The real estate sector is booming despite the pandemic and economic challenges, and here’s why
BY Manila Bulletin
January 6, 2023 • 5 min. read
The real estate sector has been flourishing even more during the years of the pandemic. Banzon and Leechiu discussed thoroughly how the industry maintained buoyancy.
“I think the developers have been registering strong sales this year. From the affordable to the high end, sales have still been quite stable. I attribute that to the fact that maybe the slow down hasn’t reached the Philippines yet because we have certain features here that differentiate us from any other countries; we have the strong overseas remittances, we have the young market, and of course, the BPO – still growing. But I think the biggest driver for that is the fact that there is a shortfall of about six to eight million units of housing. There will always be a strong demand for that,” said Banzon on how the market remains strong despite the crisis.
Leechiu expounded that the pandemic crisis has helped the real estate sector stay ahead among other sectors.
“In the services sector, the Philippines is a very big part of the solution to the crisis management of the companies. That’s why every time there is a global crisis, more jobs are created in the Philippines. There’s just more demand for the real estate when that thing happens to the Philippines. These numbers have been consistent in every big crisis in the world,” Leechiu said.
He gave two reasons why the real estate sector is better now than pre-pandemic levels. “[First] the Philippine economy and property market have continued to perform gracefully. Many submarkets in the real estate sector have not crashed, unlike what’s happening all over the world. Number two, you have a support system. The appreciation levels have come down, but they have not gone negative. They are just appreciating at a much slower pace.”
The young market has been entering and investing in the real estate industry. As discussed by Banzon in this episode, the young market is one of the very important ones as 51 percent of SMDC’s total sales are from those aged below 40 years old.
“They’re earning that well. We have the BPO, we have the OFWs. And there are actually a lot of entrepreneurs among them. We’ve been quite successful in capturing that market. We need to make sure that, as I mentioned earlier, our projects fit their cash flow. The payment terms, the price, and the features, the amenities that we put in our projects is what the younger market is looking for,” Banzon discussed.
Apart from this, Leechiu explained that the next 10 years will be about the “transition of wealth and power” in many corporations and families, creating younger buyers in the industry.
“The third generation is ascending. You’re going to see a transition in power, resources, and because of the new wealth, the new buyers are also younger,” said Lee Chiu.
He also explained that the instability of other markets like in crypto, equities market, and the bond market encourages tech-savvy youth to invest in real estate.
“In the Philippines, 90-plus percent of investment activity is in the property market. It will continue to be that way because of the volatility of the markets in crypto, equities market, and the bond market. All those things will just drive more people to invest in real estate.”
How SMDC Stayed Ahead
Among developers, SMDC has unique approaches in capturing investors’ trust. Its projects are located in different parts of the country, even during the surge of the pandemic. Both speakers enlightened viewers on how SMDC thrives, being one of the strongest developers in the country.
“Of course, it is still a competitive market, so we need to make sure that the products that we are offering are what the buyers are looking for. Clearly, the world economy has slowed down some of our buyers. Especially the affordable market. Their income has been impaired. We need to respond to that,” Banzon explained. “If you want to be faithful to the affordable market, we need to come up with a product that would match their cash flow.”
Leechiu explained how the developments of SMDC have been keeping up with the present situation and set-up of the working class. “You’ve got the move from work-from-home to work-near-home. That will drive the need for more live-work-play concepts. So, developments like what SMDC is doing, where you’ve got this massive retail center at the ground floor, you don’t have to cross the street. You’ve got these massive 75-hundred-meter pools that you don’t normally find in condominiums. You’ve also got an office building next door or below the living spaces. And then, diversity in terms of location and integration with the mass transit systems.”
These are just some of the many reasons why the real estate sector is flourishing despite the challenges. Stream to find out more about the future of the real estate sector in the Philippines and SMDC’s plans here.