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Old June 16th, 2016, 02:41 AM   #81
DanOrtega
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"high risk of vacancy "
Given the prime location, I think the risk of a long vacancy is very low. The only issue is the rent you will receive. If you ask a high rent, the you may not get a tenant quickly. But if you price in line with the market, I think you will have many potential tenants.

I have seen some of the ALVEO marketing materials, and there are many high-paying jobs, and well as good restaurants in this area. And with the mall, it should be a very attractive and convenient place to live.

I suppose what we are seeing now in Makati is that pricing on new high end locations is catching up with BGC, where prices jumped some months ago, and are approaching (or topping) P 200k psm. Investors seeking higher yields have over alternatives, but there are buyers for whom location is more important than yield.
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Old June 16th, 2016, 04:26 AM   #82
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ok

Last edited by Alfred88; June 16th, 2016 at 04:28 AM. Reason: wong post
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Old June 16th, 2016, 04:29 AM   #83
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Well said! It is really a wake up call.

Quote:
Originally Posted by tarlacquenoako View Post
It is very risky to invest in real estate anticipating capital appreciation, especially when the market is at its peak. Holding your unit for 10 years with low rental yield and high risk of vacancy while waiting for it to appreciate is big gamble.

This is the premise of previous property bubble. People buying properties in anticipation of appreciation that did not materialize. Unless you have a deep pocket, negative cash flow each month from your rental is painful for an investor.

Investors that can't keep up with their monthly obligations (mortgage, asso dues, taxes), will ultimately throw in the towel and unload their their investment by selling at depressed price, making your dream cap gains in the future, more illusive.

The location might be great, but the timing is not the best. The market is at or near its peak. Waiting for the cap appreciation boat that have since sailed, it may take great patience before it docks again my friend.

Selling your flats after 10 or so years might be problematic too. Remember most of your fellow investors in this project expected an appreciation, once that happens, inventory of unit for sale will swell. You have to price your unit competitively, or worst, cut your selling price. Also, you only have a limited pool of buyers who can shell-out 20% down and finance the balance. You may accept a lower offer, when that buyer knocks on your door. Did I mention other flats for sale on the area with close proximity to Gentry 10 or so years from now.

Welcome to this board and I hope this will be the first of your many post.

I am curious to see your analysis and I wish all the best!
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Old June 19th, 2016, 12:25 PM   #84
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Great news!

the finally released the pricelist and schemes for the units last Friday, i'm seeing some units at reasonable payment schemes go for around 150+k per sqm, but some units shoot up to 175k per sqm. Its not that expensive contrary to what we were expecting a few weeks ago, go call your brokers and agents to find out more. These prices are only valid until the 25th. We'll be getting a new price range after the launch
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Old June 22nd, 2016, 12:02 PM   #85
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How come prices now in Makati CBD are priced at 150-175K per sqm? Very expensive compared to other neighboring countries/cities like KL for example, where condos are at 120-130K per sqm only and with bigger unit cuts.. I stayed for a month last February in a condo named Binjai 8, for a training, and this is within the KLCC area. It has superb amenities and Ayala Land Premier/Rockwell quality to say the least in terms of design and finishes.. and its 70 sqm 1 bedroom unit. At the lobby, are some brochures of the condo as there are still available units for sale. I inquired how much would it cost to buy a unit the same as where I'm staying and its current selling price if converted to peso is around Php9.1M. Considering that its already an RFO unit. Im just curious, is this the ongoing trend now in Makati CBD? I understand that this is still 5 years before turnover, but even after 5 years, I can't imagine prices would have gone this high.. Just my thoughts.. Anyway, this project has great location though..

Last edited by Germain_7; June 22nd, 2016 at 12:16 PM.
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Old June 22nd, 2016, 03:01 PM   #86
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Quote:
Originally Posted by Germain_7 View Post
How come prices now in Makati CBD are priced at 150-175K per sqm? Very expensive compared to other neighboring countries/cities like KL for example, ...
I think this market can only work if you include the remittances of OFW's. Otherwise the prices in Metro Manila are way too high already. Just compare the numbers:

- In Berlin, Germany, the average price per sqm for one of the standard-shoebox sized apartments like in the Philippines (30sqm) is ~2715 EUR at the moment = 142k PHP. That is with a GDP per capita of 47774 USD per year per person (2014, Germany).

- Compare this to the Philippines GDP per capita of just 2873 USD per year per person (2014) and a price per sqm now rarely below 100k.

Almost all of the projects in Manila are out of reach for most of the population and without the remittances prices like these here simply wouldn't work. In a market oriented towards the locals with their incomes prices would have to be much lower.

I found this article quite interesting: http://www.globalpropertyguide.com/A.../Price-History

Quote:
It is estimated that 60% of these remittances go directly or indirectly to the real estate sector, according to the World Bank. ... These are problematic numbers given that many of these families already have houses in the first place. The World Bank assumes only 10% of these capable end-users as prospective end-users, indicating a gross oversupply.

In terms of affordability, property developers are building more mid-end condominium units than locally-based Filipinos can afford to occupy. Many of the buyers are OFWs, causing a mismatch between demand and supply
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Old June 23rd, 2016, 05:40 AM   #87
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Quote:
Originally Posted by Germain_7 View Post
How come prices now in Makati CBD are priced at 150-175K per sqm? Very expensive compared to other neighboring countries/cities like KL for example, where condos are at 120-130K per sqm only and with bigger unit cuts.. I stayed for a month last February in a condo named Binjai 8, for a training, and this is within the KLCC area. It has superb amenities and Ayala Land Premier/Rockwell quality to say the least in terms of design and finishes.. and its 70 sqm 1 bedroom unit. At the lobby, are some brochures of the condo as there are still available units for sale. I inquired how much would it cost to buy a unit the same as where I'm staying and its current selling price if converted to peso is around Php9.1M. Considering that its already an RFO unit. Im just curious, is this the ongoing trend now in Makati CBD? I understand that this is still 5 years before turnover, but even after 5 years, I can't imagine prices would have gone this high.. Just my thoughts.. Anyway, this project has great location though..
KLCC has a very serious glut of supply right now.
It can take months to find a tenant, and if you want to sell, even longer

Who is the builder for Binjai 8 ?
What is the selling price in MYR?
Last time I checked, they were getting about MYR 150 per sf in KLCC

So:
MYR 1500 / 4.02 = USD $373.10 x 10.73 = $4,000 psm x 46.5 = P 186,174

So Binjai must not be in the prime area.

BTW, Malaysia's economy is weak, thanks to oil - while the Philippines growth is still very strong.
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Old June 23rd, 2016, 10:26 AM   #88
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Thanks guys for clarifying that..

At least, good to know that the Philippines' economy is on the rise.. By the way, Binjai 8 I have to say is in a prime location with a really nice view of the PETRONAS Towers.. I guess Malaysia's economy right now especially the real estate sector has some serious issues.. Considering the location and its RFO, its surprising to find out they still have available units.. I guess also the exchange rate has something to do with the conversion back in February especially now that we just had the elections and transition of government..
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Old June 24th, 2016, 03:18 PM   #89
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this is why i final decide not to buy the studio unit here although i submit LOI and show check: ***My personal Opinion

1. the 170k price/SQM make Studio unit Price much than 3.2M need pay VAT.
2. ALI charge already charge 12% VAT and 6% CGT if I sold it before turn over. (but other developer may not. u lost 20% if u want to resale )
3. u pay ur money everymonth for 6 years with not rent income. if invest a RFO 5m condo u already have 30k*12*6 = 2.1m cash back.
4. "best or nothing". if ur have 180K for ALVEO project. why not add some money for a Ayala premier beside greenbelt malls.

Any way, tnx Ayala sales man for the patient and well planned project.
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Old June 24th, 2016, 04:29 PM   #90
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I get your points - they make sense

But on this one:
"the 170k price/SQM make Studio unit Price much than 3.2M need pay VAT."

Where can you find a nice below VAT condo in the better parts of Makati's CBD these days? I bought one last year, but it is on the fringe of Makati
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Old July 3rd, 2016, 05:54 AM   #91
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Makati Transportation issues

Makati's advantages: more facts, more figures

(in the advert for San Antonio Residence in today's Manila Bulletin)

Living in Makati...

+ can deliver savings: On Time, and Fuel
"Every ten minutes you leave your car idle, you are losing between 0.1 and 0.6 liters of fuel . And if fuel costs Php 41 a liter, that's Php 24.60 per hour. If you multiple that by the extra 700 hours that commuters spend in traffic, that translates to at least 17,220 wasted on fuel alone! Those living in Makati can avoid wasting that much money

+ money spent on an owner-occupied condo is not wasted on rent
+ the owner of a Makati condo will have more time to spend on other pursuits, including family
=== ===


Duterte, the new president, has promised to reduce traffic congestion, and some new initiatives are being discussed

+ The President has taken on emergency powers for two year to tackle the traffic crisis

+ There is talk of making more use of Clark airport, and connecting it to Manila and Makati with a new rail line

+ There's even an offbeat suggestion to move commuters over the heads of stall traffic in gondola lines, which are quicker and cheaper to build than rail lines

(from another website)

Any idea where that Makati station might go?
What happened to plans to build a underground rail connecting Makati with BGC and Mall of Asia?
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Old July 5th, 2016, 09:26 AM   #92
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Quote:
Originally Posted by DanOrtega View Post
Makati's advantages: more facts, more figures

(in the advert for San Antonio Residence in today's Manila Bulletin)

Living in Makati...

+ can deliver savings: On Time, and Fuel
"Every ten minutes you leave your car idle, you are losing between 0.1 and 0.6 liters of fuel . And if fuel costs Php 41 a liter, that's Php 24.60 per hour. If you multiple that by the extra 700 hours that commuters spend in traffic, that translates to at least 17,220 wasted on fuel alone! Those living in Makati can avoid wasting that much money

+ money spent on an owner-occupied condo is not wasted on rent
+ the owner of a Makati condo will have more time to spend on other pursuits, including family
=== ===


Duterte, the new president, has promised to reduce traffic congestion, and some new initiatives are being discussed

+ The President has taken on emergency powers for two year to tackle the traffic crisis

+ There is talk of making more use of Clark airport, and connecting it to Manila and Makati with a new rail line

+ There's even an offbeat suggestion to move commuters over the heads of stall traffic in gondola lines, which are quicker and cheaper to build than rail lines

(from another website)

Any idea where that Makati station might go?
What happened to plans to build a underground rail connecting Makati with BGC and Mall of Asia?
That underground rail is already a scrapped project as per PNoy Administration.. I'm not sure if Duterte will revive it because his railway plans is more focused on the Clark-Manila Railway, Manila-Batangas Railway, and railways within Cebu City and Davao City. And he is planning to reduce proposed big projects within Metro Manila to decongest the city.

I think developers should start on full-blast proposals on their new township projects outside Metro Manila.

Ayala, for example, should start building offices & other commercial in Alviera, Altaraza, Nuvali & Vermosa so that focus in the metro would be reduced.
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Old July 9th, 2016, 07:18 PM   #93
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UBS (one of the leading international brokers in the country) has published an interesting report on the Philippine property sector on Thursday and i thought it’s worth sharing a few snippets and what their current expectations are (surely less biased than a property developer estimates).

So here we go:

Despite slower new launches, the inventory life has extended to 2.5y (it’s getting uncomfortable for developers >2y).


Prices will likely come down.. no crash.. but likely not any value gain either. That means investing now looks like „dead money“. Avg rent going to 800php.. that would make a ugly yield at 160k/sqm..




Yields are coming down. And we’re talking gross yields. Gentry will be easier to rent out due to the great location but I don’t think one get a huge premium for it.


Bottom line = why buy on the primary market if the secondary market is about to offer great opportunities, no delays, bargaining power for buyers, view of the finished project, no bullshit.
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Old July 10th, 2016, 09:52 AM   #94
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Interesting figures mds_investor but for a new investor like me, I am hoping the price of pre selling condo will appreciate by the time the project gets completed.

Btw, does anyone know whether the parking lot beside the gentry site is the construction staging area? I see construction materials there.
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Old July 10th, 2016, 01:03 PM   #95
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Hi TUG77 - I wish for the best for your pre-selling condo but keep in mind that there are two price dynamics in RE.

1. In the primary market, developers like Ayala, Megaword, SMDC set the price. It is not a price where "supply meets demand". They will always talk about upcoming price increases (= create urgency feeling) and will probably even increase them by a couple of % every 6 months. This practice used to be perfectly fine since, up until today, the secondary market was going up as well. Where you need to be careful now is when they increase price although the secondary market goes the other way (if colliers/UBS/etc are right). It is quite likely they do it, because they don't want to piss off early buyers, and it's about maintaining the narrative that the pinoy RE market is buoyant, the project is hot and you're lucky to get a piece of it. So your condo that you buy today will likely appreciate in value based on a price that is set solely by ayala at any given time. But you will never ever be able to cash that profit in because ALI does not allow you to sell it before turnover and if you sell it back to ALI, they take it back at the original price -20% haircut (ouch). So basically the illusion continues until turnover when you really need to find someone who will pay the price – and that can be tricky.

2. In the secondary market prices are set by supply and demand, and it’s only here that you will get the benefits of having oversupply. Interestingly enough there are many units offered at high prices but when you look how long the add is online you notice that it’s been there for 12-18months.. Many Filipinos will stubornly wait for 2y until someone pays the price. The ones one needs to look out for are those who can’t afford their unit anymore and need to sell. That’s where real price discovery is made. If you are patient you will be able to find great deals out there with less headaches than with a pre-selling unit.

I will close this with a quote: „Bull markets are born on pessimism, grown on scepticism, mature on optimism and die on euphoria“ (John Templeton). I know it’s hard to fight the current narrative of „prices only go up and you will miss out if you don’t invest NOW“. This overconfidence comes also with the fact that 90% of salesmen are young and have never ever seen the market go down in their whole career. As an example, I really have to fight the temptation myself: I’m 28 and from the first day i started working on the trading floor i only heard and experienced that central banks dictate all market outcomes. My generation is brainwashed for 7years now and the result is a $10 trillion asset class of negative rate sovereign bonds which is entirely based on the „common knowledge“ that there is no limit to the greater foolishness of Central Banks. If this Narrative fails we will see the mother of all rotations – but that's a way bigger issue than the pinoy RE market and I’m now totally off topic .
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Old July 10th, 2016, 01:21 PM   #96
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From another site, they talk about Rents and Prices returning to the Red Line



That line represents CPI price inflation.

There are some interesting figures for completions and office space. If you want a link send me a PM because I heard that some people have been banned for providing links to other sites that discuss Makati Prime properties.
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Old July 10th, 2016, 01:54 PM   #97
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DanOrtega, you’re right office and retail will be a really hot topic in the future. I got a couple of charts that show the challenges. Especially if the new government decides to promote offices in the north or south of metro manila to decongest the city...

So new office supply space coming:



But.. We are also seeing a shift towards high-value non-call centre service formats such as knowledge process outsourcing (KPOs) and higher tech functions, which do not necessarily require a lot of manpower. As such, forecasters think absorption from the BPO sector could be limited to 400k sqm per year at best. The last time a major glut happened in the office sector was in 2008-10, when Makati CBD rents corrected by as much as 30% from their peak as the vacancy rate rose from 2% to 8%. Tho I don’t think we would have that kind of move again as BPO demand was small 7y ago. But more than fair to say that this will be a “tenant market”.



The picture for retail does not look much rosier... and thanks god that internet and e-commerce still sucks in the phils cos the moment that changes we will have an even bigger pressure on retailers/malls (see China..).



Bottom line – It seems like a text book example of how global easy money eventually leads to over-investment that creates overcapacity and then non-performing assets which then eventually lead to non-performing loans.. and the cycle turns. It happens all the time all over the world.. it’s just normal.. no major drama but i don’t see why the phils would be any different. In fact every time i say „this time is different“ i usually end up loosing money.
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Old July 10th, 2016, 02:25 PM   #98
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Well said. I have met a lot of young real estate sale person who think price only goes upwards.
Quote:
Originally Posted by MDS_investor View Post
Hi TUG77 - I wish for the best for your pre-selling condo but keep in mind that there are two price dynamics in RE.

1. In the primary market, developers like Ayala, Megaword, SMDC set the price. It is not a price where "supply meets demand". They will always talk about upcoming price increases (= create urgency feeling) and will probably even increase them by a couple of % every 6 months. This practice used to be perfectly fine since, up until today, the secondary market was going up as well. Where you need to be careful now is when they increase price although the secondary market goes the other way (if colliers/UBS/etc are right). It is quite likely they do it, because they don't want to piss off early buyers, and it's about maintaining the narrative that the pinoy RE market is buoyant, the project is hot and you're lucky to get a piece of it. So your condo that you buy today will likely appreciate in value based on a price that is set solely by ayala at any given time. But you will never ever be able to cash that profit in because ALI does not allow you to sell it before turnover and if you sell it back to ALI, they take it back at the original price -20% haircut (ouch). So basically the illusion continues until turnover when you really need to find someone who will pay the price – and that can be tricky.

2. In the secondary market prices are set by supply and demand, and it’s only here that you will get the benefits of having oversupply. Interestingly enough there are many units offered at high prices but when you look how long the add is online you notice that it’s been there for 12-18months.. Many Filipinos will stubornly wait for 2y until someone pays the price. The ones one needs to look out for are those who can’t afford their unit anymore and need to sell. That’s where real price discovery is made. If you are patient you will be able to find great deals out there with less headaches than with a pre-selling unit.

I will close this with a quote: „Bull markets are born on pessimism, grown on scepticism, mature on optimism and die on euphoria“ (John Templeton). I know it’s hard to fight the current narrative of „prices only go up and you will miss out if you don’t invest NOW“. This overconfidence comes also with the fact that 90% of salesmen are young and have never ever seen the market go down in their whole career. As an example, I really have to fight the temptation myself: I’m 28 and from the first day i started working on the trading floor i only heard and experienced that central banks dictate all market outcomes. My generation is brainwashed for 7years now and the result is a $10 trillion asset class of negative rate sovereign bonds which is entirely based on the „common knowledge“ that there is no limit to the greater foolishness of Central Banks. If this Narrative fails we will see the mother of all rotations – but that's a way bigger issue than the pinoy RE market and I’m now totally off topic .
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Old July 10th, 2016, 04:31 PM   #99
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Thanks MDS for the inputs. You are right about watching out for a unit from the secondary market. I was thinking of acquiring an RFO or an old but spacious condo in Makati but had to settle with a pre sell since I lacked the funds to pay in full. What sold me to purchase a pre sell is that it is payable until turnover date without interest ��
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Old July 10th, 2016, 06:35 PM   #100
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"it is payable until turnover date without interest"

I read comments like that and I scratch my head a bit in puzzlement.
Why would anyone pay interest for something prior to turnover?
Presumably, you are buying for own use, or as an investment to rent out. You cannot use or rent out a property until it is turned over and you have the keys. Someone else (the seller) still has possession and use potential. So why would anyone in presence of mind pay any interest?? When I hear agents make silly statements like that, I want to shout aloud.
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