4 Reasons Why Real Estate Investment Remains a Bright Spot Amid the Pandemic
September 30, 2020
Real estate investments have proven to be surprisingly resilient through the COVID-19 pandemic... and may yet bounce back higher after the lockdowns lift. By Joyce Panares Real estate has been a surprisingly resilient investment, even as the COVID-19 health crisis has severely disrupted global markets. Just like any other business operating under the so-called “new normal”, the real estate sector had to resort to innovative solutions to cope with the various pandemic coping mechanisms (like lockdowns) imposed by governments around the world. As a result, the Philippines’ real estate players have outdone expectations, remaining a bright spot for investors and end-users alike. To increase investor interest, developers and partner banks have dropped interest rates to an all-time low. Several observers have noted that now is the best time to purchase homes or property. During a recent Re/Start: Business webinar sponsored by Avida Land, experts weighed in on why real estate investment has done well in these uncertain times. Re/Start: Business is a webinar series produced by Project Ripple. In their August 15 episode, “Boom or Bust: The State of the Real Estate Industry”, industry professionals – Avida Land Vice President for Marketing and Sales Bing Gumboc; RJ Ledesma, Board Governor of the Subdivision and Housing Developers Association; and Leechiu Property Consultants Inc. Chief David Leechiu – had some surprisingly optimistic thoughts about real estate investing in the Philippines. Reason 1: OFWs are still investing in local real estate OFWs may be having a more difficult time lately, but the pandemic hasn’t stopped a “natural increase” in their local investments. According to Bing Gumboc, OFWs account for 11 percent of sales during the community quarantine. RJ Ledesma noted how Avida Land was able to sell P3 billion of residential low-end property to OFWs from March onward. “The OFW market is still a very, very strong and vibrant market,” Ledesma noted. And it’s not the high-end properties that are flying off the shelves. “The biggest number of markets we have in the Philippines, given our demographics, is really our C and D markets,” Ledesma explained. “So if you look at it, it’s really the affordable housing segment that’s the largest.” Reason 2: Booming business in properties outside Metro Manila Ledesma said with social distancing measures in place, there is a push for developing townships outside of the capital. And with more roadshows to OFWs taking place in cyberspace, the emphasis has shifted from Metro Manila properties to those found further afield. “These properties that have been selling haven’t been Metro Manila-based properties,” Ledesma told the webinar audience. “These investments are really in the provincial areas – Butuan, Davao, Naga, all where our OFWs are.” Ledesma thinks that online selling is the reason for this growth in provincial markets, resulting in democratized real estate sales. “On one platform you can see everything! ‘Uy, pwede na ako bumili ng affordable housing sa probinsiya ko!’” explains Ledesma. “And that’s what’s becoming prevalent nowadays, which is great for the whole country!” Reason 3: the Internet has reshaped real estate deals Avida Land’s Bing Gumboc agreed with Ledesma’s insights on virtual sales. “It’s easy right now to touch base with overseas Filipinos because of digitalization. The business becomes borderless,” Gumboc said. Instead of undertaking roadshows (impossible due to COVID-19-related travel restrictions), real estate agents now reach out to clients via Facebook Live. “Selling is becoming easier because of the digital platform,” Gumboc said. “The challenge is really on making the close happen online, unlike the face-to-face setup where you can easily just give a pen to the client and make the sale right away.” Reason 4: Increased demand for luxury homes One surprising segment of the market has seen a spurt in growth. “Luxury home vacation homes have increased in transaction volume,” explains David Leechiu. “We have not seen this in the secondary market since the mid-‘90s.” It may be partly driven by high-end investors who are considering a work-from-home setup far from Metro Manila – “In the last four months, a lot of people said, ‘wow, you know I cannot stay stuck in this house anymore! I’m gonna get a second home’,” Leechiu noted. “The luxury market is still moving,” added Leechiu. “So if you look at the last four months, from March all the way to today, the top 15 developers have sold altogether P66 billion in unit sales, primarily condominiums and primarily high end.” Invest now – just mind your ABCs All these reasons show why the COVID-19 pandemic hasn’t dampened the market for real estate – it’s just made the opportunities less obvious. Brave buyers in the new normal can reap awesome returns from daring to invest – as long as certain fundamentals are still followed. “The considerations are simple – just your ABCs,” Bing Gumboc explains. “A for address or location. B for budget. C is the credibility or reputation of the developer.” Buyers in today’s market “don’t have to really stretch your pocket so hard when making an investment in real estate,” Gumboc said. “Take advantage of the stretched pay terms that are available now – these will no longer be available when [the pandemic] is over.” Avida Land’s partner banks are also offering what Gumboc calls “very special rates” for housing loans. “We’re also [offering] giveaways to customers who are buying on spot down payment terms,” she explained. Are you comfortable investing in today’s real estate market? Visit the Avida website to explore the different homes across prime locations that are available to invest in – a bounty of opportunity even in the middle of a crisis.