Investing in Real Estate in the Philippines [Archive] - Page 9

3cr

July 3rd, 2007, 04:06 AM

Hope the trend continues...

Philippines' property sector is red-hot

The talk at a recent dinner party in Hong Kong hosted by one of Europe's largest banks for a group of wealthy clients was centred - surprisingly - on the Philippine property sector.

I can't remember the last time investors like this have waxed so lyrically about the Philippines,' said a banker, who asked not to be named. Booming demand for office space and condominiums has resulted because of a rise in outsourcing to the Philippines, as well as the purchasing power of the country's more affluent overseas workers.

The upsurge, say developers and market analysts, shows no signs of flagging. The sector's upbeat prospects are vividly reflected in the share prices of property companies, which have risen by an average of 17 per cent so far this year, nearly double the advance of the Philippine Stock Exchange's main index.

'The property market is now very much on the radar screen compared to four or five years ago, when nobody even considered this place,' said Mr Lindsay Orr, country head of real-estate services group Jones Lang LaSalle.

The expansion of foreign companies' 'offshoring' of business functions such as call centres and back-office work to the Philippines has been breathtaking, eclipsed only by India.

This has created huge demand for large office space in prime areas of Manila over the past years, which developers are scrambling to meet. The chances of finding rentable floor area for a sizeable outsourcing centre in the business district of Makati are practically zero these days.

Call centres typically need at least 32,000 sq ft of space. New rents in Makati rose 15 to 20 per cent last year. 'They'll probably do the same in 2007,' said Mr Orr. In the district's top addresses, landlords are raising office rents by as much as 30 per cent for new tenants, with some hitting 1,000 pesos (S$ 32) per sq metre.

Thought that is far lower than in most Asian financial centres, it is sky-high by local standards, Still, despite a large pool of educated English speakers, rents and salaries here will need to stay competitive as other countries ramp up their outsourcing sectors. With no large office buildings opening in Makati this year, new operations are looking for space in other parts of the capital, especially nearby Fort Bonifacio, a former military camp, as well as cheaper regional centres.

The second city of Cebu is now fast establishing itself as an outsourcing centre, as are smaller cities like Iloilo and the pleasant university town of Dumaguete, all in the central Philippines. A decade ago, the Asian financial crisis put paid to the last major rally in the property market here.

But this time around, said the Philippine Central Bank's Governor Amando Tetangco, the market is being dri- ven by real demand: 'It's different from 1997, when the rise in property prices was due largely to speculators.'

When Net Group, a property developer focused on projects for outsourced operations, completed its 22-floor Net Square building in Fort Bonifacio last July, it reportedly signed up tenants for the entire leasable space of 194,000 sq ft six months before it was finished. Blue-chip developer Ayala Land has managed to pre-lease over half of its 506,000 sq ft complex in Makati before the ground was broken on the project. The US$ 64 million Dela Rosa E-Services Building is set to open in late 2008.

Going by current estimates, future demand for leasable space for outsourced operations as well as so-called build-to-suit deals for specific clients will be mighty. The Business Processing Association of the Philippines reckons that by the end of the decade, 950,000 people will be employed in outsourced operations, nearly a four-fold rise on the current level.

'We're getting around six to eight visits a week from mostly American companies sizing up whether to outsource to here or to India,' said association executive director Mitch Locsin. 'About half are choosing the Philippines.'

Based on the association's projections, analysts reckon that by 2010, an additional 26 million sq ft of office space will be needed. That represents roughly the entire office stock in Makati today. But only around three million sq ft is currently under construction across the Philippines. Even so, mega projects are coming off the drawing board.

Ayala Land wants to replicate India's campus-type IT developments in the Philippines, starting with a 37ha site in Manila's Quezon City. Early next year, it plans to break ground on a US$ 191 million technology park with shops and residences built around 10 office complexes. Mid-priced residential condominiums, with units typically costing S$ 80,000 to S$ 160,000, are the property market's other main driver.

The demand here is being spurred by Filipino professionals working overseas and, lately, enticingly low mortgage rates. Some eight million Filipinos - a tenth of the population - live and work overseas. Many are in low-paying jobs, but an increasingly large number are nurses, engineers and other professionals.

That trend is being closely watched by property developers. As long as the remittances of overseas workers keep growing, there should be no let-up in demand, said Mr Victor Asuncion, research director of property consultants CB Richard Ellis Philippines.

The Philippine Central Bank expects overseas workers to wire home a record US billion (S$ 22 billion) this year. A sizeable chunk of that is expected to be spent on real estate. Remittances are also keeping shop tills ringing at home, and that is driving the construction of new malls.

With an eye to buyers from overseas, developer Megaworld now has 40 sales offices in countries with sizeable Filipino diasporas. The company, which pioneered the mid-end condominium market in the 1990s, expects 40 per cent of sales for middle-income housing to soon come from overseas earners.

Its biggest project is a 9,000-unit, 20-tower complex called Manhattan Gardens, on a 5ha site in Quezon City. The first tower, set for completion in late 2011, has been 90 per cent pre-sold. The surge in demand from overseas workers is also partly demographic.

'Many professionals who went overseas in the 1970s and 1980s are retiring and buying pro- perty in the Philippines as second homes and investments,' said Ayala Land spokesman Paulo Campos. Filipinos are also taking advantage of local mortgage deals, which have never been better. Some banks are now offering 25-year mortgages at fixed annual rates of 11 per cent.

The boom is clearly reflected in the earnings and share prices of the country's five major developers: Ayala Land, Fil-Estate Land, Megaworld, Robinsons Land and the SM Group of tycoon Henry Sy.

Megaworld is pencilling in a 40 per cent increase in net profit this year after earning 2.04 billion pesos last year. Condominiums are the only property that foreigners may own in the Philippines, though ownership restrictions may be relaxed.

President Gloria Arroyo, her economic managers and many in the business community favour loosening a number of restrictions to attract more foreign investment.

Reference:Straight Times

________________________________

This is encouraging news:

Retirees seen becoming another major economic force
By Doris Dumlao
Inquirer
http://business.inquirer.net/money/topstories/view_article.php?article_id=66589

MANILA, Philippines -- The spending power of Filipino retirees is expected to expand by 4.4 percent annually in the next 10 years to reach $6.8 billion in 2015, aided by cash remitted by relatives working overseas, a regional study said.

Financial support for the elderly in the Philippines is dependent on extended family units, as social security coverage remains small, Yuwa Hedrick-Wong, an economic adviser to Mastercard International, noted in a recent publication titled, “The Glittering Silver Market: The Rise of the Elderly Consumers in Asia.”

But the Filipino elderly are supported financially by the unique overseas Filipino worker (OFW) phenomenon, Hedrick-Wong said.

“The majority of these overseas workers leave behind their spouses and young children,” he noted. “In many instances, both parents work overseas, leaving the young children at home,” creating a situation in which the grandparents and sometimes the granduncles and grandaunts serve as surrogate parents for OFW children.

“And, for the elderly themselves, their role as surrogate parents enables the parents to seek work abroad. It may not be ideal, but in many ways this is a win-win situation for the elderly, the overseas workers and the children left behind,” Hedrick-Wong said.

As of 2005, the total spending power of retired empty nesters and retired old singles was estimated at $4.4 billion, the study said. The average spending power was about $1,350 per person for retired empty nesters and $1,230 for retired old singles, it said.

“The spending power is split quite evenly between the retired empty nesters (or those whose adult children have left their homes to live elsewhere) and the retired old singles, with the spending power of the former growing at a slightly higher annual rate of 4.8 percent, compared with 3.9 percent for the latter,” it added.

The study noted a wide discrepancy between the elderly in the rural and urban areas, with those based in Metro Manila being more dynamic.

Among the five discretionary expenditure items, spending on dining and entertainment was found to be the biggest in 2005, accounting for 60 percent of total. Shopping came in second, accounting for 26 percent. Purchases of vehicles, personal computers and mobile phones ranked third.

“The expected growth rates of these key discretionary expenditure items are very uneven in the next 10 years. Spending on travel and leisure activities is expected to grow the fastest at an average of over 10 percent a year,” Hedrick-Wong said.

Spending on shopping, on the other hand, was expected to grow the slowest at 0.9 percent per year.

“These five discretionary items will grow collectively at an average of 7.8 percent per year in the coming decade, bringing the total discretionary expenditure to almost $2 billion in 2015,” he said.

Across the region, Mastercard president for Asia-Pacific, Middle East and Africa Andre Sekulic said, the lengthening of individual life expectancy would make the elderly a dynamic driver of the consumer market.

“The silver market of elderly consumers is set to glitter in Asia Pacific. The reward is expected to be great when businesses get it right,” Sekulic said.

In affluent Asia-Pacific countries and territories -- Japan, South Korea, Taiwan, Hong Kong, Singapore and Australia -- the total potential spending by the elderly households was estimated at $868 billion in 2005, and is expected to rise to $1.5 trillion in 2015.

In emerging Asia -- consisting of China, India, Thailand, Malaysia and the Philippines -- total spending of elderly households was estimated at $153 billion in 2005, and is projected to rise to $430 billion in 2015.

3cr

July 3rd, 2007, 04:07 AM

raf

July 3rd, 2007, 05:28 AM

what's wrong with americans?

apart from being loud, obnoxious, invading countries and trying to take over the world......nothing much...

whatever it was that these americans did to you or your people, i apologize, on their behalf(partly serious, partly kidding, as the case may be)

on a neutral note-- the romans were very much hated when they were in power, so were the greeks, and so were the chinese emperors, and so were the brits when they were in power, and still hated even if no longer, as made obvious by recent 'activities' over there..

the tendency to hate those in power, i should say, is an integral part of many people who have less of it..

and speaking for myself, i find fault in the philippine gov't moreso than i can the us gov't, especially if i have to bring up issues regarding what services these gov't provide for their respective tax-paying citizens. Sure there are corrupt cops in america, but speaking from my experiences with cops of my own race and blood, and whose salaries i have been paying for courtesy of VAT...

i am getting off-topic here, as usual.

Lili said something about new mexico and taos is one of the nicest spots, many say.. and this one's for people who don't despise americans.

http://homes.realtor.com/search/listingdetail.aspx?ctid=5895&ml=3&mxp=16&typ=7&sid=773d225946bb4c21a4f99ddbb66bfa2b&lid=1069277828&lsn=2&srcnt=7#Detail

3cr

July 3rd, 2007, 10:32 AM

what i am emphasizing here(aside from value for money) is the fact that even a jeepney operator in pinas who's earned enough to buy two jeepneys already is one guy substantial enough to buy a condo unit in houston texas!

this jeepney operator can't possibly buy a run-down home in his, say, tondo hometown, for just 1 million pesos, can he?

a million pesos can't even buy raw land in squatter areas in tondo or anywhere in the ghetto areas of metromanila.:ohno:

http://farm2.static.flickr.com/1034/648321511_baaabda0d6.jpg

What's wrong with the photo above?
See answer below...
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Aba sosyal naman yan naka aircon pa! Hehehe...:lol:
I wonder who is paying for the electricity! :bash:

smokingunmanila

July 3rd, 2007, 11:00 AM

That is a very common site in the squatters area...honest...ang dami nilang aircon....eh mga professional squatters yan eh..baka marami pang pera yan sa atin ...sa akin lang pala..since bokya na account ko...

tafftrader

July 3rd, 2007, 01:23 PM

whatever it was that these americans did to you or your people, i apologize, on their behalf(partly serious, partly kidding, as the case may be)

on a neutral note-- the romans were very much hated when they were in power, so were the greeks, and so were the chinese emperors, and so were the brits when they were in power, and still hated even if no longer, as made obvious by recent 'activities' over there..

the tendency to hate those in power, i should say, is an integral part of many people who have less of it..

and speaking for myself, i find fault in the philippine gov't moreso than i can the us gov't, especially if i have to bring up issues regarding what services these gov't provide for their respective tax-paying citizens. Sure there are corrupt cops in america, but speaking from my experiences with cops of my own race and blood, and whose salaries i have been paying for courtesy of VAT...

i am getting off-topic here, as usual.

Lili said something about new mexico and taos is one of the nicest spots, many say.. and this one's for people who don't despise americans.

http://homes.realtor.com/search/listingdetail.aspx?ctid=5895&ml=3&mxp=16&typ=7&sid=773d225946bb4c21a4f99ddbb66bfa2b&lid=1069277828&lsn=2&srcnt=7#Detail

poor website!

smokingunmanila

July 3rd, 2007, 05:38 PM

tafftrader

July 3rd, 2007, 11:20 PM

Compared to other nationalities if I will be in an island...I would prefer the Americans...since we have more similarities in terms of taste and culture compared to other races....Arabo..nako...ma rape ka dyan...baka si ravencute gusto nya makasama sa island arabo..hahahahaha..joke lang poh

they'll soon have you enslaved on that island. good luck...

raf

July 4th, 2007, 03:10 AM

^^ the guy/gal's definitely snarling and baring his/her fangs, and oozing with so much hatred and ill-will...

another spoiled thread.

mods, please lock it up.

am outa here.

ChicTown

July 4th, 2007, 07:16 AM

^^ the guy/gal's definitely snarling and baring his/her fangs, and oozing with so much hatred and ill-will...

another spoiled thread.

mods, please lock it up.

am outa here.

:ohno: @raf, just can't blame you for having this site locked up. We are dealing with another legend in his own mind, who got educated beyond his intelligence. Time to sign off completely from all the threads. Good luck and God bless!:) :)

smokingunmanila

July 4th, 2007, 07:23 AM

they'll soon have you enslaved on that island. good luck...

Nako tafftrader may issue ka nga...you need to resolve that...na rape ka ba ng kano or something similar? hahahahaha....just joking .....we cannot classify or generalize a certain race or group of people...bawal yan...ayaw yan ni Hillary clinton...bow

3cr

July 4th, 2007, 07:48 AM

Personally just want to Thank Raf for originally opening the thread to help people/investors like me expand our options as far as realestate investing is concerned. Sadly due to the unfortunate turn of events, another good thread has to prematurely close because of outside forces! I perfectly understand and commend Raf for taking the high road. Many Thanks again Raf and hope you reconsider.

Risk Taker

July 4th, 2007, 09:21 AM

yeah why do we succumb always to have the good threads closed just because there's people who violate rules here. It's the mods job i think to warn them of their mistakes and be careful of their comments and imo closing this thread is not really a good solution. although i haven't posted here before but i am learning from posts of people here. Thanks to you Raf for starting this thread and hope you would really consider not closing this good thread.

tafftrader

July 4th, 2007, 09:49 AM

Close the thread! Bakit? The fun is only just beginning. Seriously, you guys need to chill out a bit. I'm all up for debate. However, you can't compare property prices in US to Manila for obvious reasons. Secondly, I'm an expat here out of choice. Have invested a lot of money in both property and stocks here and am very bullish the Philippines and have been for 3 years(even when locals were telling me I was crazy!!!!!). For me, moving to the states is not even a consideration. Invest here, ITS GOING UP!!!! BPO's, commodities, low base, currency appreciation, tourism.....need i go on. Start believing in yourselves and your fantastic country.

I do find americans annoying though even though some of my friends are yanks.

smokingunmanila

July 4th, 2007, 02:05 PM

You didn't answer my question..were you rape? hahahahaha..joke lang poh..para naman matawa kayo...

Rene Ybardolaza

July 4th, 2007, 04:38 PM

Cut the bullshit, tafftrader. You're a troll! The only input you've made in this thread are disparaging remarks about another culture.

Close the thread! Bakit? The fun is only just beginning. Seriously, you guys need to chill out a bit. I'm all up for debate. However, you can't compare property prices in US to Manila for obvious reasons. Secondly, I'm an expat here out of choice. Have invested a lot of money in both property and stocks here and am very bullish the Philippines and have been for 3 years(even when locals were telling me I was crazy!!!!!). For me, moving to the states is not even a consideration. Invest here, ITS GOING UP!!!! BPO's, commodities, low base, currency appreciation, tourism.....need i go on. Start believing in yourselves and your fantastic country.

I do find americans annoying though even though some of my friends are yanks.

jgacis

July 4th, 2007, 11:22 PM

how could it be possible that housing in america has higher standards and yet cheaper than pinas?

It is beyond my finite intelligence.

The answer lies in the PROPERTY-TITLE system of the USA when compared to the Philippines.

When the title of a property is secured through a trusted legal system, it filters through a financial network where banks give value through the property's equity.

Property owners who have "capital" through this equity tend to keep better care of their homes and "investment".

U.S. federal and state housing laws add to this "trusted" system through enforcement and "checks and balances".

The Philippine version of this is still somewhat primitive, with no checks/balances and oversight.....

j.r.

July 4th, 2007, 11:50 PM

is this why in the philippines, u can only call a piece of property ur own and able to sell it when u fully paid for it and hav the title of the property in ur name?

tafftrader

July 5th, 2007, 12:01 AM

You didn't answer my question..were you rape? hahahahaha..joke lang poh..para naman matawa kayo...

were you rape? what does that mean? do you mean, were you rapeD?:ohno:

tafftrader

July 5th, 2007, 12:02 AM

Cut the bullshit, tafftrader. You're a troll! The only input you've made in this thread are disparaging remarks about another culture.

OK tough guy!

gen1

July 5th, 2007, 01:02 AM

is this why in the philippines, u can only call a piece of property ur own and able to sell it when u fully paid for it and hav the title of the property in ur name?

you can sell it even if you haven't paid for it in full.

please wag naman text shortcut ang gamitin mo sa messages mo. sakit sa ulo basahin :)

Risk Taker

July 5th, 2007, 04:26 AM

^^ unless the buyers agree to buy it even if there's no title yet. i learned from my broker that usually it would take months and years for you to receive the title of your property. My experience last time in buying a lot there in the philippines is also the same. But i am not sure however if this is standard procedure or the owner of the lot i bought just didn't process it soon so it takes more than 6 months for me to receive my title although it's cash paid.

gen1

July 5th, 2007, 05:41 AM

jgacis

July 5th, 2007, 09:35 PM

^^ if the seller bought the property your interested in through a bank loan, then the title of the property is with the bank. In which case you can pay off the loan to take immediate possession of the title property.

if the seller made use of in-house financing from the developer, you will asume the balance of the loan and your title will be turned over to you by the developer once you've fully paid.

key word is - reputable developers. some developers may have taken loans against the property you've bought from them. hindi mo talaga makukuha ang title mo kapag nagkataon :)

I bought a condo straight from the developer cash in Quezon City, and the project is completed. Turn-over was this January. I still haven't received the title yet! I talked with the V.P. and he said all the titles are under the developer's name. The transfer of title to the buyer is a different story, he says. They are still processing the paperwork with the BIR and he said it is taking a long time.

Can it also be that the developer still owes money to a lender or has a current lien on it? He says there is alot of paperwork involved and people are slow.... :ohno:

gen1

July 6th, 2007, 12:38 AM

my serendra unit has not yet been turned over to me yet meron nang title. nasa bangko nga lang since I took out a home loan :)

iba pa rin talaga ang ayala land :)

TheRick

July 6th, 2007, 01:17 AM

I'm looking at a possible Boracay Condotel Investment.

The numbers look great. It seems that there are plenty of visitors compared
to the number of rooms available to rent out. You get to enjoy Boracay
Island - 30 days in a year and rest of the time you are making money.

The return seems to be good - according to some conservative estimates given to me 5 to 8 yrs.

My hesitation comes from -
What if they keep building hotels and resorts would it saturate the island?
Would boracay still be beautiful in 5 to 10 years from now?
( http://www.manilastandardtoday.com/?page=business3_mar12_2007 )
What if a new Island is developed Carabao or Calicoan Island would it lessen the visitors of Boracay?
Is Boracay just a fad? Right now its a party place. But its a party place until the next party place arises.

If Boracay is not maintained then visitors would not come - then rent will go
low and If I want to sell my unit then it might be very hard to do.

Any thoughts? :ohno:

jgacis

July 6th, 2007, 03:25 AM

my serendra unit has not yet been turned over to me yet meron nang title. nasa bangko nga lang since I took out a home loan :)

iba pa rin talaga ang ayala land :)

Yes, I also bought from Ayala Land, Inc. last October 2005, The Residences At Greenbelt (which I think is a better location than Serendra ;)).

I won't be able to enjoy my unit though until 2010.

I'm sure it will be worth the wait, since the view from the 37th floor will be great!!!

The other condos I bought in Q.C. (where I don't have title yet) was still a good investment kasi malapit sa Ateneo University and I have them fully rented out already... :)

Risk Taker

July 6th, 2007, 04:45 AM

^^ if the seller bought the property your interested in through a bank loan, then the title of the property is with the bank. In which case you can pay off the loan to take immediate possession of the title property.

if the seller made use of in-house financing from the developer, you will asume the balance of the loan and your title will be turned over to you by the developer once you've fully paid.

key word is - reputable developers. some developers may have taken loans against the property you've bought from them. hindi mo talaga makukuha ang title mo kapag nagkataon :)

the seller didn't bought the property thru loans. it's the transfer of title to my name that took so long. the processing is very slow don't know if that is the standard procedure there or maybe the owner is just lazy to process it. and yes i agree with you that the key word here is buying from reputable developers.

lazybum

July 6th, 2007, 04:53 AM

The answer lies in the PROPERTY-TITLE system of the USA when compared to the Philippines.

When the title of a property is secured through a trusted legal system, it filters through a financial network where banks give value through the property's equity.

Property owners who have "capital" through this equity tend to keep better care of their homes and "investment".

U.S. federal and state housing laws add to this "trusted" system through enforcement and "checks and balances".

The Philippine version of this is still somewhat primitive, with no checks/balances and oversight.....

You are exactly right jgasis. Pls. allow me to add my thoughts to your post:

The US real estate industry is one of the most regulated industries in America. Every state in the Union has its own set of laws and requires property developers, real estate appraisers, brokers, sales agents, escrow agents, and title companies to be properly licensed and/or certified in order to do business in that state. On the other hand, financial institutions such as community banks, regional banks and other state or federally chartered banks are required to draw up real estate lending policies and procedures that strictly conform to the Federal Reserve Bank’s lending guidelines. These guidelines are then strictly enforced by the Office of the Currency Controller or by the Office of the Thrift Supervisor through annual policy compliance audits of banks under their supervision or control.

In addition to the above, developers must also comply with local and federal environmental laws and other state or federally mandated programs that could potentially affect the successful completion of a development project. Any potential issues and proposed mitigations are required to be properly disclosed to lending institutions during project underwriting.

In US real estate parlance, real estate fundamentals primarily refer to: (i) real estate projects are adequately supported by a comprehensive general market and financial studies [includes analyses of project location, building costs, supply, potential size of market, current and projected demand, price comparisons, profitability and return analysis, etc.]; (ii) established real estate values adequately support real estate loans; (iii) adequate borrower/builder financial capability and local market knowledge and expertise; and (iv) supply does not go too far ahead of projected demand [ex. absorption rates, inventories, speculative limitations, etc].

How do all of these translate? All of the above-described licensing and lending guidelines and assessment of market fundamentals were designed and instituted for the purpose of bringing transparency to the industry thus providing adequate protection to real estate investors and the buying public in general.

I recognize that in most developing countries, important industry components are lacking and that real estate industry practices are still in the process of development. In the Philippines most particularly, I have no doubt that in the near future, the real estate industry will attain maturity thus making it easier for investors and the buying public to access better market information and in the process, gain confidence in assessing investment risks and returns.

gen1

July 6th, 2007, 06:49 AM

Yes, I also bought from Ayala Land, Inc. last October 2005, The Residences At Greenbelt (which I think is a better location than Serendra ;)).
:)

not in my case. my wife's work place is walking distance from our unit. Co terminus ang employment ng driver niya sa delivery ng serendra unit namin :)

j.r.

July 6th, 2007, 12:14 PM

you can sell it even if you haven't paid for it in full.

please wag naman text shortcut ang gamitin mo sa messages mo. sakit sa ulo basahin :)

>> ha ha. sori. will try not to resort to shortcuts sa susunod. :cheers:

jgacis

July 6th, 2007, 07:37 PM

not in my case. my wife's work place is walking distance from our unit. Co terminus ang employment ng driver niya sa delivery ng serendra unit namin :)

Hehe..I was just joking...hence .. ;)

I'm sure you guys in Serendra are enjoying your units! :colgate:

jgacis

July 6th, 2007, 08:04 PM

You are exactly right jgasis. Pls. allow me to add my thoughts to your post:

The US real estate industry is one of the most regulated industries in America. Every state in the Union has its own set of laws and requires property developers, real estate appraisers, brokers, sales agents, escrow agents, and title companies to be properly licensed and/or certified in order to do business in that state. On the other hand, financial institutions such as community banks, regional banks and other state or federally chartered banks are required to draw up real estate lending policies and procedures that strictly conform to the Federal Reserve Bank’s lending guidelines. These guidelines are then strictly enforced by the Office of the Currency Controller or by the Office of the Thrift Supervisor through annual policy compliance audits of banks under their supervision or control.

In addition to the above, developers must also comply with local and federal environmental laws and other state or federally mandated programs that could potentially affect the successful completion of a development project. Any potential issues and proposed mitigations are required to be properly disclosed to lending institutions during project underwriting.

In US real estate parlance, real estate fundamentals primarily refer to: (i) real estate projects are adequately supported by a comprehensive general market and financial studies [includes analyses of project location, building costs, supply, potential size of market, current and projected demand, price comparisons, profitability and return analysis, etc.]; (ii) established real estate values adequately support real estate loans; (iii) adequate borrower/builder financial capability and local market knowledge and expertise; and (iv) supply does not go too far ahead of projected demand [ex. absorption rates, inventories, speculative limitations, etc].

How do all of these translate? All of the above-described licensing and lending guidelines and assessment of market fundamentals were designed and instituted for the purpose of bringing transparency to the industry thus providing adequate protection to real estate investors and the buying public in general.

I recognize that in most developing countries, important industry components are lacking and that real estate industry practices are still in the process of development. In the Philippines most particularly, I have no doubt that in the near future, the real estate industry will attain maturity thus making it easier for investors and the buying public to access better market information and in the process, gain confidence in assessing investment risks and returns.

Yes, very thorough and correct! Thanks for clarifying some of the details for the rest of the forumers...

Although it seems complicated, it's not as bad as it seems. And even though the U.S. system isn't perfect, it does protect everyone in the most efficient way (so far) and most importantly ---> gives us VALUE and EQUITY in our properties!!! :colgate:

I was able to buy my condos in Makati and Quezon City through home equity loans on my properties here in the states. The banks didn't even care what I was doing with the money! They just wanted to verify my current employment, assets, and an appraisal on my properties. My credit report (payment history) was also a big factor.

The Philippines doesn't even have a credit reporting agency for ALL consumers. Everything is on a trust basis, utang, and case-by-case basis with each individual bank. If the Philippines wanted to create such an agency, it needs to create at least TWO agencies, both private/non-profit. It also needs to be regulated by federal laws. The watchdog should be someone else other than the credit-reporting agencies...

In addition, the Philippines doesn't have a proficient TITLE system.

Here in the states, when you buy a house (in California), there are two DEEDs recorded with the county clerk (the county the house is located in).

GRANT DEED - Document that shows who is the legal owner

TRUST DEED - A SECOND document that acts as a security instrument (lien) for the bank that lent the money to the owner in buying the property.

The GRANT DEED is NEVER in the banks name, even though the buyer hasn't paid off the loan!!!. If the owner goes through default/foreclosure, the TRUST DEED that stipulates the LOAN CONTRACT (security instrument) allows the lender to SELL (or own) the property. Remember, most banks don't want to be added on the GRANT DEED as legal owners for any length of time, they aren't in the business of being property managers! They are financial lenders, not REAL ESTATE AGENTS. Their primary business is making money through money, not commissions through listings!!!

If you look at the ratio of non-performing loans in Philippine banks, many are very high compared to U.S. banks. Looking at the specifics, you will see many of them having many cars and houses on their assets/inventory listings. That is bad practice.....

I walked into a bank in the Philippines one time (I believe Bank of the Philippine Islands) last January in metro-Manila and they had a long listing of assets for sale/auction for customers to look at. That is never done here in the states. That would reflect the poor payment history of the bank's customers!!!! :bash: Such information can be found here in the states either online or an appointment with a bank representative...

This is a BIG difference in the system and the WAY OF THINKING I see in the United States of America and the Philippines.....

lazybum

July 6th, 2007, 08:48 PM

The Philippines doesn't even have a credit reporting agency for ALL consumers. Everything is on a trust basis, utang, and case-by-case basis with each individual bank. If the Philippines wanted to create such an agency, it needs to create at least TWO agencies, both private/non-profit. It also needs to be regulated by federal laws. The watchdog should be someone else other than the credit-reporting agencies...

In addition, the Philippines doesn't have a proficient TITLE system.

Here in the states, when you buy a house (in California), there are two DEEDs recorded with the county clerk (the county the house is located in).

GRANT DEED - Document that shows who is the legal owner

TRUST DEED - A SECOND document that acts as a security instrument (lien) for the bank that lent the money to the owner in buying the property.

This is a BIG difference in the system and the WAY OF THINKING I see in the United States of America and the Philippines.....

Several years ago, I arranged a meeting between the reps of Pres. Ramos and some of the business people affiliated with the title industry in the US. The purpose of the meeting was to express our interest to help develop a title insurance system in the Philippines. I'm sorry to say that nothing came out of that meeting. We realize that it will take a massive overhaul of the land ownership system and the way real estate business is conducted in the Philippines in order to succeed. I wonder if our timing then was not right? Hmm, makes me think...

crappypants

July 6th, 2007, 09:23 PM

jgacis

July 6th, 2007, 09:34 PM

Several years ago, I arranged a meeting between the reps of Pres. Ramos and some of the business people affiliated with the title industry in the US. The purpose of the meeting was to express our interest to help develop a title insurance system in the Philippines. I'm sorry to say that nothing came out of that meeting. We realize that it will take a massive overhaul of the land ownership system and the way real estate business is conducted in the Philippines in order to succeed. I wonder if our timing then was not right? Hmm, makes me think...

Wow, you arranged that meeting? VIP ka ba? Hehe...

Yes, a major overhaul would indeed undermine the way things are done in the Philippines. This would cause alot of exposed corruption, shame, further investigations, and the likes. I think they (the Philippine reps) were not ready for that. I'm sure they weren't seeing it the way the U.S. title reps were seeing it.

So that's the problem.....

Btw, it should be the President of the Philippines (not the reps) who needs to address this issue as well. Why was it the President's reps who attended the meeting? This just shows the lack of seriousness and leadership... :ohno:

I hope OFWs and filipino home-owners unite to have this whole title-system revamped from A to Z. (Oops, I forgot..the Philippine abakada doesn't have a Z... :nuts:)

jgacis

July 6th, 2007, 09:44 PM

that would seem like a good business to undertake in the PHils, title insurance companies, of course that would probably mean additional costs. maybe developers will not be partial as it would make their projects less attractive to potential buyers .

Actually, a title-system benefits developers. During a pre-sell, a strong title-system would allow banks to lend on units not yet built (assuming good financial history of the developer).

This would put less pressure on developers to "unload" their units or stop the construction all together if prospective buyers know that their units are "marketable" again once they own clear title of the property.

lazybum

July 6th, 2007, 09:54 PM

that would seem like a good business to undertake in the PHils, title insurance companies, of course that would probably mean additional costs. maybe developers will not be partial as it would make their projects less attractive to potential buyers .

Hello, crappypants,

You brought up 2 very important points. Remember the point of having a title insurance is to mitigate any potential risk associated with a defective land title. If we all go back to our Finance 101...a land title is a negotiable instrument which means that you can approach a bank and endorse the title in exchange for a bank loan called a mortgage; or you can endorse your land title to Mr. De La Cruz who wants to buy your land. But Mr. De La Cruz does not know if your land title is good or not. Think how much you are adding value to your position if you can provide a full recourse for Mr. De La Cruz, if after your sale closes, and your title is proven defective? You can use same argument for developers - this is just one factor - but a very important one - that will help make real estate transactions less of a gamble (as some Filipino sales agents put it:ohno: )

lazybum

July 6th, 2007, 10:02 PM

Wow, you arranged that meeting? VIP ka ba? Hehe...

Yes, a major overhaul would indeed undermine the way things are done in the Philippines. This would cause alot of exposed corruption, shame, further investigations, and the likes. I think they (the Philippine reps) were not ready for that. I'm sure they weren't seeing it the way the U.S. title reps were seeing it.

So that's the problem.....

Btw, it should be the President of the Philippines (not the reps) who needs to address this issue as well. Why was it the President's reps who attended the meeting? This just shows the lack of seriousness and leadership... :ohno:

I hope OFWs and filipino home-owners unite to have this whole title-system revamped from A to Z. (Oops, I forgot..the Philippine abakada doesn't have a Z... :nuts:)

No, not a VIP - asungot lang :lol: Hindi, nung medyo bata pa tayo, active ako sa R/E industry dito sa L.A. kaya marami din akong kakilala sa industry. I used to work for Citicorp Real Estate an then GE Capital.

Your knowledge of the title industry is impecable - maybe you and I can partner and start this thing going sa Pinas. Why don't you send me a private message...Thanks and regards.

crappypants

July 6th, 2007, 10:27 PM

bustero

July 7th, 2007, 05:25 PM

Fyi CREBA the Chamber of Real Estate Builders Association actually operates a title insurance system. Not many individuals are willing to pay for it though perhaps in the future.

lazybum

July 7th, 2007, 05:43 PM

Since there are no title companies i guess people just have to rely on their own research whether the title is clean or not.
There are also not many professional home inspectors , private home appraissers. if you have all these then i guess there's no need for realtor agents as Filipinos don't like to deal with middle men to cut extra costs.

I'm not sure if I would want to do the title search myself. I think that real property buyers are doing that now and despite of their best efforts, I heard that there is a good backlog of "estafa" cases filed in Philippine courts today resulting from fraudulent real property sales.

Sales agents play an important role in the transaction. But home appraisals or home inspections is not one of them - these are hightly specialized jobs. Appraisals and home inspections are important components in real estate transactions and must be kept on an "arms-length" basis.

I realize that it will take a collective effort of industry and political leaderships in order to create an environment where buyers/sellers and financial institutions can all transact their business in an environment where everyone can trust the sustem.

lazybum

July 7th, 2007, 05:56 PM

Fyi CREBA the Chamber of Real Estate Builders Association actually operates a title insurance system. Not many individuals are willing to pay for it though perhaps in the future.

^^ That is good to know. If I may ask, is the willingness of individuals to accept title insurance due to costs or lack of familiarity with the value it can bring to the table? Does CREBA provides insurance only on properties that are owned by the developer-members or are they able to provide insurance on other properties as well?

crappypants

July 7th, 2007, 08:20 PM

I'm not sure if I would want to do the title search myself. I think that real property buyers are doing that now and despite of their best efforts, I heard that there is a good backlog of "estafa" cases filed in Philippine courts today resulting from fraudulent real property sales.

Sales agents play an important role in the transaction. But home appraisals or home inspections is not one of them - these are hightly specialized jobs. Appraisals and home inspections are important components in real estate transactions and must be kept on an "arms-length" basis.

I realize that it will take a collective effort of industry and political leaderships in order to create an environment where buyers/sellers and financial institutions can all transact their business in an environment where everyone can trust the sustem.

Even with all the estefa cases lots of filipinos prefer to buy house and lots directly from the owner to cut costs. there is a small fee you pay for the refferal if you didn't talk to the owner yourself. that is how we purchased our small house and lot.

I know home inspections and home appraisals are not jobs of the sales agent.
but if the housing industry in the PHilippines gets more developed and organized there would probably be a lesser need for sales agent because you would have the title or escrow doing most of the paper works. if you can buy the standardized legal forms and you don't have a very complicated transaction more people in the PHils will probably opt For Sale by owner transactions as it will save them money. Plus the advent of internet advertising. Saving money is the bottom line for Pinoy buyers . sales agents will just be negotiators or if you're too lazy or busy to negotiate with the owners yourself . That is all i'm saying.

with condos this is different as they have many agents representing the projects to provide info. to many potential buyers.

j.r.

July 7th, 2007, 11:28 PM

the judiciary should expedite the resolution of these estafa cases to serve as a deterrent to future likely offenders.

3cr

July 8th, 2007, 07:35 AM

Asian financial crisis … 10 years after
PHILEQUITY CORNER By Ignacio B. Gimenez
PhilStar
http://www.philstar.com/index.php?Business&p=49&type=2&sec=27&aid=2007070873

Last week marked the 10-year anniversary of the Asian Financial Crisis. We remember it vividly because it was the first time that a financial crisis contagion happened in Asia. As a fund manager, the crisis brought forward an important realization. It taught us that in an economically integrated world, prosperity in faraway countries can create opportunities elsewhere, but instability in a distant economy can also create uncertainty and instability at home. This is why we in Philequity find it essential to monitor the global economic cycle, the movement of other currencies and the performance of other stock markets, especially that of the US.

Anatomy of a crisis

Since the early 1990s, investment and credit flows to the so-called “Asian tigers” had been increasing rapidly in response to strong growth and steps toward economic modernization. These developing countries had privatized state-owned industries and liberalized their financial markets. Over time, the capital flows to these countries became speculative excesses. Meanwhile, complacency and inappropriate fiscal and monetary policies (overvalued currencies, current account deficits financed by short-term borrowings and poorly regulated financial systems) have led to serious vulnerabilities to these countries.

After the Thai baht’s collapse in July 3, 1997, the financial crisis swept the region like wildfire. In a few weeks, the currencies of Malaysia, Singapore, Philippines and Indonesia came under attack as investors pulled out their money. Despite the IMF announcement of a $17.2 billion support package for Thailand in August, the currencies and stock markets of these countries continued to plunge. In August 28, 1997, the Philippine Composite Index went down 9.3 percent, while the Jakarta Composite Index declined 4.5 percent. By October of that year, the turmoil turned toward Hong Kong, where the Hang Seng Index lost 23 percent of its value over four days starting October 20. South Korea was also coming under pressure as the Korean won dropped as investors dumped Korean stocks. The aftershocks were felt across emerging markets such as Russia, Brazil, Mexico and Argentina, and even in the industrialized world. In November 1997, the IMF announced a $40 billion stabilization package for Indonesia with the US pledging a $3 billion standby credit. By December, Korea and the IMF agreed on a $57 billion support package. By early 1998, the crisis ebbed and most currencies and stock markets recovered.

A look at the table below shows that the countries who received IMF support packages seemed to have recovered first. The Korean won, for example, bottomed out in December 1997 after dropping 126 percent. This was followed by the Thai baht which reached its low of 56.45 against the US dollar in January 1998.

In the case of stocks, the Korean stock market also bottomed out first when the KOSPI index reached 277.37 in June 1998. Other markets hit their lows in September 1998, except for the Philippines which made a double bottom in October 2001 (due to a political crisis in 2000-2001) and in March 2003 (due to a deteriorating fiscal balance).

In retrospect, the swiftness of the restoration of public confidence in South Korea, Indonesia, Thailand, and also in the case of Malaysia, was due to their government initiated financial restructuring. Their governments provided for the liquidity support to banks, guarantees of bank liabilities, the provision of public funds for the recapitalization of financial institution, and the creation of publicly owned centralized asset management companies.

In contrast, the Philippines took the longer rout. While our banking system were relatively healthier (post-crisis) compared the countries mentioned above, the fiscal constraints of the government left the private sector to spearhead the cleanup of the banking system. But now that the fiscal reforms are in place and the economy back on its track, public confidence has been completely restored.

More room to go for peso and Philippine stocks

Fast forward ten years, Asia is once more at the forefront of investors’ radar screens. Investment and portfolio inflows are back. Gone, however, are the shortcomings of the past. This time around, most of the fallen “Asian tigers” have significant current account surpluses, limited external debt and huge foreign exchange reserves. Moreover, their currencies have been strengthening against a generally weak US dollar. This is the reason why we continue to be bullish on Asia, especially the Philippines. Note that despite the peso’s recent strength and the PSEi Index (PSEi) reaching new highs, the Philippines have yet to recover lost ground when compared to other countries hit during the Asian crisis.

The chart below reveals that the peso is still 74.7 percent off its pre-crisis level of 26.38. Meanwhile, the Korean won and the Thai baht are just 4.1 percent and 22.5 percent off their pre-crisis levels, respectively. This means that the peso potentially has more room to appreciate.

Similarly, the Philippine stock market still has plenty of room to catch up given that the stock markets of Thailand and Indonesia are up more than 200 percent from their pre-crisis levels, while Korea is up 150 percent. At the current value of 3,758, the PSE Index is only up 32.6 percent from its pre-crisis level of 2,835. Thus, given the country’s accelerating economic growth and an appreciating peso which should attract more investment capital, the Philippine stock market has the potential to gain more ground.

_____________________________

Asian banks shine post-crisis, but new risks emerge
http://www.abs-cbnnews.com/storypage.aspx?StoryId=84446

SINGAPORE/HONG KONG - Ten years after Asia's financial crisis crippled many of the region's banks, lenders face new potential risks that analysts say they are in better position to handle this time around.

Most Asian banks are booking big profits on strong loan growth amid the region's economic surge, and while a crisis may not be looming, lenders need to gird themselves against possible jumps in inflation and a Chinese or Indian economic slowdown, among other risks.

"Everyone has become very dependent on China and if we saw any economic difficulties in China, the Asian countries will be very hard hit because they are very reliant on exports to China," said Peter Tebbutt, senior director at Fitch Ratings.

"Banks would be hurt by any significant economic difficulties here in Asia, but they wouldn't be hurt anywhere to the extent they were hurt back in 1997," he said, citing sound capitalisation, diverse loan books and less foreign currency lending as the reasons for their newfound strength.

Asian economies, particularly South Korea, Indonesia and Thailand, were caught out 10 years ago when foreign investors pulled their cash out of the region, a currency exodus that led to the collapse of currency pegs and asset prices.

Banks who had lent to a number of enterprises during the preceding economic boom were left holding the bag in the form of bad loans and a big buildup of foreign currency debt they couldn't finance.

"They were really -- particularly in Indonesia and Korea -- houses of cards back then," Tebbutt said.

TIMES ARE CHANGING

Lenders like South Korea's Kookmin Bank and Shinhan Financial, Thailand's Bangkok Bank and Kasikornbank and Indonesia's Bank Mandiri and Bank Danamon are all in good shape, and analysts and bankers said times have changed from 10 years ago.

But bank analyst Deborah Schuler of Moody's Investors Service said notable risks to disrupt the current rosy picture are high oil prices -- and the resulting inflation -- and a pile of foreign currency reserves in Asia hunting too few investment ideas which could lead to asset price bubbles.

"Things are good in Asia and India and China will continue to provide GDP growth to the region ... but some sort of downturn is probably unavoidable," Schuler said.

Lenders are in good shape to weather this downturn, analysts said, and bankers point to an increased focus on managing risk.

"In credit risk, we have invested significantly in data, model and system changes to support our businesses," said Chng Sok Hui, head of group risk at Singapore's DBS Holdings, Southeast Asia's biggest bank.

"In market risk, we have implemented a scaleable full revaluation risk architecture which can be easily extended as new products are added to the trading platform and volumes expand," she said, while adding that "market shocks and major events such as 9/11 are intrinsically unpredictable".

FURTHER REFORMS

That's not to say there isn't a lot of work to be done. Schuler notes that non-performing loans (NPLs) are still high in markets like Thailand, the Philippines and Vietnam, and that some banks still don't have proper protection for bad debt.

"High NPLs relative to the level of loan loss reserves in China and Vietnam are an example of how not all banks have recapitalised," she said.

Analysts said that regulators need to take a harder line raising minimum operating standards and making sure the banks adhere to them, particularly in Thailand, Indonesia and the Philippines.

"The Philippines is a good example -- slow to become tougher -- many banks in the country are operating at levels below 'true capital requirements' and they've been allowed to do that," said Tebbutt, adding that regulators could bare their teeth by forcing management change for banks who do not comply.

To be sure, there is no doubting that banks and regulators have learned lessons from the Asian financial crisis.

_____________________________

Real estate industry fears ‘consumer finance crisis’ (http://philstar.com/index.php?Business&p=52&type=2&sec=71&aid=20070715189)
By Ehda Dago-oc
Monday, July 16, 2007

While dollar earning Filipinos have caused the dynamic economy in the Philippines, the continued strengthening of the peso to the US dollar may cause a “consumer finance crisis” especially for real estate and retail.

In an economic briefing organized by China Trust (Philippines) Commercial Bank Corporation, Rolando Avante, the bank’s executive vice president and treasurer, warned that a growing concern on the declining of consumer demand, as OFWs are now keeping their money, instead of spending, due to the lesser value of their dollars.

Avante warned that in the middle-range real estate industry, wherein growth is fueled by the OFW market, a decline of demand in this particular segment is seen as dollar dominated income of Filipinos working abroad is now getting smaller, while they (OFWs) don’t get increases in the salaries.

Significantly, he said amortization of the real estate products does not change, and value of their income has declined, “it is worrisome, because OFW don’t get increases,” he warned.

Economic observers have seen a “red light” in the consumer demand for the Philippines, while the Philippine peso is seen to take stronger hold against the greenback.

He hopes that small and medium real estate developers have already taken their preparatory measures, in case consumer shock will happen.

For bigger developers on the other hand, he said these companies have already put in place preparatory shields if ever OFW market will take a slower movement.

The Philippine peso had already appreciated by 20 percent from P56 last year up to P45 levels these days. He said there is possibility that peso will continue to climb breaking P44 if the entry of dollar will not be well defended.

Aside from the growing entry of dollar remittances to the Philippines, there are also foreign bond investors, like the Japanese who are taking advantage of the strong peso, selling their yen to dollar dominated bonds, and invest it in the Philippines. This has pushed further the dollar reserves in the country.

Avante reported that in his own bank, they have three to four real estate developer clients, which have developments in middle-range housing projects, from P500,000 to P1 million, expressed observation of slower consumer demand from the OFW market.

The Philippine real estate industry, which has been affected heavily in the 1997 regional economic crisis, has experienced a rebound in the recent years, primarily because of the dollar-earning Filipino market.

He reiterated that the strong peso, although an indication of a good economic landscape in the Philippines in the macro level, could also triggered a slight fall down in the consumer demand—in the dollar-earning consumer based.

Generally, he said the Philippines is slowly building a good impression in the outside investors, because it has successfully taken out the “political risk” factor, meaning the environment much better, although it’s not yet the “ideal”.

_____________________________

Number of foreigners retiring in RP doubles (http://www.philstar.com/index.php?Headlines&p=49&type=2&sec=24&aid=20070708155)
By Mayen Jaymalin
Monday, July 9, 2007

For many foreigners, the Philippines is no longer just a popular tourist attraction but a well-loved retirement destination.

The Philippine Retirement Authority (PRA) has reported a dramatic growth in the number of elderly foreign nationals coming to the country to retire and enjoy life.

Ex-Col. Fernando Francisco, acting PRA general manager, said the recorded number of “foreign retirees” doubled in the past years and is still growing.

Francisco said from a total of 1,263 in 2005, the number of foreign retirees who registered with the PRA went up to 2,398 in 2006.

“In the first four months of the year, PRA already recorded a total of 1,060 foreign retirees and we expect the number to exceed last year’s figure,” Francisco told The STAR.

As a result of the increase, Francisco said the PRA also posted a staggering $600 million income generated from the registration fees and investment deposit of the applicants.

Those who registered for membership with the PRA are foreign nationals who are 35 years old and above. The PRA lowered the minimum age to accommodate American servicemen who choose to retire here, Francisco said.

“Some of the retirees come here by themselves but there are also some who come with their spouses and children,” Francisco disclosed.

Many of those who opted to retire in the Philippines permanently with their family were Korean nationals, according to Francisco.

Based on PRA data, since 2005, Koreans accounted for 56 percent of the total retirees, followed by the Chinese, 16 percent and Japanese, 5.75 percent.

“The number one motivation of Korean nationals to retire here is for their children to study the English language,” Francisco further said.

Francisco added that foreign retirees who have registered with PRA are allowed to travel in and out of the country without the need to seek clearance from the Bureau of Immigration.

They are also allowed to engage in business upon posting investment deposit to PRA.

Even with the steady growth in the number of foreign retirees coming to the Philippines, Francisco said the PRA still joins marketing missions to encourage more elderly foreign nationals to live here.

3cr

July 9th, 2007, 10:30 AM

Retro

July 10th, 2007, 12:46 AM

http://www.businessmirror.com.ph/07102007/headlines08.html

Veep, DOJ lead task force
vs property scammers

By Joel R. San Juan
Reporter

AS fast as the real-estate industry was recovering, the scams victimizing eager home buyers multiplied quickly, prompting the Justice department and state housing agencies to warn real-estate developers that their licenses would be revoked if they renege on their contractual obligations to their buyers.

Vice President Noli de Castro, who heads the Housing and Urban Development Coordinating Council (HUDCC), Justice Secretary Raul Gonzalez, Securities and Exchange Commission Chairman Fe Barin and representatives from the Real-Estate Brokers Association of the Philippines conferred Monday to discuss how to prevent and totally eliminate the scams in the preselling of real estate, condominium units and townhouses.

The conferees said that as a first step they have agreed to urgently ask President Arroyo to authorize within this week a task force for the protection of subdivision and condominium buyers.

Their proposed statement of the problem as worded in their proposed executive order is this: “The prevalence of unsound, criminal and unlawful practices in the real-estate subdivision and condominium business is growing at an alarming rate, to the prejudice of the property rights and investments of the buying public.”

They proposed to have the Justice Secretary chair the task force with the Housing Regulatory commission chief as cochairman.

They said the task force would receive and evaluate complaints against erring subdivision and condominium owners, developers, operators and sellers. The ensuing investigation would also be done by the task force, which, if it finds the complaint valid, would then refer it for prosecution.

Gonzalez said the usual victims of these unscrupulous real-estate developers are overseas Filipino workers, who invest hard-earned money on real estate.

Properties and structures being offered by these erring developers, according to the justice secretary, are often left unfinished and the buyers are not refunded their down payment if they reject the units or are satisfied when they complain to the developers.

“This is a very big problem facing the country especially in light of the fact that one of the major thrusts of the government is housing,” said Gonzalez after the meeting.

“When you are enticed to purchase, there should be protection from government because there are many buyers who are victimized by developers who are unscrupulous, fly-by-night or whatever you call them,” he added.

De Castro said another of the task force’s initial moves is for the HLURB to identify all real-estate companies with pending civil cases.

3cr

July 10th, 2007, 05:59 AM

It's about time! :) :) :)
http://www.businessmirror.com.ph/07102007/headlines08.html
Veep, DOJ lead task force vs property scammers
By Joel R. San Juan
Reporter

AS fast as the real-estate industry was recovering, the scams victimizing eager home buyers multiplied quickly, prompting the Justice department and state housing agencies to warn real-estate developers that their licenses would be revoked if they renege on their contractual obligations to their buyers.

Vice President Noli de Castro, who heads the Housing and Urban Development Coordinating Council (HUDCC), Justice Secretary Raul Gonzalez, Securities and Exchange Commission Chairman Fe Barin and representatives from the Real-Estate Brokers Association of the Philippines conferred Monday to discuss how to prevent and totally eliminate the scams in the preselling of real estate, condominium units and townhouses.

The conferees said that as a first step they have agreed to urgently ask President Arroyo to authorize within this week a task force for the protection of subdivision and condominium buyers.

Their proposed statement of the problem as worded in their proposed executive order is this: “The prevalence of unsound, criminal and unlawful practices in the real-estate subdivision and condominium business is growing at an alarming rate, to the prejudice of the property rights and investments of the buying public.”

They proposed to have the Justice Secretary chair the task force with the Housing Regulatory commission chief as cochairman.

They said the task force would receive and evaluate complaints against erring subdivision and condominium owners, developers, operators and sellers. The ensuing investigation would also be done by the task force, which, if it finds the complaint valid, would then refer it for prosecution.

Gonzalez said the usual victims of these unscrupulous real-estate developers are overseas Filipino workers, who invest hard-earned money on real estate.

Properties and structures being offered by these erring developers, according to the justice secretary, are often left unfinished and the buyers are not refunded their down payment if they reject the units or are satisfied when they complain to the developers.

“This is a very big problem facing the country especially in light of the fact that one of the major thrusts of the government is housing,” said Gonzalez after the meeting.

“When you are enticed to purchase, there should be protection from government because there are many buyers who are victimized by developers who are unscrupulous, fly-by-night or whatever you call them,” he added.

De Castro said another of the task force’s initial moves is for the HLURB to identify all real-estate companies with pending civil cases.

3cr

July 10th, 2007, 06:01 AM

^^ Good News indeed. It's about time! :) :) :)

3D-CAD

July 10th, 2007, 08:46 AM

Good for you 3cr,

I just saw the pic....Fort Boni is my best bet that it will be a clean and green master planned community....congrats and here's to a better Philippines especially when we all decide to come back home...:banana:

http://i26.photobucket.com/albums/c127/coined101/UP_2_logo_smaller.jpg

3cr

July 10th, 2007, 11:22 AM

^^ Uy Thanks! :)

Hope they do something about this so that it does not become a crisis.
Real estate industry fears ‘consumer finance crisis’ (http://philstar.com/index.php?Business&p=52&type=2&sec=71&aid=20070715189)
By Ehda Dago-oc
Monday, July 16, 2007

While dollar earning Filipinos have caused the dynamic economy in the Philippines, the continued strengthening of the peso to the US dollar may cause a “consumer finance crisis” especially for real estate and retail.

In an economic briefing organized by China Trust (Philippines) Commercial Bank Corporation, Rolando Avante, the bank’s executive vice president and treasurer, warned that a growing concern on the declining of consumer demand, as OFWs are now keeping their money, instead of spending, due to the lesser value of their dollars.

Avante warned that in the middle-range real estate industry, wherein growth is fueled by the OFW market, a decline of demand in this particular segment is seen as dollar dominated income of Filipinos working abroad is now getting smaller, while they (OFWs) don’t get increases in the salaries.

Significantly, he said amortization of the real estate products does not change, and value of their income has declined, “it is worrisome, because OFW don’t get increases,” he warned.

Economic observers have seen a “red light” in the consumer demand for the Philippines, while the Philippine peso is seen to take stronger hold against the greenback.

He hopes that small and medium real estate developers have already taken their preparatory measures, in case consumer shock will happen.

For bigger developers on the other hand, he said these companies have already put in place preparatory shields if ever OFW market will take a slower movement.

The Philippine peso had already appreciated by 20 percent from P56 last year up to P45 levels these days. He said there is possibility that peso will continue to climb breaking P44 if the entry of dollar will not be well defended.

Aside from the growing entry of dollar remittances to the Philippines, there are also foreign bond investors, like the Japanese who are taking advantage of the strong peso, selling their yen to dollar dominated bonds, and invest it in the Philippines. This has pushed further the dollar reserves in the country.

Avante reported that in his own bank, they have three to four real estate developer clients, which have developments in middle-range housing projects, from P500,000 to P1 million, expressed observation of slower consumer demand from the OFW market.

The Philippine real estate industry, which has been affected heavily in the 1997 regional economic crisis, has experienced a rebound in the recent years, primarily because of the dollar-earning Filipino market.

He reiterated that the strong peso, although an indication of a good economic landscape in the Philippines in the macro level, could also triggered a slight fall down in the consumer demand—in the dollar-earning consumer based.

Generally, he said the Philippines is slowly building a good impression in the outside investors, because it has successfully taken out the “political risk” factor, meaning the environment much better, although it’s not yet the “ideal”.

j.r.

July 10th, 2007, 11:38 PM

i hope whatever they come up with will really sting!! it's really high time the government realize it's the ordinary, honest people who are being victimized here. :ohno:

bustero

July 13th, 2007, 06:07 AM

^^ That is good to know. If I may ask, is the willingness of individuals to accept title insurance due to costs or lack of familiarity with the value it can bring to the table? Does CREBA provides insurance only on properties that are owned by the developer-members or are they able to provide insurance on other properties as well?

I've not taken a close look at it but from what was reported to me by my marketing mgr who went to the creba meeting its open to the public.

It's still pretty new so it will take time for the market to get educated.

I don't use it since we do our own due dilligence (which is also offered by some other companies if you are so inclined to do 3 title search backs), a problematic title has repurcussions for developers that go way beyond having it ensured.

Btw this whole discussion is pretty OT perhaps this should be merged with HLURB LTS.

Dvorak

July 13th, 2007, 03:10 PM

Good news for Pag-ibig members with existing Housing loan:

this includes even those who availed of the maximum 2M loan, so this cuts the 12% loan to 10%.

=========
Dear member,

Per the directive of President Gloria Macapagal Arroyo and as a way of rewarding Pag-IBIG housing loan borrowers who pay their amortizations promptly, the Pag-IBIG Fund is implementing the Good Payor Incentive Program effective June 1, 2007.

This program is open to the following members:

- those who availed of a housing loan before November 2006
- member/borrowers with accounts that are 1-6 months in arrears as of June 1, 2007 (these member/borrowers will be given until December 31, 2007 to fully update their respective accounts)
- borrowers who pay their amortization before their respective due dates.

Please note that under this program, borrowers who pay on or before the due date as indicated in their monthly billing statement shall be entitled to a maximum of 2% discount on the interest, provided that the resulting interest rate will not fall below the rates provided for in Pag-IBIG Fund Circular 219.

The discount granted to borrowers paying their amortization on or before their due dates shall be applied to principal or on the interest rates for a lower monthly amortization.

For further inquiries within Metro Manila, you may contact the NCR Billing and Collection Department at Rooms 314 & 315, Atrium Bldg., Makati Ave., Makati City, tel. nos. 8114120 / 8488294. For provincial accounts, please coordinate with the nearest Pag-IBIG Fund branch.

Maraming salamat po.
The Public Affairs & Information Office

Retro

July 16th, 2007, 10:57 AM

Wow the changes in our local market react fast. We are not yet there in 2010 and some sector in real estate market is already starting to felt the impact of strong peso vs US dollar. If this news become a reality later on maybe those project that would forecast to complete beyond 2008 would be affected by slowdown in OFW spending in condo properties.

The best way to mitigate this problem is to have a stable interest rate and better amortization payment :banana:

bustero

July 16th, 2007, 07:55 PM

mabuti na rin iyan so that some of the capital can go back to housing for the domestic market which is severely underserved.

lazybum

July 18th, 2007, 02:07 AM

depende na kung ano ang market rates for the next years. fixed one year ang tawag dun. you can opt for longer terms.

my first year's mortgage was 9.75% fixed for one year. 8.5% when it was renewed for this year. If as predicted be collier it falls to 5.5% I will change the terms of my loan and fix the rate for the remaining years.

parang states na yang interest rates na iyan :)

When banks re-set or adjust the rate of interest for succeeding years, what base index rate do they usually use? For example, 6 months Libor, 10- Yr US treasury rate, etc.

bustero

July 19th, 2007, 09:15 AM

Interbank mart gets its signals from ROP tbills.

shamrock

July 21st, 2007, 02:31 PM

mga KABABAYAN

tulong po...

how much does it cost monthly to live in a condo in then philippines?

eonynx

July 21st, 2007, 03:46 PM

mga KABABAYAN

tulong po...

how much does it cost monthly to live in a condo in then philippines?

^^ basics lang talaga alam ko ha! it can range between P9-P15 thousand a month depending depending on the payment scheme(s) that you choose. this payment scheme could be like 1.5 mos. to 3 years in spread after which you can have ownership of the unit. depende rin sa number of beds (usually a choice among 2, 3, and 4 bedroom condo units) and how well the unit(s) is/are furnished.

location can also (i think) influence a condo unit's price. the ones especially near the makati CBD area would most likely command higher prices than condos located in let's say, sampaloc area. many condo developers also waive yung montly interest rate if you choose a payment scheme with a shorter time period like maybe (just maybe) a one year payment scheme.

obviously in this kind of payment (or rent-to-own) mode spread in 1 year, you pay bigger monthlies. but you do away with the interests that usually go to payments arranged for let's say 2-3 years time. but then again, these are just how i understand them!:) hopefully you'll encounter someone na may alam talaga!

TheRick

July 21st, 2007, 05:38 PM

mga KABABAYAN

tulong po...

how much does it cost monthly to live in a condo in then philippines?

Are you asking monthly rent or monthly payment to buy a condo unit?

Is it a studio, 1, 2 or 3 Bedroom unit?

Which location makati, the fort, ortigas, manila, qc...?

Cropduster

July 21st, 2007, 06:42 PM

Bit like asking how long a piece of string is.

It depends on location, size, developer etc.
It could be 8,000 per month or 200,000 per month.

laquacherra

July 23rd, 2007, 03:53 AM

Bit like asking how long a piece of string is.

It depends on location, size, developer etc.
It could be 8,000 per month or 200,000 per month.

i agree... depends so much on one's lifestyle too

Dvorak

July 23rd, 2007, 06:52 AM

i think he is asking the expenses to pay in living in a condo.. well basically this includes the condo dues, electric and water bill, parking if separate, plus if you own the condo, paying insurance, real estate tax.

All of these depends on the size of your unit.. condo charges Php30.00 to Php80.00 per sqm on the dues, some includes the size of parking in the computation of the dues... so for a 50sqm at say 50.00 per sqm, that's 2,500.00 a month, then your electric / water bill will depend on your usage. If you're using 2 aircon running 8 hours per day, that will be about 5T to 6T per month on electric bill. Water bill is higher on condos compared to residential houses/apartments. Water bill is usually 30.00+ per cu. meter for condos within metro manila, while the one in BGC is about 70.00+ per cu. meter.

laquacherra

July 23rd, 2007, 08:33 AM

THE PROPERTY MARKET is currently on the upswing, thanks to a better economic environment. But given the sizable amount of investment needed when acquiring real estate, clients are advised to be cautious.

Richard Raymundo, property consultancy firm Colliers International Philippines, Inc.’s director for research, shared a few pointers on how to secure a sound real estate investment.

• CHOOSE A GOOD LOCATION.
Location plays a big part in the valuation of properties. The nearer one is to
a commercial district, a major thoroughfare, or a host of institutions, the higher its value. Those tucked in secluded areas, on the other hand, may not be valued at a premium. Mr. Raymundo said that if you’re aiming to resell your property, key locations will allow you to resell more easily, while others will not offer attractive buys at all. He also advised checking the supply and demand in the area, as this will determine whether you can sell your property at a higher price in the long run. “If you’re buying a property with the
intention of making a profit for the price appreciation, are you in a location where supply and demand is good? You’ll never know, maybe in two to three years there will be an oversupply [in that area] and you won’t be able to sell your property at a higher price,” he said.

• BUY FROM A REPUTABLE DEVELOPER.
In the case of condominium properties where units are sold off-plan or before
the completion of the project, one should rely only on developers that have
made good on their promises. “The mode of purchase for residential developments here is pre-sell. Developers haven’t even started the building,
but you’re buying it from a plan. You have to make sure that what the developer says [will materialize]. It doesn’t make sense for you to buy because of affordability,” Mr. Raymundo said, adding that properties made by developers who are known for their quality are easier to resell.

• CHECK OUT PROPERTY MANAGEMENT.
A poorly managed property, especially a condominium, will look like a haunted building in five years, making it harder for you to rent or sell the property.

• CONSIDER YOUR BUDGET.
You may avail of bank loans or inhouse financing, but get only the property that you think will fit in your budget in order to avoid falling into the debt trap.

• INVEST NOW.
As in the case of financial instruments such as mutual funds, trust, stocks or bonds, it’s always a good time to invest. The economy has been strong of
late, and this makes investing in or acquiring a new property a lot easier for
you. “The economy is really strong now. The interest rates are going down and Tbill rates are at their lowest in history. Inflation is benign at around 2.5%, which is the lowest that we’ve ever had; the exchange rate is now at P45 a dollar. We forecast office rents to go up by 20% this year, and we’re already up by 20% as of now. The next two years will be strong for the real estate industry,” Mr. Raymundo said. — Gerard S. dela Peña

complete article at http://www.bworld.com.ph/

Pocholo

July 24th, 2007, 03:09 AM

If I have to choose between location and view I'd rather choose location, I think that's more practical. I can go on vacation if I want a good view.

But of course, it's better to have both. :)

3cr

July 24th, 2007, 04:26 AM

The Fort is one good example of the concept of Live-Work-Play. The concept of "New Urbanism" could be seen here and is a reinforcement of the fact that people are now appreciating the importance of living in the countrysides, than dwelling in the hard concrete and steel urban jungles. New urbanism is people's acknowledgement that we cannot have those non-renewable energy sources forever, and we have to take steps to conserve energy, or to create newer sources found in our environment. ^^ Yup I agree with you that the concept of new urbanism where beauty, convenience and eco-friendiness converge is pretty much evident in the master planning of Global City and especially so in the City Center / Boni High Street area of Fort Boni. The best of all worlds talaga at para kang hindi na sa Pinas when you're there. Looking forward to Fort Boni's evolution into a world class CBD! :okay: :okay:

http://farm2.static.flickr.com/1163/798355417_274e378e74.jpg?v=0

Bonifacio High Street
http://farm1.static.flickr.com/194/522864582_658c60af78.jpg?v=0

Bonifacio High Street the New Fort address

“This is not your regular thoroughfare,” remarked Fort Bonifacio Development Corporation (FBDC) and Ayala Land, Inc. (ALI) president Jim Ayala, in describing Bonifacio High Street (BHS), a new development in Taguig.

High Street actually begins at the popular Serendra which opened last year. The ultimate plan is to develop the entire stretch into, would you believe, a one-kilometer lush, landscaped, pedestrian-friendly park, ending at Crescent West.

Ayala also said: “It will create an environment that is “a home of passionate minds, and a sanctuary that will uplift mind and spirit, that others around the world would say, ‘What I want is something like what is found in the Philippines.’”

The project is being developed by Fort Bonifacio Development Corporation, a partnership between Ayala Land, Inc., Evergreen Holdings, and Bases Conversion and Development Authority.

Distinguished by its own eye-catching contemporary architecture, its awesome spacious walkways and stunning sculptures by three acclaimed Filipino artists, BHS is now called the “new day city center,” dahlings.

This will be the site of the planned Science Museum at Bonifacio Global City (BGC). This is actually a portion of the Crescent West Park. I took this picture along Rizal Drive.

http://i71.photobucket.com/albums/i143/cynchyap/BGC-2007/IMG_2896.jpg

http://i71.photobucket.com/albums/i143/cynchyap/BGC-2007/IMG_2894.jpg

"High Street actually begins at the popular Serendra which opened last year. The ultimate plan is to develop the entire stretch into, would you believe, a one-kilometer lush, landscaped, pedestrian-friendly park, ending at Crescent West." ---- Therefore, at the end of the Bonifacio High Street "extension" will be this Science Museum at Crescent West Park. :banana: :banana: :banana:

bustero

July 25th, 2007, 09:24 AM

Kabayan, tama sila , you need to be more specific kung anong type and saan. Malaki kaibahan ng gastos. Kung sosi na lugar tulad ng Fort Boni, lahat ng naibangit ni Master Dvorak ay mas mahal ng kaunti, pero kung paranaque o Mandaluyong Condo mo mas mura rin. Iba't ibang lugar iba't ibang charges rin kasi iyan minsan. In general iyung mga inibangit nila sa taas ang basic expenses , be prepared to pay for such things over and above your ammortization kung mayroon pa.

j.r.

July 25th, 2007, 02:21 PM

wowowee... i'm salivating... that thing they envision is paradise... :banana: :banana: :banana:

j.r.

July 25th, 2007, 02:23 PM

a perfect union of location and view!!! :cheers: inuman na!!

tigidig14

July 25th, 2007, 05:42 PM

^ang overseas like us here, can we borrow money to fix our rickity old house

tigidig14

July 25th, 2007, 07:17 PM

mind if i ask;
is there a rule in pnas that in order for the tenant to be removed out of their apartment, you must give them 3 month notice and they dont even have to pay. i find it absurd and unreal

Dvorak

July 26th, 2007, 05:04 AM

yup may program ang Pag-ibig for pinoys outside pinas.. you just have to be a member.. then you can avail of the benefits, including loans.

^ang overseas like us here, can we borrow money to fix our rickity old house

red_jasper

July 26th, 2007, 06:51 AM

mind if i ask;
is there a rule in pnas that in order for the tenant to be removed out of their apartment, you must give them 3 month notice and they dont even have to pay. i find it absurd and unreal

AFAIK there is no rule to that effect. lessor and tenant relationship is primarily governed by a contract that is supposed to contain all the terms and conditions agreed by the parties. if there is no written contract, the termination of the lessor-tenant relationship will depend on the term of payment, e.g. if the rent is monthly, the period of lease is monthly, so any of the parties can terminate the agreement at the end of each month by giving notice to that effect. it's just that if the tenant continues to use the property for 15 days after the end of each period without any objection from the lessor, the lease agreement is deemed automatically renewed.

of course, the tenant will have to pay rent as long as he is using the property. but then some lessors already require deposits/advances precisely to avoid not being paid :)

Hope this is helpful :)

red_jasper

July 26th, 2007, 07:02 AM

Question: do the monthly association dues include the payment for the electric bill covering the common areas? kasi if few pa lang unit owners sa isang bagong condo development and then separate yung electric bill from the dues, ang laki ng babayaran coz konti pa lang kayong mag-si-share!!!

Dvorak

July 26th, 2007, 07:26 AM

yup kasama na sa dues yung bill sa common areas..

ang ginagawa nang mga condo.. eh pare pareho ang start nang payment nang dues.. para pantay pantay.. so if they start Jan. 2006, everybody starts paying Jan. 2006.. kahit Jan. 2007 ka pa mag move.. Jan. 2006 start nang payment for the dues.

Question: do the monthly association dues include the payment for the electric bill covering the common areas? kasi if few pa lang unit owners sa isang bagong condo development and then separate yung electric bill from the dues, ang laki ng babayaran coz konti pa lang kayong mag-si-share!!!

tigidig14

July 26th, 2007, 08:06 PM

^salamat :)
may pinapaalis kami kasi pero sobrang tagal na dun nakatira sa apartment namin
ipababarangay daw kami, kung paalisin sila
ayun din sabi ko sa sis-in-law ko na sabihing walang kontrata so it means that its month to month basis

red_jasper

July 27th, 2007, 06:04 AM

glad to be of help :)

red_jasper

July 27th, 2007, 06:17 AM

ah, OK. thanks for the info @Dvorak :)

animasola

July 28th, 2007, 05:12 AM

3cr

July 28th, 2007, 09:51 PM

^^ In the McKinley Hill area of Fort Bonifacio there is a project called Stamford which is affordably priced. Check the Stamford / McKinley Hill thread for details. Hope this helps. :)

animasola

July 29th, 2007, 04:05 AM

Parang malayo siya sa FB hehe, pero I'll check it out. Thanks!

3cr

July 29th, 2007, 04:38 AM

^^ Duon kasi sa McKinley Hill talagang mura pa kung tutuusin kasi mataas na ang Price/SQM sa Global City eh. Though if you want sa BGC mismo, I guess resale units in Forbeswood Heights (if you need it asap) or pre-selling BTO projects of GW (if you are willing to wait) will be the most affordable ones there I would think. Robinson and Megaworld both have several offerings in BGC as well. Check the threads na lang for more details. :) :) :)

tigidig14

July 30th, 2007, 01:38 AM

san ba nakakakitang narerematang mga condo hahaha puro 2nd hand lang laging hinahabol mo noh haha

3cr

July 31st, 2007, 01:49 AM

Foreclosed properties ng mga bangko sa Pinas should be a good source Tigs. :)

bustero

July 31st, 2007, 05:49 AM

I'm looking for a condo too. Something cheap, with a bedroom or two; regarding location, sa Ortigas or FB. Can anyone direct me or give me the prices of the condos within those areas? Ung hindi high-end, somewhere to stay after college lng.

When do you need it and what size? If you need it in a few months then it has to be done now? And what exactly is cheap. 1million or 3 million or more. Something can be cheap relatively unless you mean cheap absolutely.

Anyway there are few choices for immediate move in to Fort Boni and if it's cheap even less.

You can check out the citylands in ortigas, go to buyand sell philipppines and look for cityland shaw or cityland mega plaza. In the 1m peso level di masyado madami rin as the areas you pointed out are pretty desirable and not that many units that are like that yet.

red_jasper

August 1st, 2007, 05:07 AM

another option @animasola is to look at properties near FB. There are several DMCI developments in nearby Taguig, just 5 or a few more minutes away from FBGC :)

3cr

August 1st, 2007, 11:50 AM

No to boom and bust
By Mary Ann Ll. Reyes
PhilStar
http://www.philstar.com/index.php?Business&p=49&type=2&sec=27&aid=2007073179

I had an interesting talk with Federal Land president Alfred Ty, younger son of banking, real estate, and automobile tycoon George Ty, who shared with us valuable insights about the state of the real property sector in the country.

Alfred, who is just slightly older than the 35-year-old company which he now heads (Federal Homes started in July 1972 and became Federal Land in 2002), disagrees with the notion that the property sector has a 10-year cycle and since the current boom started eight years ago, then we should be at the tail end.

Don’t be fooled by Alfred’s youth though. As corporate secretary of Metrobank, vice-chairman of Toyota Motors Philippines, and president of the Metrobank Group’s property arm, Alfred definitely knows what he’s talking about. His wearing several hats gives him the distinct advantage of seeing the business from different perspectives.

We can’t help but commiserate with pessimists who believe that the good times are about to end. After all, these are people who lost their shirts in the ‘90s when the real estate bubble burst.

But Alfred thinks otherwise. After all, he wouldn’t be investing P8 billion (initial investment in at least 10 new projects) over the next 12 months, and much more in the next few years (one of his projects is estimated to cost at least P20 billion) if he doesn’t believe that the fundamentals are strong and sound.

Assuming that there indeed is a 10-year cycle, he believes that this can definitely be extended for a longer period by government putting into place the needed policy environment.

Of course, the pessimists (victims of the ‘90s real estate disaster) may have failed to take into account the fact that the banks are healthier, more liquid, and are focusing on consumer lending, that developers are becoming more resourceful in tapping new markets here and abroad, that the Philippines is becoming a call center and BPO haven, and of course the phenomenon that is OFW remittances. Many of these were not present in the ‘90s.

There are more sectors (banking for one) that are investing in the real estate sector. More than 10 percent of OFW remittances is spent for buying real property. Almost all the big names in business have joined the property bandwagon. These are people who are not going to risk their names, reputation, and capital. Without doubt, the local property sector will be here for the long run.

3cr

August 1st, 2007, 11:51 AM

bustero

August 2nd, 2007, 06:02 AM

pero kailangang pinoy citizen ka , di puedeng americanong citizen na taga pinas!

crappypants

August 7th, 2007, 07:19 AM

3cr

August 7th, 2007, 07:36 AM

^^ Mmm...Which developer is this Tes and are you working with a direct company Rep or a third party/independent realtor? Para lang kasi hindi yata tama yon procedure na yan ah. Sounds fishy di ba? Just that the way I see it, you've already given your reservation fee plus they're asking for the 20% down payment as well even before you can read the Sales Contract details? Too much exposure for my taste and I would not be comfortable with that arrangement if I am a prospective investor. My humble opinion only of course so please take it with a grain of salt. Let's see what others have to say about it...

crappypants

August 7th, 2007, 07:59 AM

it's antel.
it's reservation fee, then 10% downpayment, then 40 monthly amortization, then 50% upon turnover. But the agent ,he's an inhouse agent, said they'll only release the sales contract after they clear 20% of the payment.
I'm a little confused if that's a safe standard procedure . in the states you get a sales contract before making any dowmpayment so it can stipulate the price and the terms of contract right?
I guess most people here paid for their units in cash .
I'm really confused how to do this safely coz this will be my first time. It's not like there is an escrow company that makes sure the money is going to the right place.
Have i just lost my reservation money down the drain. :ohno:

gen1

August 7th, 2007, 08:54 AM

^^ when i bought my unit, i gave i think 50k as reservation fee for which i was given a receipt. no sales contract pa at that stage.

3cr

August 7th, 2007, 09:40 AM

^^ Marites, Based on Gen1's post above baka nga that's how it's done there now. Yung akin kasi noon with Philtown P25T lang yung Reservation Fee sa Fairways Tower then eh and was given a receipt for it. I didn't have to show any more money until after contract signing (there's a 30 day grace period) and when the sales transaction was finally completed, I got my sales contract paperwork that same day I gave them the cashier's check.

Dvorak

August 7th, 2007, 10:42 AM

normal lang yan, ask for an official receipt then verify sa head office nang antel to make sure..

tigidig14

August 7th, 2007, 01:43 PM

yup may program ang Pag-ibig for pinoys outside pinas.. you just have to be a member.. then you can avail of the benefits, including loans.

pano makiki-member dun

ano pala kaibahan satin sa process ng condo or townhouse

tigidig14

August 7th, 2007, 01:45 PM

gen1

August 7th, 2007, 01:59 PM

^^ the reservation fee fixes the price of the property you're buying for a specified period of time.

you should have sued.

laquacherra

August 8th, 2007, 02:09 AM

so after making the reservation fee i was told the sales contract won't be released after i wire the 20% down payment. Does that sound right? any precautions the buyer needs to observe if doing the deal based outside the PHils?

with Ayala Land Premier, you don't get to sign a Contract to Sell until after they get all the checks representing the full payment of the contract price - that's downpayment plus all post dated checks for the amortization

crappypants

August 9th, 2007, 12:07 AM

Thankyou kindly for all those who answered. I feel better now.
You know you hear alot of scams that happen in the PHils you just can't help but be overly cautious. i guess a reservation form is considered a binding contract until you get your sales contract.

GearX

August 9th, 2007, 02:34 AM

single-detached housing units are better.....ur "noise" won't disturb your neighbors. hehehe

bartman

August 9th, 2007, 04:06 AM

nangyari to sa mama ko nung nakipag-bid sya sa next namin lote
tapos, parang tinataasan kunyari may nakikipag-bidan.
so ginawa nagbackout si mader nasayang tuloy yung 40 thou reservation fee
there is nothing similar in purchasing a property and making a bid to buy a property.

at bakit ka naman magbabayad ng 40 thousand just to be able to make a bid? tapos pag di ka nanalo sa bidding, wala na yung 40 thousand mo? :nuts:

j.r.

August 9th, 2007, 10:24 PM

oo nga no. or maybe it is a sort of a reservation payment na. maybe tigs could explain what transpired... the conditions under which the 'transaction' took place...

arnolds

August 10th, 2007, 04:41 PM

It actually should be called a transaction tax. I'm just amazed that the BIR calculates the Cap Gains tax as 6% of the selling or zonal valuation of the property whichever is higher. That's not capital gains! :ohno:

richard24

August 10th, 2007, 05:13 PM

^^ diba eto yung tax sa pag papalitan ang name ng titulo?

arnolds

August 10th, 2007, 05:35 PM

^^ diba eto yung tax sa pag papalitan ang name ng titulo?

Nope, that's the transfer tax of 1.5% of the selling price/zonal valuation whichever is higher.

laquacherra

August 11th, 2007, 06:32 AM

Anvaya Cove, Bataan

July 2007

http://i68.photobucket.com/albums/i37/llaurenversion3/DSC_0208.jpg

http://i68.photobucket.com/albums/i37/llaurenversion3/DSC_0247.jpg

http://i68.photobucket.com/albums/i37/llaurenversion3/DSC_0235.jpg

D'Transporter

August 11th, 2007, 06:38 AM

Capital gains tax is the tax paid by the seller on the profit he made on selling his asset.

laquacherra

August 11th, 2007, 06:41 AM

Anvaya Cove, Bataan

July 2007

http://i68.photobucket.com/albums/i37/llaurenversion3/DSC_0265.jpg

http://i68.photobucket.com/albums/i37/llaurenversion3/DSC_0210.jpg

http://i68.photobucket.com/albums/i37/llaurenversion3/DSC_0249.jpg

laquacherra

August 11th, 2007, 07:05 AM

Anvaya Cove, Bataan

July 2007

http://i68.photobucket.com/albums/i37/llaurenversion3/DSC_0248.jpg

http://i68.photobucket.com/albums/i37/llaurenversion3/DSC_0264.jpg

http://i68.photobucket.com/albums/i37/llaurenversion3/DSC_0251.jpg

http://i68.photobucket.com/albums/i37/llaurenversion3/DSC_0226.jpg

3cr

August 11th, 2007, 11:46 AM

Marriage for convenience in real estate
By Gilbert C. Yu
Friday, August 10, 2007
http://www.philstar.com/index.php?Real%20Estate&p=49&type=2&sec=37

Land owner and developer Joint Venture (J.V.) projects are a boon lately, especially after the bank closed their lending window to plain land mortgages without a financial plan incorporated into it. Left and right we see the merging of forces — big businesses fuse their efforts and assets for this type of housing development, condominium tower and the like.

Most layman investor or homebuyer sees this as a good indication — of two big groups who have joined together to do a project that redounds to reliability and soundness.

But, what they don’t know is that it is not as simple as it may seem.

Primarily speaking joint ventures arise from the developers’ short of capital or refusal to infuse capital to purchase land — avoiding risk by pushing it to someone else. On the other hand, land owners welcome this offer to develop his property at a value much higher than what he can fetch from just selling the property.

In many ways joint venture is more similar to a marriage of convenience. It is a mutually beneficial partnership that doesn’t have the foundation of loyalty to last long, and is not really tied down to keep the vows like “for poorer or for richer till death do us part.” Yes there is nuptial bliss but the union isn’t strong enough to weather tough times together, that going on separate ways or thru divorce litigation is a quicker and better solution than working things out during bad times.

When a marriage goes bad and marital disputes arise, the children are the victims of these unfortunate circumstances, similarly if a J.V. partnership ends up in litigation… the victim is the buyer — patronizer of the unhealthy union.

Knowing the risk buyers of a joint venture project should insist to know the details of the joint venture contract from the seller developer.

Be aware of the responsibility of each partner. As the land owner gives his land to be developed, the other partner does the work of marketing and handling the project. .In the meantime it is only the developer collecting money from the buyers while the contract of sell doesn’t require land owner to have direct responsibility to the homebuyers or any legal obligation what so ever.

In some cases, the risks are higher when a government entity is the land owner partner. Changes in the administration often result to alteration or renegotiation sometimes with impossible demands that the developer cannot cope with. Then problems arise, buyer who paid and buy in good faith are left in a quandary.

3cr

August 11th, 2007, 11:46 AM

3cr

August 11th, 2007, 11:47 AM

arnolds

August 11th, 2007, 12:10 PM

Capital gains tax is the tax paid by the seller on the profit he made on selling his asset.

Not in the Philippines.

http://www.bir.gov.ph/taxinfo/tax_capgin.htm

Again, tax is based on the selling price or zonal valuation of the asset, not on the profit made by the seller. :bash:

ChicTown

August 12th, 2007, 09:20 PM

Not in the Philippines.

http://www.bir.gov.ph/taxinfo/tax_capgin.htm

Again, tax is based on the selling price or zonal valuation of the asset, not on the profit made by the seller. :bash:

^^ Correction please per bir.gov.ph interpretation of capital gains which state it's a tax Imposed on the Gains presumed to have been realized by the seller from the sale,............etc.. It's the same as the U.S method. Regards!:) :) :)

arnolds

August 12th, 2007, 11:46 PM

^^ Correction please per bir.gov.ph interpretation of capital gains which state it's a tax Imposed on the Gains presumed to have been realized by the seller from the sale,............etc.. It's the same as the U.S method. Regards!:) :) :)

I know this is very hard to comprehend but let me re-iterate because it doesn't make sense.

In the US, capital gains tax is usually 15% for long term(over one year) holdings unless its your primary residence. 15% of the difference between the selling price and the price you acquired the property at. So you buy it a 100k, hold it for over a year, sell it for 125k and your tax is 15% of 25k(profit) or 3,750 usd.

In the Philippines, you buy a condo for 100k, sell it for 125k, the tax rate is 6% of 125K. If you bought your property at 125k and sold it for 100k and the zonal valuation is 115K, your tax rate is 6% of 115K.

Please somebody prove me wrong because I would hate to pay this tax. But everybody I've talked to even a director for the BIR tells me that the 6% is based on selling price or zonal valuation whichever is higher.

crappypants

August 13th, 2007, 12:52 AM

^^that is right. it's stupid but it's right. they do the same for stocks. they tax you over and over again on the same money and not just the profit.

laquacherra

August 13th, 2007, 02:56 AM

In the Philippines, you buy a condo for 100k, sell it for 125k, the tax rate is 6% of 125K. If you bought your property at 125k and sold it for 100k and the zonal valuation is 115K, your tax rate is 6% of 115K.

Please somebody prove me wrong because I would hate to pay this tax. But everybody I've talked to even a director for the BIR tells me that the 6% is based on selling price or zonal valuation whichever is higher.

IMO, most of the zonal values of lots around metro manila are way below their current market value and it's actually a common practice to declare that properties are just sold at a price equivalent to the zonal value to "save" on capital gains taxes

lazybum

August 13th, 2007, 03:15 AM

IMO, most of the zonal values of lots around metro manila are way below their current market value and it's actually a common practice to declare that properties are just sold at a price equivalent to the zonal value to "save" on capital gains taxes

Isn't that tax evasion?

Dvorak

August 13th, 2007, 04:06 AM

yup tama yan.. sa taguig lang.. a 10 to 12M condo unit's zonal value is only pegged at 3M.. pag tinanong mo kung bakit ang baba.. eh talaga daw ganon kasi pag tinaasan.. masyadong mataas na ang babayarang real property tax..

hello! eh di dapat baguhin nila yung tax computation nila pero they should reflect the true market value of the property..

IMO, most of the zonal values of lots around metro manila are way below their current market value and it's actually a common practice to declare that properties are just sold at a price equivalent to the zonal value to "save" on capital gains taxes

arnolds

August 13th, 2007, 04:13 AM

yup tama yan.. sa taguig lang.. a 10 to 12M condo unit's zonal value is only pegged at 3M..

I thought the zonal value sa Taguig (Fort) is 100k per sq m ?

Dvorak

August 13th, 2007, 04:20 AM

i meant market value.. where they based the assessed value for the real property tax.

I thought the zonal value sa Taguig (Fort) is 100k per sq m ?

laquacherra

August 13th, 2007, 04:43 AM

I thought the zonal value sa Taguig (Fort) is 100k per sq m ?

if i'm not mistaken, that is true for the lots/land

laquacherra

August 13th, 2007, 05:14 AM

yup tama yan.. sa taguig lang.. a 10 to 12M condo unit's zonal value is only pegged at 3M.. pag tinanong mo kung bakit ang baba.. eh talaga daw ganon kasi pag tinaasan.. masyadong mataas na ang babayarang real property tax..

hello! eh di dapat baguhin nila yung tax computation nila pero they should reflect the true market value of the property..

IMO, matindi nga yung zonal values na yan coz when say a parent wants to transfer the title of a real property to his children he'll have to pay taxes based on the zonal value too kahit na walang gain yon coz di naman nabenta

crappypants

August 13th, 2007, 06:24 AM

^^yup even just transferring the title without money exchanges you still have to pay the taxes. we didn't know this so we put the house we bought under my sister's name, we found out we had to pay almost 2000 dollars of taxes to transfer it under our name. it's crazy. In the states you can do it through the country without any fee.

ChicTown

August 13th, 2007, 07:25 PM

I know this is very hard to comprehend but let me re-iterate because it doesn't make sense.

In the US, capital gains tax is usually 15% for long term(over one year) holdings unless its your primary residence. 15% of the difference between the selling price and the price you acquired the property at. So you buy it a 100k, hold it for over a year, sell it for 125k and your tax is 15% of 25k(profit) or 3,750 usd.

In the Philippines, you buy a condo for 100k, sell it for 125k, the tax rate is 6% of 125K. If you bought your property at 125k and sold it for 100k and the zonal valuation is 115K, your tax rate is 6% of 115K.

Please somebody prove me wrong because I would hate to pay this tax. But everybody I've talked to even a director for the BIR tells me that the 6% is based on selling price or zonal valuation whichever is higher.

^^ pls. read the BIR's definition/description of Capital Gains Tax in its website you've posted. I could have misunderstood it. Regards!:)

arnolds

August 13th, 2007, 07:58 PM

^^ pls. read the BIR's definition/description of Capital Gains Tax in its website you've posted. I could have misunderstood it. Regards!:)

Here's what it says...

Capital Gains Tax is a tax imposed on the gains presumed to have been realized by the seller from the sale, exchange, or other disposition of capital assets located in the Philippines, including pacto de retro sales and other forms of conditional sale.

However, for the BIR's purposes...gain means the selling price or the zonal valuation of the property in question.

ChicTown

August 13th, 2007, 08:36 PM

Here's what it says...

Capital Gains Tax is a tax imposed on the gains presumed to have been realized by the seller from the sale, exchange, or other disposition of capital assets located in the Philippines, including pacto de retro sales and other forms of conditional sale.

However, for the BIR's purposes...gain means the selling price or the zonal valuation of the property in question.

Oh well, thanks @arnolds. I should go back to school to enhance on my comprehension and the Phils. system of writing/journalism. Thanks again and regards!:) :)

j.r.

August 13th, 2007, 11:14 PM

you have apprehension? :)

ChicTown

August 14th, 2007, 01:31 AM

you have apprehension? :)

Sorry. It's comprehension. Thanks!:)

ChicTown

August 14th, 2007, 01:33 AM

you have apprehension? :)

sorry. it's comprehension. thanks!:)

Dvorak

August 14th, 2007, 06:30 AM

gains from sale?? pano pag you sold it in a loss?? may capital gains tax pa rin ba?

Here's what it says...

Capital Gains Tax is a tax imposed on the gains presumed to have been realized by the seller from the sale, exchange, or other disposition of capital assets located in the Philippines, including pacto de retro sales and other forms of conditional sale.

However, for the BIR's purposes...gain means the selling price or the zonal valuation of the property in question.

laquacherra

August 14th, 2007, 06:38 AM

gains from sale?? pano pag you sold it in a loss?? may capital gains tax pa rin ba?

kaya nga ang sabi ay "presumed" gains yung ni tax nila... so wala kang kawala... basta zonal value or selling price which ever is higher... in other words you have to at least sell at the zonal value otherwise sorry ka na lang

Lili

August 14th, 2007, 07:11 AM

^^ yeah, coz I guess the Philippine BIR knows how much people undervalue real property prices for tax assessment purpose such that they pegged the capital gains tax from a presumed gain pegged at 6% of the zonal valuation or selling price or fair market value, whichever is higher. Talaga ngang walang kawala.

shufatid

August 14th, 2007, 06:09 PM

^^ So, what's the verdict?

Going back to the previous example, let's say I bought a property for Php5M and sold at Php8M, will I be taxed 6% on the Php3M gain, or 6% on the Php8M value? If it's the latter, sobrang hold-up naman yan! Php480,000 ang babayaran na tax kung ganyan?!

bitoy

August 14th, 2007, 06:30 PM

Sana may mag pamana sa akin ng condo para ibenta ko, kahit anong tax ipatong siguro meron pang matitirang pera. :lol:

Wala palang kawala sa Pinas when it comes to property taxes. Unless.... may sirang calculator yung BIR na yumayaman for fixing or adjusting taxes... kanila na yung butal na libo-libo.

arnolds

August 14th, 2007, 06:59 PM

shufatid

August 14th, 2007, 07:53 PM

^^ whoa! so using that example and converting it into US$ (let's say $1 = Php48), then I will pay $10,000 tax on a $62,500 gain! Sobrang hold-up talaga!!!!

bartman

August 14th, 2007, 08:29 PM

^^ at kung ang fair market value niyan ay 9M kahit 8M mo lang ipinag bili, mas malaki pa ang tax dahil magiging 6% ng 9M.

tama ba?

arnolds

August 14th, 2007, 11:54 PM

^^ at kung ang fair market value niyan ay 9M kahit 8M mo lang ipinag bili, mas malaki pa ang tax dahil magiging 6% ng 9M.

tama ba?

Yep..however, it is zonal value which I guess could be the same as fair market value. One other question I have is how does the BIR determine the zonal value of an area?

gen1

August 15th, 2007, 01:08 AM

gen1

August 15th, 2007, 01:11 AM

aren't zonals determined by LGUs, in this case the city admin of Taguig ?

D'Transporter

August 15th, 2007, 01:46 AM

Yep..however, it is zonal value which I guess could be the same as fair market value. One other question I have is how does the BIR determine the zonal value of an area?

I think the zonal value might be the assessed value as figured by the City Assessors office which are usually very low compared to the actual fair market value (sometimes 1/3 to 1/2 of the fair market value)

As what Lili mentioned that's why most Pinoys undervalue properties during sale transactions like preparing two Absolute Deed of Final Sale so the other one will show a lot lower sale price which will be used to submit in BIR for assessment purpose. The higher one will just be kept on the side for record keeping. This is hard to do specially when buying brand new condo units. This typical pinoy practice is usually done when buying lots or used residential units. The seller gain by not paying excessive capital gains tax and the buyer somestimes avoid paying the EVAT taxes.

lazybum

August 15th, 2007, 02:24 AM

arnolds

August 15th, 2007, 02:26 AM

laquacherra

August 15th, 2007, 11:09 AM

zonal for serendra is 100k per m2 + 250k per parking slot

got that from the worksheet emailed to me by the serendra sales rep during my number crunching days.

condos nearby should have similar valuations.

100k is the zonal value of the LOTs in BGC... not condos. i believe dvorak said that zonal value of a 113 sqm boni ridge condo is something like 3M

Dvorak

August 15th, 2007, 11:10 AM

hindi yata kasi zonal value ang tawag sa munisipyo pag yung mismong condo unit.. market value yata.. so mababa talaga.. kasi dyan ni ba-based yung real property tax

arnolds

August 15th, 2007, 02:13 PM

100k is the zonal value of the LOTs in BGC... not condos. i believe dvorak said that zonal value of a 113 sqm boni ridge condo is something like 3M

Sana totoo ito....time to do more research. :cheers:

Ok..according to this website(excel zipped file for Taguig), Zonal Valuation for Fort Bonifacio City Center is 100k per sq m. Now, does this apply to condos as well? Every broker I've talked to have said yes.

http://www.bir.gov.ph/zonalvalues/zonalvalues.htm

Dvorak

August 15th, 2007, 03:13 PM

as laquacherra previously posted, zonal values applies to land.

I've looked at the actual tax declaration for the 113sqm Boni Ridge unit and at the back under Accessor's finding:

Condominium = Residential
Market Value = 2,569,980
Assessment level = 40%
Assessed value = 1,027,990.00

The Official Receipt for the Real Property Tax has:

Basic = 10,279.90 + 2,878.37
SEF = 10,279.90 + 2,878.37
Total = 26,316.54

arnolds

August 15th, 2007, 03:18 PM

Dvorak

August 15th, 2007, 03:24 PM

I only quoted that to show the market value of the unit as assessed by the city treasurer of Taguig. So for a 10M+ condo unit in Taguig, the market value is only 2.6M, but again, the basis for Capital Gains Tax as previously quoted is on the actual selling price so the assessed market value is useless.

Now, how they came up with that market value is a big question mark to me.

Are we confusing two different items here though? Real Property tax is paid yearly correct (Amilyar)? Does the same computation apply to a sale transaction of a property?

Dvorak

August 15th, 2007, 03:34 PM

So going back to the topic, zonal value is not equal to market value, as market value as pegged by the city treasurer is very low. So it could be true that zonal value for condo is equal to the zonal value of the land x sqm of the condo.

Dvorak

August 15th, 2007, 03:38 PM

ZONAL VALUES OF A CONDOMINIUM UNIT/TOWNHOUSE.

IF THE TITLE OF A PARTICULAR CONDOMINIUM UNIT/TOWNHOUSE IS -
(A) A CONDOMINIUM CERTIFICATE OF TITLE (CCT), THE ZONAL VALUE OF THE LAND AND THE IMPROVEMENTS SHALL BE TREATED AS ONE; OR
(B) A TRANSFER CERTIFICATE OF TITLE (TCT), THE LAND AND IMPROVEMENT SHALL BE GIVEN SEPARATE VALUES, i.e.ZONAL VALUE/GROSS SELLING PRICE/FAIR MARKET VALUE PER LATEST TAX DECLARATION WHICHEVER IS HIGHER AND, IN THE ABSENCE OF ZONAL VALUATION, PROPERTY SHALL BE VALUED PURSUANT TO RAMO 2-91.
THE GROUND FLOOR OF THE RESIDENTIAL CONDOMINIUM SHALL BE CLASSIFIED AS COMMERCIAL AND TWENTY PERCENT (20%) OF THE ESTABLISHED VALUE SHALL BE ADDED THERETO.

arnolds

August 15th, 2007, 03:47 PM

For future reference, here's the BIR form.

ftp://ftp.bir.gov.ph/webadmin/forms/1706.pdf

lazybum

August 15th, 2007, 04:50 PM

Very interesting discussion...so at the end of the day, after factoring: (i) the other taxes paid at the beginning of the transaction; (ii) the cost of upgrades to the unit; (iii) the HOA dues; (iv) cost of travel to Pinas...wonder what kind of profit this great investment is going to return to this poor US balikbayan?

How does one decide to put their hard-earned money into this type of investment when clearly, the tax rules are not even understood? The system appears rigged for corruption (by both taxpayers and tax collectors alike).

To me, an exit strategy is paramount in any investing I do...understanding tax consequenses of an investment is a major part of that strategy.

arnolds

August 15th, 2007, 04:52 PM

How does one decide to put their hard-earned money into this type of investment when clearly, the tax rules are not even understood? The system appears rigged for corruption (by both taxpayers and tax collectors alike).

To me, an exit strategy is paramount in any investing I do...understanding tax consequenses of an investment is a major part of that strategy.

I believe many here are not buying in the Philippines for investment but to go back and retire there in the near future.

Lili

August 15th, 2007, 08:29 PM

I have a question... for computation of capital gains tax in the Philippines, are condominiums considered real property or shares of stock in a condominium corporation?

crappypants

August 15th, 2007, 08:50 PM

that's good when developers have the exchange rate clause in the contract.
what happens when developers don't. it can get confusing if you're wiring funds or issuing checks especially now the exchange rate is so volatile.

Lili

August 16th, 2007, 12:28 AM

^ okay, I researched it. It seems that different rates are applied for capital gains tax on sale of condominium units:

Typical Transaction Costs

A. Purchases from Individuals

a. Capital gains tax - 6% of actual sale price. This is paid by the seller but in some cases it might be expected that the buyer pays. This percentage could differ if the property assessed is being used by a business or is a title- owned by a corporation, in this case the percentage is 7.5%

b. Document stamp tax - 1.5% of the actual sale price. This is paid by the seller
but in some cases it might be expected that the buyer pays.

c. Transfer tax - 0.5% of the actual sale price.

d. Registration fee - 0.25% of the actual sale price.

B. Purchases from Developers

a. Capital gains tax - 10% of actual sale price. This value might be expressed as part of the sale price.

b. Document stamp tax - 1.5% of the actual sale price.

c. Transfer tax - 0.5% of the actual sale price.

d. Registration fee - 0.25% of the actual sale price.

Anyway, as buyers, typically we do not have to contend with this. But should we decide to sell or transfer the condominium units, then that is when we deal with it.

tonyboy

August 16th, 2007, 12:30 AM

^^ from the bir website:

http://www.bir.gov.ph/lumangweb/tax_capgin.html

What are the applicable tax rates of Capital Gains Tax under the National Internal Revenue Code of 1997?

a) Real Properties - 6 %

b) For Shares of Stocks not Traded in the Stock Exchange, on the net Capital Gains

- Not over P100,000 - 5%

- Any amount in excess of P100,000 - 10%

Who are required to file the Final Capital Gains Tax return?

Every person, whether natural or juridical, resident or non-resident, including estates and trusts, who sells, transfers, exchanges or disposes real properties located in the Philippines classified as capital assets, including pacto de retro sales and other forms of conditional sales or shares of stocks in domestic corporations not traded through the local stock exchange classified as capital assets.

gen1

August 16th, 2007, 12:54 AM

delete

gen1

August 16th, 2007, 01:21 AM

100k is the zonal value of the LOTs in BGC... not condos. i believe dvorak said that zonal value of a 113 sqm boni ridge condo is something like 3M

I've rechecked my purchase documents from ALI for my serendra unit. The following is how it was computed (specifically for my unit)

a. Transfer Taxes is computed at 0.5% x zonal
b. Doc Stamps is computed at 1.5% x zonal
c. Registration Fees & Expenses is computed at __ x actual sale price. (mahaba ang formula kaya hindi ko na inilagay)

Zonal is 100K x Floor Area + 250K x # parking slots.

Real Property Taxes was computed/estimated at PhP 240 x Floor Area. Payment for my unit's RPT is yet to commence.

bustero

August 16th, 2007, 05:41 AM

Uh developers actually do not pay capital gains, sales are treated as ordinary income hence credited to EWT , expanded witholding tax. The rates of these differ if you are a CREBA member or not. This does not apply to anyone here.

CCT's (condo's) and TCT (condo's) are both subject to capital gains. The basis which many seem to find confusing is the higher of either the zonal value determined by the BIR (not the municipality) based on their surveys or actual sale price.

Property taxes are not to be considered transaction fees or costs to the deal. They are separately computed by the LGU and is the main basis for their revenue. These are paid on an annual basis (can be monthly and quarterly).

When one sells the asset the term capital gains is a misnomer in that no actual gain is computed, it is a gross tax on the transaction, subject to each particular sale the particular property goes through. So whether you make money or not, you will pay (or someone will pay) the tax.

Lili

August 16th, 2007, 07:02 AM

^ Thanks for the clarification everyone.

laquacherra

August 16th, 2007, 08:36 AM

3cr

August 16th, 2007, 09:11 AM

^^ Yup like Lauren said, that's what others do actually. Normally they include them (estimated taxes to be owed/due) in their asking price already or sell the said property at a lower price but the buyer will also need to pay for the associated taxes to get the title of the property transferred in their name.

3cr

August 16th, 2007, 09:40 AM

Philippines seen leading property boom in Asia
By Ronnel Domingo
Inquirer
http://business.inquirer.net/money/breakingnews/view_article.php?article_id=82908

A global boom in housing prices has put the Philippines in the lead of an Asian rally as of the first quarter, according to a study made by online research firm Global Property Guide.

The study considered property prices as end-March, covering 27 countries and territories, including nine in the Asia-Pacific region.

Research findings show that first-quarter nominal prices in the Philippines rose 14.29 percent compared to year-ago level, higher than 13.75 percent in Singapore.

South Korea, where prices jumped 11.64 percent, completes a troika of markets in the Asia-Pacific region that showed year-on-year improvement as well as two-digit growths.

Still, Singapore led the region in terms of real price improvements, registering an increase of 13.19 percent year-on-year.

Philippine prices went up 10.04 percent while those in South Korea jumped by 9.36 percent.

“The house price boom is now moving toward Asia-Pacific,” the GPP study said. “Property prices in countries affected by the Asian crisis are showing strong signs of recovery, prompting fears that a property bubble is developing anew in the region.”

Global Property Guide senior economist Prince Christian Cruz said the current economic and monetary conditions suggest continued strong demand for housing in countries affected by the crisis.

“All economies affected by the Asian crisis grew by five percent in 2006,” Cruz said.

“GDP growth from 2002 to 2006 has been stronger than during the crisis period (1997 to 2001), although still slower compared to [the few years before the crisis set in],” he added.

Cruz said income per person in Indonesia, Hong Kong, South Korea and the Philippines were at an all time high. Here, the rate of increase was placed at 24 percent.

Global Property Guide said the Philippine real estate sector started its recovery in 2004, boosted by the business process outsourcing industry.

It added that with growing demand from overseas-based Filipinos, condominium projects were rising all over Manila and condominium prices and rents were going up.

Also, demand for office space for call centers and other business process outsourcing operations sparked the revival of the sector.

3cr

August 16th, 2007, 09:41 AM

-TC-

August 16th, 2007, 05:58 PM

Merged all discussions about real estate-related documents into this thread...

-TC-

August 16th, 2007, 06:03 PM

Here is a sample of a CTS: http://legal-forms.philsite.net/contract-to-sell.htm

lazybum

August 17th, 2007, 07:35 AM

i guess one can always pass on the tax to the buyer... like if i want a net of say 3M i'd just add the applicable tax to my selling price. besides, the buyer really has no choice but to see to it that the capital gains tax has been paid otherwise he can't have the title of the property transferred in his name

Youre right, buyers have no choice...they're itching to buy...great strategy...you're on your way to making millions of pesos. You know, you can write a book with that selling strategy!

crappypants

August 17th, 2007, 07:37 AM

i don't know any buyer that would be willing to pay the capital gains tax of the seller.

lazybum

August 17th, 2007, 07:44 AM

:rofl:

3cr

August 17th, 2007, 09:02 AM

On homeowners’ right to buy a transparent contract
By Architect Gilbert C. Yu
http://www.philstar.com/index.php?Real%20Estate&p=49&type=2&sec=37

Joint-Venture (JV) projects between landowners and developers are a boon lately, especially after the bank closed their lending window to plain land mortgages without a financial plan incorporated into it. Left and right we see the merging of forces — big businesses fuse their efforts and assets for this type of housing development, condominium tower and the like.

Most layman investor or homebuyer sees this as a good indication — of two big groups who have joined together to do a project that redounds to reliability and soundness.

But, what they don’t know is that it is not as simple as it may seem.

Primarily speaking joint ventures arise from the developers’ shortage of capital or refusal to infuse capital to purchase land — avoiding risk by pushing it to someone else. On the other hand, landowners welcome this offer to develop their property at a value much higher than what they can fetch from just selling the property.

Like a marriage of convenience

In many ways joint venture is more similar to a marriage for convenience.

It is a mutually beneficial partnership that doesn’t have the foundation of loyalty to last long, and is not really tied down to keep the vows like “for poorer or for richer till death do us part.” Yes there is nuptial bliss but the union isn’t strong enough to weather tough times together; that going on separate ways or through divorce litigation is a quicker and better solution than working things out during bad times.

When a marriage goes bad and marital disputes arise, the children are the victims of these unfortunate circumstances, similarly if a J.V. partnership ends up in litigation… the victim is the buyer — patronizer of the unhealthy union.

Know JV contract details

Aware of the risk, buyers of a joint-venture project should insist to know the details of the joint venture contract from the seller developer.

Be aware of the responsibility of each partner. As the landowner gives his land to be developed, the other partner does the work of marketing and handling the project. In the meantime it is only the developer collecting money from the buyers while the sales contract doesn’t require landowner to have direct responsibility to the homebuyers or any legal obligation whatsoever.

In some cases, the risks are higher when a government entity is the landowner partner. Changes in the administration often result to alteration or renegotiation sometimes with impossible demands that the developer cannot cope with. Then problems arise, the buyer who paid and buy in good faith are left in a quandary.

Take the case of a high-end development for a golf and country club in Northern Luzon under the auspices of a government authority. The developer experienced some form of success with its offer of high-end housing but allegedly defaulted on payment obligations to the government.

Only after the government entity issued a warning that it would retake the property did the developer pay up partially.

The danger of litigation always exists between the developer and the landowner at the expense of the buyers which have no knowledge of the details of the partnership.

In some cases, incomplete fulfillment of the developer’s obligation cause the landowners refusal to surrender the land title to be processed for the issuance of a condo title. And when this happens the buyer cannot do anything, leaving them hanging and their investment in thin air again.

Land title should be put in trust

For buyers who already took the risk of buying in to a JV project, insist that the JV contract be transparent for review by a lawyer to see if they’re properly protected even when there’s a quarrel between the JV partners.

Absolutely there should be no compromise. Since 3rd party landowner is involved, insist that the land title be put in trust. This will work to the buyers’ advantage because it means that the landowner recognizes your contract with the developer.

But if the said condition is not possible and the buyers still feel that they are treading with a shadow of a doubt… Once a contract is drawn, the buyer should assert their rights by requiring the landowner-partner to be a binding 3rd party signatory, for the simple reason that land is also included in the sales.

3cr

August 17th, 2007, 09:03 AM

3cr

August 17th, 2007, 09:04 AM

laquacherra

August 17th, 2007, 09:16 AM

i don't know any buyer that would be willing to pay the capital gains tax of the seller.

yup! in much the same way buyers would NOT be willing to pay the 12%VAT but, depending which the developer/seller they buy from, they still end up paying for the VAT anyways

3cr

August 17th, 2007, 09:21 AM

^^ Yup I agree. Nasa negotiation na kasi yon ng seller and buyer. :)

shufatid

August 17th, 2007, 09:25 AM

Youre right, buyers have no choice...they're itching to buy...great strategy...you're on your way to making millions of pesos. You know, you can write a book with that selling strategy!

i don't know any buyer that would be willing to pay the capital gains tax of the seller.

@lazybum, I don't understand where your sarcasm is coming from, as this practice happens all the time in a sellers' market. In fact, in Singapore right now where the property market is red hot, buyers are being forced to take this burden, for lack of a better word. Sellers are even upfront with buyers about it. In Montreal about three years ago, this was also not unheard of, when the property market suddenly bounced back up. I stated this two examples as I can only speak from experience.

@crappypants, I'm sure buyers are not willing to pay the capital gains, and I actually don't agree that this should be the case, but like I said above, this happens often in a sellers' market. Not fair, yes, but it happens.

3cr

August 17th, 2007, 10:46 AM

^^ Yup such transaction definitely happens in Pinas just like what Lauren and Jen mentioned. It really boils down to how badly the buying party wants the property. For example the house and lots in Sta.Mesa Heights our family once owned were bought by some Chinese-Filipinos with all inclusive buy offers (capital gains and others taxes and incidental costs included) so the deal for whatever amount it was is actually free and clear already. They paid for the taxes first afterwhich they gave us the rest/balance after when all the paperwork was in order. All of them like that when we got rid of our ancestral home and some rental units in the area. Lapit lang kasi sa Banaue/St.Theresas so they may be eyeing it for possible commercial prospect/use. Sabi din nila the area is in the belly of the dragon or something to that effect kanya very desirable daw for the chinese.

i guess one can always pass on the tax to the buyer... like if i want a net of say 3M i'd just add the applicable tax to my selling price. besides, the buyer really has no choice but to see to it that the capital gains tax has been paid otherwise he can't have the title of the property transferred in his name

yup! in much the same way buyers would NOT be willing to pay the 12%VAT but, depending which the developer/seller they buy from, they still end up paying for the VAT anyways

-TC-

August 17th, 2007, 12:27 PM

What can you say about this guys?

"Project completion is expected on or before mm/dd/yyyy, exclusive of twenty four (24) months grace period."

24 months!?? Isn't that too long? I couldn't believe it when I read it.

bustero

August 17th, 2007, 03:42 PM

From a purely financial point of view, best not to get tied down with labels and current practice and whatever baggage it may bring. The semantics of who actually pays makes it difficult to Recognize that all these are transaction costs and that ultimately both sides actualy pay for these. In the end there is a net amount that the seller is happy to part his asset with and there is a gross amount that any buyer will pay to acquire said asset. Any piece of transaction cost, whether it is brokers fee, capital gains, doc stamps, registration, title insurance, boring tests, title verification etc etc etc is just sums of money to be bargained with, who actually pays is secondary to the bottom line of the minimum amount a seller will receive and the maximum amount a buyer will pay.

D'Transporter

August 17th, 2007, 04:10 PM

In the last lot purchase I had, I had the seller pay for the cost of resurvey, the attorney that assisted me (prepared the conditions of sale agreement and deed of final sale), capital gains, documentary, transfer tax and the latest property tax.

bustero

August 17th, 2007, 04:30 PM

Almost all the big developers have jv's with landowners. e.g. who do you think actually owns the land underneath serendra :) clue it's a GOP entity. The country's largest horizontal land developer Sta Lucia almost never buys any land and they've have hundreds of projects.

gen1

August 18th, 2007, 12:47 AM

Isn't the serendra land owned bu ALI and the Greenfields joint venture.

The land where SOMA sits is fully paid for by the developer.

But I hear a developer with a couple of buildings overlooking manila golf is having money trouble. He's paying his contractors with units in the condo they're building. That's a big no-no for reputable contractors, and only struggling contractors with short client lists will go for such an arrangement.

laquacherra

August 18th, 2007, 03:40 AM

^^ yeah, 2 years is quite a long grace period. looks like the developer really got his back covered

laquacherra

August 18th, 2007, 05:04 AM

^^ i think that's why there were those BCDA units

-TC-

August 18th, 2007, 05:05 AM

^^ yeah, 2 years is quite a long grace period. looks like the developer really got his back covered

I am having them amend the contract before I will sign it. 1 year would be more reasonable.

twinstar633

August 18th, 2007, 05:20 AM

[QUOTE=..... In fact, in Singapore right now where the property market is red hot, buyers are being forced to take this burden, for lack of a better word. ...[/QUOTE]

FYI - there is no capital gain tax in Singapore.

laquacherra

August 18th, 2007, 05:36 AM

shufatid

August 18th, 2007, 04:02 PM

FYI - there is no capital gain tax in Singapore.

No, Singapore does not tax capital gains of either foreigner or resident shareholders, BUT when a series of transactions takes place, the powers-that-be view it as a “business transaction” within Singapore, and capital gains are sometimes taxed as ordinary income. While capital gains are not taxed, a tax charge of some 26% arises on distributions of a capital gain. This has happened to me and other investors and has led to taxpayer disputes in the past.

But the point of my post above was not merely about capital gains, but other 'burdens' passed on to buyers by sellers in a sellers market (and vice versa when it is a buyers' market.) This includes passing on the cost of hiring the rea estate agent, stamp fees, etc.

3cr

August 19th, 2007, 09:50 AM

Don't remember if this has been posted before...

For the complete article go to: http://www.globalpropertyguide.com/country.php?id=154&cid=as&cat=3

Philippines: Rental Yields for:
Makati Central Business District, Ortigas Center, Eastwood City, Global City
Source: Global Property Guide
As of February 27, 2007

Most of the luxury condominiums are located in Makati CBD, Rockwell, Ortigas Center and Fort Bonifacio. Rental yields for these units are high.

The smallest apartments in each segment earn the highest yields. For instance, studio apartments in the prime areas of Metro Manila can earn around 13%-15%. But the highest returns are available on the smallest studios (30 sq. m.), which earn rental returns of an average of 15.1%. Larger studio condos (40 sq. m.) earn slightly lower returns (12.9%).

_____________________________

Philippines: High Yields on Metro Manila Condominiums
by Prince Christian Cruz

The rental returns from letting residential condominiums in central areas of Metro Manila range from 8% to 15% yearly, according to a survey just released by the Global Property Guide.

The smallest apartments in each segment earn the highest yields. For instance, studio apartments in the prime areas of Metro Manila can earn around 13%-15%. But the highest returns are available on the smallest studios (30 sq. m.), which earn rental returns of an average of 15.1%. Larger studio condos (40 sq. m.) earn slightly lower returns (12.9%).

The same pattern holds in other condominium segments. One to two bedroom units (measuring 50 – 90 sq. m.) earn around 12%-15%, but the highest returns can be earned on the smaller (60 sq. m.) condos, which earn rental returns of 15%. Larger 1 – 2 bedroom condos (80 sq. m.) earn rather lower returns (11.5%).

“The pattern is unusual,” says Matthew Pollock, publisher of the Global Property Guide. “Instead of a smooth progression from high yielding units to low, we have high to low with high-yielding 'ridges' or 'lumps' at particular apartment sizes - which correspond to the smallest case of a particular number of bedrooms.”

Investment plus

Interest rates in the Philippines are at historic lows, making such condominium unit returns highly attractive. At present 364-day T-bills yield less than 3.82%, while interest rates on one-year time deposits are around 1.5% - 2% annually. A five-year time deposit returns only 5% per annum, and a 5-year T-bond earns 5.68%.

Demand for residential condominiums in Metro Manila has been boosted by strong economic growth, particularly by the rapid growth of business process outsourcing firms, including call centers. Call center agents form a new breed of young urban professionals with tremendous purchasing power. Because most call center agents work at night, they need condominium units that are right next to their work place.

“The lesson is clear - to earn good money, buy a small unit in Metro Manila’s business districts, with very small rooms. The returns will be significantly better than in most cities in Asia,” Pollock says.
The growth of the condominium sector has also been helped by the fact that they are free from the title registration and property appraisal problems which commonly hound landed properties in the Philippines.

Foreigners are also allowed to purchase condo units, as long as the foreign component does not exceed 40% of the building. There is no rent control for units with monthly rents above P10,000 (US$208). Under that level, the Rent Control Act limits annual rent increases to 10%.

A significant expansion of the mortgage market has recently occurred in the Philippines. Banks are keen to lend up to 70% of the purchase price. Adjustable rate mortgages are available at interest rates of 9% to 9.99%, with fixed-rate loans of 5+ years costing 1% - 1.5% more.

Excessive taxation

Potential investors, however, should beware of the very high taxes and fees they may have to pay on their condominium units.

For instance, the rental income of foreigners is charged a withholding tax of 25%. A value added tax of 12% is, in addition, imposed on units with monthly rents exceeding P10,000 a month (US$208).

Round trip buy-sell costs for property transactions can reach up to 35% of the selling price because of numerous taxes and fees, such as VAT (12%), capital gains tax (6%), not to mention the very high real estate agents’ fee (5%), and other registration costs.

3cr

August 19th, 2007, 09:51 AM

TheRick

August 19th, 2007, 10:04 AM

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3cr

August 19th, 2007, 10:06 AM

Global housing boom shifts focus
By: Global Property Guide
Last Updated: July 25, 2007
http://www.globalpropertyguide.com/articleread.php?article_id=94&cid=

The global house price boom continues in 2007, albeit at a much slower pace and with different set of countries.

A dramatic slowdown has taken place in several countries in Europe. House prices in Estonia, 2005 and 2006’s star performer, rose only 5.68% y-o-y to Q1 2007, dramatically lower than the 77.52% y-o-y increase to Q1 2006.

Higher interest rates and an overheating market were the main causes of the slowdown. The key interest rate of the European Central Bank (ECB) has been raised nine times to 4% in June 2007, from its historic low of 2% in Nov 2006.

Other European countries that experienced lower house price changes y-o-y to Q1 2007 than in 2006 included France, Sweden, Ireland, Spain, Greece, the Netherlands, Switzerland and Portugal.

Ireland’s annual house price growth slowed to 7.44% y-o-y to Q1 2007, a deceleration from 12.07% y-o-y to Q1 2006. Apart from the higher interest rate, the heating issue on Stamp Duty also contributed to the decline.

The US house price rise also slowed to 4.07% y-o-y to Q1 2007, down from 12.78% y-o-y to Q1 2006.

The US Federal Funds rate has risen sharply from its low of 1% in May 2004 to its current level of 5.25%. The Fed has kept the rate unchanged since June 2006. This rate increase has meant trouble for sub-prime borrowers, leading to delayed payments and foreclosures.

Strong rises in non-Eurozone Europe

Interestingly, European countries which have not adopted the Euro have experienced stronger house price rises y-o-y to Q1 2007, than countries within the zone. Such is the case of Latvia which plans to adopt the Euro in 2010. Latvia took the lead in house price increases y-o-y to Q1 2007.

Latvia's capital, Riga, experienced a remarkable appreciation of 61.91% y-o-y to Q1 2007, higher than the 35.64% y-o-y increase to Q1 2006. However, recent data from Latio, Latvia's leading research-oriented real estate agency, show that prices have started to fall in Q2 2007.

Lithuania’s house prices rose by 26.32% y-o-y to Q1 2007, up from 25% y-o-y to Q1 2006. Lithuania has recently increased its long-term interest rate to 4.6% in June 2007, from 4.2% in March 2007. The European Commission rejected Lithuania’s bid to adopt the euro in 2007 because its inflation breached the required limit.

House prices in Norway were up by 16.69% y-o-y to Q1 2007. Norway rejected EU membership in a referendum in 1972, and again in 1994. Positive factors such as continued economic expansion and the strength of the labour market overpowered the pull exerted by higher interest rates.

After taking a breather in 2005 and early 2006, house price growth in the UK accelerated to 9.25% y-o-y to Q1 2007, up from 5.3% y-o-y to Q1 2006. Particularly, Northern Ireland and London saw double-digit y-o-y house price increases in Q1 2007, at 57.6% and 14.3%, respectively.

Cyprus, which is set to adopt the Euro starting January 2008, is in a middle of a housing boom with house prices rising by almost 10% y-o-y to Q1 2007. Liberalization of the financial sector, a decrease in interest rates, and increased demand for higher quality housing and second homes were the main drivers for the price boom.

Now it’s Asia–Pacific’s turn

The house price boom is now moving towards the Asia-Pacific region. Property prices in countries affected by the Asian Crisis are showing strong signs of recovery, prompting fears that a property bubble is developing anew in the region.

Property prices in the Philippines, Singapore and South Korea rose by more than 10% y-o-y to Q1 2007, higher than in 2006. Although Japan registered a nationwide land price drop of 1.48%, land prices in its six major cities increased by a remarkable 7.75% y-o-y to Q1 2007, suggesting a real recovery from the 15-year house price downturn. There are no official house price statistics in Japan, so land prices are used as a proxy.

Australia has recovered from its 2004-2006 slowdown. Despite higher interest rates, house prices rose by almost 8% y-o-y to Q1 2007, from 4% y-o-y to Q1 2006.

New Zealand’s house prices rose by 11.36% y-o-y to Q1 2007, significantly up from 9.55% y-o-y to Q4 2006. This is despite the fact that the Reserve Bank of New Zealand (RBNZ) has increased interest rates since early 2004 to cool down the housing market.

Elsewhere, South Africa saw 16.74% house price increases y-o-y to Q1 2007. South Africa’s house prices have been escalating for seven continuous years, with price increases peaking at 30% in 2004.

Canada’s house prices moved forward in Q1 2007, thanks to strong economic growth, low mortgage rates and large net immigration. House prices rose 9.30% y-o-y to Q1 2007, up from 7.55% y-o-y to Q1 2006.

The laggards

Thailand and Israel, after suffering from political crises, have not yet recouped the confidence of investors. This resulted in a drop of 5.09% y-o-y to Q1 2007 in Thailand’s house prices, down from an 8.03% y-o-y increase to Q1 2006. Israel’s house prices fell by 10.52% y-o-y to Q1 2007, due to increased political and security concerns in the Middle East.

Portugal’s sluggish economic expansion exacerbated the effect of higher Euro interest rates. House prices have risen by a meager 1.14% y-o-y to Q1 2007, after an already low growth rate of 2.17% y-o-y to Q1 2006.

3cr

August 19th, 2007, 10:07 AM

3cr

August 19th, 2007, 10:54 AM

Special Feature: 2nd Quarter Real Estate Report

(Business World (Philippines) Via Thomson Dialog NewsEdge) Water levels may have gone up this rainy season, raising the alarm bells for some sectors. But for the resilient real estate industry, which is now awash with investments, the rainy spell does not bring on the blues as the sector awaits to be flooded with more projects.

Having posted significant growth in the past four years, the local property sector looks more bent than ever in beating the dry spell that ravaged the industry in the late 1990s.

In the past two weeks alone, Eton Properties, Inc. launched the 41- storey Eton Emerald Lofts, Rockwell Land Corp. started the construction for the much-anticipated Number One Rockwell, DMCI Homes partnered with Equitable PCI Bank in developing the Riverside Residences, and One Asia Development Corp. jump-started its P100-million business park in Binan, Laguna.

Despite the storm of new projects, David Leechiu, president and general manager of property consultancy firm Leechiu & Associates, insists that supply across all segments remains tight, a lack that at this rate is expected to be relieved no sooner than by June next year.

Coupled with a corresponding deficit in quality stock, these factors are mainly responsible for the escalation of rent values in prime locations, although a widespread increase in land values is yet to be seen.

"Prices have stayed generally flat across Metro Manila and we are nowhere near pre-crisis values yet except in Fort Bonifacio, which makes it the safest place to invest in at the moment," Mr. Leechiu said.

Land values at Fort Bonifacio in Taguig dropped by as much as 50% in the 1997 crisis but have seen a hundred percent increase since the Bonifacio West Development Corp. -a joint venture of Greenfield Development Corp. and Ayala Land Corp. - took over its development, making the area the country's top sales performer in recent months.

Of the central business districts, Makati still holds the prime spot, with average asking prices ranging from P250,000 to P300,000 per square meter. Ortigas, which reached a low of P90,000 per square meter from a peak of P180,000 per square meter in 1997, is now trading between P110,000 and P120,000 per square meter, Mr. Leechiu said.

Despite its 100% occupancy rate in office space, Fort Bonifacio, remains comparatively cheap at P175,000 to P215,000 per square meter, making it a favorite alternative to the Makati central business district.

"We now see a lot of migration to Fort Bonifacio in all segments. Being in close proximity to Makati, many locators choose Fort Bonifacio because it has a well-planned, well-constructed environment that is only one step away from the Makati facilities that they have gotten used to," he said.

According to the latest Colliers International Philippine Property Overview, there had been a 20% increase in office space rents in the second quarter due primarily to the dearth of quality office supply, a factor that has hindered companies from opening businesses in the country since 2005.

Monthly lease rates for premium office space in Makati are now at the P1,200-per-square meter level while Fort Bonifacio is up to P750 per square meter. Meanwhile, for other districts, monthly lease rates are still at the P400- to P600-per-square meter transaction range.

Mr. Leechiu has pegged Fort Bonifacio's annual rate increase at seven to eight percent for the next three to four years, while Makati accrual is calculated at five percent for the next two to three years before slowing down to two percent.

As available space in these two areas will continue to be limited, a significant amount of future office space supply can be found from emerging business districts such as Eastwood City, Binondo and Old Manila.

Next year will bring good news to the business process outsourcing (BPO) sector, which continues to be the main driver for office space demand, as the number of available supply coming on-stream will double towards the third and fourth quarter, offering more quality stock to choose from.

Tight supply in commercial space will be slightly relieved with the completion of the Ayala Center Building Glorietta 5 and the Dela Rosa e- Services Building in Makati, the Total Corporate Center in Fort Bonifacio, and the One E-Com Center at the SM Central Business Park in the Bay area before mid-2008.

Residential development

And as Metro Manila population continues to increase, condo living is fast becoming the habitat of choice for reasons of cost and practicability.

An estimated 23,000 units is due for completion before 2010, 60% of which will be situated in Fort Bonifacio and Makati, with the remaining 40% scattered across Quezon City, Mandaluyong, Las Pinas and other Metro Manila districts. A big chunk of supply will cater to mid to upper market, while small percentage of the total is targeted for the low-end market.

The steady inflow of overseas foreign worker (OFW) remittances, now reaching all-time highs, assures the continuance of strong demand in the residential market.

"Lately, we have seen a shift from semi-skilled workers to high-end professionals leaving the country to work abroad and despite their high- paying jobs, they are still not covered by expatriate packages where the company pays for the whole family's expenses. This in turn becomes a good motivator for OFWs to continue sending money to the Philippines," Mr. Leechiu pointed out.

Single-digit mortgage rates and easier payment schemes will result in more retail purchases from the middle class in the years to come. For professionals, Mr. Leechiu said there's a growing preference for centrally located condominium units over suburban houses in distant locations such as Las Pinas and Rizal.

Another significant source of investment demand are the local families who had parked money abroad during the Asian financial slump, but are now pre-terminating their placements and transferring them back to the Philippines.

Despite visible demand and propitious property forecasts, Mr. Leechiu warns developers against building too much stock. With debt restructuring being made available to developers both big and small, real estate corporations have been able to raise bonds at a much lower rate.

"These companies have done IPOs or secondary or even third offerings and raised a lot of cash through the stock market. They've been able to joint venture with other institutional big players. This means that there is a lot of money flowing into the system," he said.

Instead, Mr. Leechiu reminds developers to consciously watch the demand and supply situation.

[I]Copyright 2007 Business World Publishing Corporation, Source: The Financial Times Limited

3cr

August 19th, 2007, 10:55 AM