7 Steps to Follow When Property Hunting

Regardless of what reasons you are buying a property, it is very important not to miss out on  your investment objective. Sharing with you an article below on ways to follow when property hunting that can result to profitable investment.- Icel

The optimism about the real estate sector’s prospects in 2016 is backed up by the results of stress tests conducted early this year by the Banko Stentral ng Pilipinas (BSP), which declared that there are no signs of property bubble in the Philippines.

“There may be some locations that have more than enough supply of residential units and may take a few years to have these absorbed by actual occupants,” acknowledged Andy Manalac, former chairman of the president and Chairman of the National Real Estate Association (NREA). “But there are still a lot of areas not only in Metro Manila, but actually all over the country, that present a lot of potential.”

Manalac, one of the most active local executives in the field of real estate sales and marketing, said he is optimistic despite persistent predictions of some economic experts about the impending glut in the residential property section of the industry.

image

Location, location, location. Check out the surroundings, and ask about existing, planned, or ongoing developments in the area. New economic agenda. The ostensible plans of the Duterte government to relax restrictions to foreign ownership rules and limits to land lease would encourage investors, and open the economy up to strategic industries, bring in capital in public utilities and other infrastructure. This would augur well to the growing local real estate industry, said KMC head of research Antton Nordberg (shown in photo below with VP for marketing services Yves Luethi.

The optimism about the real estate sector’s prospects in 2016 is backed up by the results of stress tests conducted early this year by the Banko Stentral ng Pilipinas (BSP), which declared that there are no signs of property bubble in the Philippines.

“There may be some locations that have more than enough supply of residential units and may take a few years to have these absorbed by actual occupants,” acknowledged Andy Manalac, former chairman of the president and Chairman of the National Real Estate Association (NREA). “But there are still a lot of areas not only in Metro Manila, but actually all over the country, that present a lot of potential.”

Manalac, one of the most active local executives in the field of real estate sales and marketing, said he is optimistic despite persistent predictions of some economic experts about the impending glut in the residential property section of the industry.

Location, location, location. Check out the surroundings, and ask about existing, planned, or ongoing developments in the area.
New economic agenda. The ostensible plans of the Duterte government to relax restrictions to foreign ownership rules and limits to land lease would encourage investors, and open the economy up to strategic industries, bring in capital in public utilities and other infrastructure. This would augur well to the growing local real estate industry, said KMC head of research Antton Nordberg (shown in photo below with VP for marketing services Yves Luethi.

“Investors are starting to realize that the actively growing market for tenants to lease their units are the BPO workers, and no longer limited to the expats, although the latter are still the ones patronizing the high-end and luxury condominium projects,” he said.

Investment opportunities galore

Other industry experts said that the government’s boost in infrastructure spending and countryside development opens more opportunities for Philippine real estate, as infrastructure eases the costs of logistics for industrial firms.

“The industrial and manufacturing sectors have been dormant for a long time, but it looks like it could finally be on the rise,” said Michael McCullough, co-founder and managing director of KMC Savills.

In an industry briefing held last week, McCullough pointed out that some 60 percent of FDI applications over the past five years “have been directed in the manufacturing sector, and we believe that this high interest will continue given the new administration’s plans. It is, in fact, probable that the industrial sector will be the next boom.”

KMC Savills head of research Antton Nordberg agreed that the real estate industry is in a sweet spot. “The Philippines has a strategic location, a large and fast-growing market, and knowledge of English. Growth rates in the industrial segment could even double in the next years,” he said. “Office spaces will also continue to be on the rise, as we have a 40-million strong workforce and cheap labor,” he said.

“The economic agenda for the country prioritizes countryside development, infrastructure and agriculture growth, and increased government spending,” said McCullough. “The property sector is continuing its growth momentum, led by the strong office space segment in Metro Manila. The industrial sector, which has long lagged behind, is also beginning to pick up as foreign manufacturing companies show eagerness in opening up facilities in and outside of Manila.”

Rick Santos, founder, chairman of real estate advisor C.B. Richard Ellis (CBRE) Philippines supported this claim as he cited that “from Clark up north to Davao City down south, the playing field is becoming more exciting especially for the BPO sector which will sustain the momentum and drive for the coming years”

“We are very positive on the way things are going for the real estate market,” Santos said. “As we have noted before, the transformation of areas outside of the central business districts are continuously creating more investment opportunities.”

What are your reason for buying?

But Manalac warns prospective investors about missing their “investment objective” with the property they are buying.

“Everyone has a different reason for buying,” he explained. “Some may have been dreaming about having their own property for a long time while some have absolutely no plans of buying but were enticed by the beautiful collaterals, presentation videos, and the convincing power of the sales agents.”

The pitfall, Manalac said, is when buyers base their decisions on their personal preferences rather than the important factors to consider to improve their chances of having a profitable investment.

“I said ‘to improve their chances’ because just like any other investments, it will always involve a certain amount of risk. But one should always keep in mind that real estate is the only investment wherein there are no mistakes that cannot be corrected by time,” he said.

How do you improve your chances of nailing down a good investment? Look out for the following signs:

Potential of the location. Some areas look nice, fancy and fully developed. But it might also be a mature location that gives little movement in terms of appreciation. Look at the surroundings, and ask about the planned, or ongoing developments in the area.

Infrastructure projects. The area may be choked by traffic now, but this may be due to ongoing infrastructure projects like road widening, improving of drainage, new rail stations, etc.

Population of office workers. Can the type of workers in a particular location afford the rent for the project you are buying? Right now, the biggest market for tenants for affordable condominium units are the employees of BPO offices. Beware of nice projects in upscale locations, where the workers cannot afford the rent.

Cost of living of workers where project is located. While the units may be affordable especially if the tenants share the rent, the standard of living within the immediate vicinity may not be practical. A specific example of this is Bonifacio Global City (BGC) where everything seems too expensive for the typical worker.

Size of unit to match target market. If you are eyeing expatriates as your tenants, then invest in bigger-sized units ( at least 60 square meters for one bedroom units). But if you can only afford to invest in smaller units like 23-29 square meter cuts, then expect to have regular employees who are looking for affordable rent as your target tenants. If you invested in a small unit in a high end project located in an upscale location, you may also consider short term leasing, like daily or weekly at higher rates.

24 hour access to public transportation. One of the best examples for this factor is the Washington area in Buendia, Makati where you will find residential condominiums that are almost fully occupied. You will always find available transportation from pedicabs, to tricyles, to jeepneys, buses, and even PNR trains just a few steps away from your building. This area also provides the BPO workers, who are the major tenants of these condominiums, a plethora of affordable restaurants and eateries serving low-priced, but good home-cooked meals.

Property management. Ask your agent who will be managing the property after the project is turned over to the condominium corporation. Check the background of that property management company. Ask about the other projects that they are handling, and see how they maintain the properties they manage. Ask also if they offer lease management services.

Once all of above check out positively, the timing of your decision is critical.

Sometimes windows of opportunity in property-hunting do not last long. Be ready to make an immediate, but not rushed, decision.

Read More: http://thestandard.com.ph/mobile/article/214525

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s