’s population) as we are all living under some lockdown or quarantine. We are all asked to stay home as offices and shops temporarily close and a small percentage of working individuals are instructed to work from home.

 

COVID-19 had changed the way we go out as we need to follow specific health and safety protocols as well as be cautious of social distancing. Wearing of face mask & shields, bringing of alcohol or hand sanitizers have become a must for everyone. This is what “the new normal” is all about.

 

Admittedly, the rapid spread of the dreaded Coronavirus disease of COVID-19 has thrown a big curveball on most professional industries. Who would’ve thought how the Covid-19 pandemic would turn out to be one of the most challenging crisis the entire humanity would face? No one had the slightest idea, we had probably underestimated Covid and thought it would just be as simple as having a flu virus. But now that we knew the severity of the Covid virus with its different variants, it was staggering and at the same time devastating because it has brought the whole world to its knees. It has made the rich and the poor equal. It has stirred uncertainties and confusion. It has overwhelmed the frontliners in the healthcare system. It has eradicated established pioneer industries and businesses we thought would last forever. Indeed, COVID-19 disrupted every known aspect of people’s lives, the government, businesses, and economies worldwide.

 

 Now, how bleak is the Philippine real estate after it became uncertain as the pandemic halted much business, travels were restricted as well as non-essential activities. The workforce was also put temporarily on hold and some of which eventually led to permanent closures. There were many properties that bore the biggest blow out of this pandemic. Amid all the drastic changes as well as learning all the lessons the hard way, real estate stakeholders and experts have long been eyeing recovery. The Filipinos are more than hopeful for more opportunities to be able to bounce back in the next coming months.

Inquirer Property recently polled industry experts who shared their insights and forecasts as well as vital key points on how we would all rise from this pandemic. According to them, recovery in real estate shall return once the consumers and investors gain back their confidence. Investor confidence shall further boost both the residential and office sub-sectors. The COVID-19 pandemic sabotaged an upward trajectory for the real estate industry. The sector ground a halt in March of 2020 and is getting its bearings only in late 2020. 

 

The Philippine real estate industry has its share of cyclical nature with its downturns and recoveries since the ’90s. The property sector is once again facing disruptions brought about by the Coronavirus 19 pandemic. But it is susceptible to periods of expansion and overbuilding as seen in the past. The good news is, unlike our fellow Asian property developers whose crisis are catalyzed by the bursting of a real estate bubble, our local developers had largely financed their projects via preselling which in turn assured the developers that the project wouldn’t end up unsold and unoccupied once completed. Other countries like Thailand had construction projects heavily financed and rely more on bank loans which may lead eventually to bankruptcy. Uncertainty in the economy is at an all-time high with the trajectory of the recovery still too bleak to forecast. Unemployment, business closure, a slowdown in OFWs [Overseas Filipino Workers] remittance are just some of the factors that could affect the industry during this ongoing health catastrophe. 

They say real estate is "one of the most low-tech industries," but it has to change now. Developers must embrace innovations such as logistics, cloud-based touchpoints, new cashless payment methods as well as cybersecurity. System-wise they had to upgrade stuff that helps with the handover, documentation process had to be faster, flexible payment terms are also a must. These improvements foster loyalty and repeated buyers--factors that may contribute to resilient sales even amid recessions. 

This pandemic and current crisis may have its hidden opportunities. Companies must be able to spot these opportunities.  And once they do, they have to capitalize on them. If only companies will anchor on such then maybe they can come out stronger and bigger because they do not dwell on the problem for so long, rather they seek solutions. 

Houses and land properties have recorded the highest growth in terms of pageviews, registering 33.03 percent and 30.24 percent respectively. This upward trend lends a positive outlook for the residential market. These are based on Lamudi's projections which show that houses, condos, and even foreclosed properties may see a spike in pageviews as people are looking at houses after realizing the significance of investing in real estate. In fact, according to them there will be a projected significant growth in the number of house seekers and it will grow by 8.01 percent. 

For those who would like to purchase another residential property or perhaps planning to update their property you may want to consider studying the pros and cons prior to making a purchase. We highly recommend for you to do as much study, plan carefully and do your own research if it'll be a good investment. 

We recently stumbled upon a tool that you may find useful. It's called a mortgage calculator. You might want to check it out in forecasting your real estate investment. We reckon this tool should be a must for those interested to purchase any property. The mortgage and amortization calculator shall be able to determine your calculated monthly amortization so you'd know exactly if you'll be able to afford the property that you are eyeing. The mortgage calculator also features other information on mortgages based on your salary, refinancing, and overpayment. And based on what number you input, it will tell you how much deposit you need as well as the remaining balance needed to pay as well as the number of terms and its interest rates. 

While it is true that the said mortgage calculator was made catering to the UK market, it should work for any market as well. The best part about this tool is it actually shows you the graphs of loan repayment along with monthly as well as annual amortization table which can be very useful to anyone interested to purchase a house.

In a nutshell, the leading factors of the Philippines' real estate market are the growing business processing outsourcing [BPO] industry from multinationals, continuous supply of flexible workspace, high demand from Chinese and foreign investors and high remittances of OFWs leading to higher purchasing investing power for residential property market. With prayers, hard work and anchoring on every Filipinos natural resilience, there is still a brighter day ahead for the Philippine real estate industry. 

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References: Inquirer Archives, psa.gov.ph, industry.gov.ph, neda.gov.ph, boi.gov.ph, hudcc.gov.ph, bsp.gov.ph, psa.gov.ph, manila standard.net, Lamudi Philippines.