First in a series

IF the seers are bullish in the year of the ox, so are realtors and property developers. And as property analysts see the bright and gloomy spots, real estate players and real estate-related companies are seeing the gray areas as opportunities.

Alejandro S. Mañalac, president of the National Real Estate Association, said the recent movements of more experienced developers, which he described as those who have been in the business for at least 20 years and have experienced at least 3 economic ?cycles? and worse crises, suggest that the latest financial situation is still ?almost business as usual.?

He added that these experienced developers are still launching ?new but carefully conceptualized (projects) focused on very specific end-user target markets.?

Mañalac said the difference between the Philippines and its first world counterparts is that ?we are more experienced, if not ?experts? when it comes to crises. With each crisis under different periods and different administrations, we have had valuable learnings that have caused reforms in our banking and economic policies.?

He added that unlike ?the most recent economic turmoil (in 1997) when the Philippines got the ?flu? almost the day after our neighbors had it, catching us unprepared, now we are seeing it approaching and giving us time to prepare.?

Manalac said that while it is true that sales for investor-oriented projects have slowed down, the ?real? need for housing, especially for the middle to low-end markets, is very much present.

?It is the availability of financing for these first homebuyers that will move this market. Investors now should actually look at buying end-user oriented projects, either to flip or to have them leased in the future,? he said.

Usual tendency

?The usual tendency of investors is to look at properties/projects/units from their own perspective, from their high standards, from their personal tastes. But actually, a rich buyer can consider investing at low-cost projects and even buy several units since the demand will always be there for these type of projects,? he added.

According to Mañalac, another market that can be considered are the foreign investors who are looking for alternatives other than the United States and Europe. He said that Asia appeals to them as a good choice and the relatively stable economy in the Philippines is definitely an attraction for them.

?Even Fitch?s ratings show a positive and stable outlook for the Philippine economy and real estate has always been proven as the safest investment. In fact, real estate is the only investment where there are no mistakes which cannot be corrected by time because of appreciation.? He advises players to ?go for the end-user market.?

But just like Global Property Guide?s prediction that many sectors, particularly the local real estate sector, that rely heavily on the international market are expected to be the most severely affected by the global financial crisis, property player Jose Razon Puyat III, president of EDGE Properties-Kawayan Cove, has a similar opinion.

Reasons

Puyat said he believes that any strategy that continues to target overseas buyers would most likely falter because:

? When people have lost a significant amount of their investment, there is no further inclination, nor available funds, to use for additional purchases such as real estate.

? Most overseas Filipinos are heavy investors in the stock market, which includes their 401K, or their retirement account. With the global meltdown in all equities markets (the US and European markets in particular) vast amounts of capital, including that of the OFWs, have been lost.

? Many overseas buyers have already borrowed against their home equity to finance their purchase of additional property investment.

? Now that the value of their loans are much more than the value of their collateral (as a result of the steep drop in the US housing market), they are caught in a situation where they?re at the risk of losing their first homes. An individual in this situation will not likely consider investing because he is faced with the more immediate need for survival.

?We believe that the overseas market is a highly speculative market, mostly buying properties with highly leveraged bank loans tied to their first home. Now that bank financing has dried up, so will sales from this particular segment,? Puyat predicted.

Kawayan Cove is a high-end seaside residential community comprising 68 hectares, only 30 of which will be sold, the rest being left as wide open spaces and common areas. Lot cuts range from 500 to 2,400 sq m. At full development the master plan envisions approximately 370 lots.