Inquirer reported on October 2021 that the best time to invest in the Philippines might be “now.” But just five months later, the fate of the real estate market hangs in the balance thanks to the election season.
The previous report wasn’t wrong, though. Seasoned investors viewed the Philippine property market as a “buyer’s market.” October 2021 had been a good time because Philippine properties offered more flexible payment terms and discounts than their close competitors in Thailand and Malaysia. International investors wanted to take advantage of this convenience.
Some leading estate developers offered no downpayment with longer terms and discounts because of construction and turnover delays. But experts and key players in the market expressed confidence that the setback was temporary, and there was nowhere to go but up.
So why is the Philippine real estate market on the rocks again if that’s the case?
Analysts said that the presidential elections in May might delay investment decisions until the new administration becomes business-friendly. But how exactly do the elections affect the real estate market?
New Administration, New Policies
The next president may implement new policies affecting real estate developments when they hold office. For that reason, developers may postpone their projects today and resume them only when those policies take effect. The postponement, of course, will also influence investors’ decisions. If their desired properties can’t be finished as fast as expected, they only make sense to hesitate to buy now.
Health-related policies, like alert levels, don’t seem like they affect the real estate market, but they greatly do. Developers and investors are on their toes because the economy may tip into recession again if another lockdown happens. A lockdown and recession would decline occupancy rates in residential, office, and retail segments.
Contested Results May Erode Investors’ Confidence
The two leading presidential candidates are sparking a likelihood for contested election results. If the winning candidate is questioned, the installation of a new administration will drag on. Investors are wary of this scenario. Delays will impact consumer confidence in the economy and property market.
Conflicting Bets Between the Masses and Business People
Surveys show that Bongbong Marcos is the choice of the masses. But Japan-based finance group Nomura had chosen the second-leading candidate in the surveys, Vice President Leni Robredo. Nomura deems that Robredo’s win will have the most favorable impact on businesses in the Philippines.
On the other hand, if Marcos wins, he might continue President Duterte’s friendlier policies to Chinese investors. In that case, tensions over the South China Sea may ease down.
But, regardless of who will win, Michael McCullough of KMC Savills sees the office market rebounding this year. But he still considers an increase in vacancy levels possible. In any case, 703,000 square meters of office space are due for completion in Metro Manila. Set your sights on those units if you want to invest in commercial property.
Investing in Real Estate Today
Despite the uncertain fate of the market, there are still great reasons to invest in real estate today. The pandemic has urged millennials to buy homes, allowing you to focus on a younger market. First-time home buyers are currently on the hunt for affordable properties.
Filipinos may be generally family-oriented, but more millennials are starting to see the benefits of living separately from their parents. Besides, if their Home Mutual Development Fund (HDMF) allows them to take out a loan, why would they pass on the opportunity? Millennials may not get the chance to buy a home again, so they take advantage of the pandemic to make such decisions.
Before the pandemic, millennials were more eager to buy gadgets or travel. Now that they have fewer reasons to spend on such luxuries, millennials eyed homeownership and deemed it worthy of their hard-earned money.
If you are investing in real estate for the first time, visit real estate websites like Lamudi to find available properties. Then, take out a bank loan if you don’t have cash. You can sell a home with a mortgage, but the loan won’t be transferred to the buyer. Instead, you will use the sales proceeds to pay off your loan.
Work with a real estate agent, lawyer, and experienced investor to know your way around the market. Their insight will help you make the best decision. Remember, it’s a buyer’s market today, so selling or renting out a property may not generate pre-pandemic income levels. But still, if your investment property meets the market’s demands, you have a good shot at succeeding in real estate investing.
If you’ll wait for the tide to subside, keep your eyes peeled for the news regarding the elections and the economy. And if an amazing opportunity comes, grab it before you lose it.
