Overseas Filipinos still long to buy real estate this holiday season
The season of giving is approaching. In the property sector, will there be a season for buying, particularly for overseas Filipinos (OFs)?
Property analysts from CBRE Philippines and Jones Lang LaSalle are unanimous in saying that a buying trend is most likely to happen.
CBRE discloses that the accounts of some sales associates for developers have historically gone up during the holiday season, the time when holiday bonuses are released and a number of OFs come home to their families and loved ones.
Claro dG. Cordero Jr., head of research, consulting and valuation of Jones Lang LaSalle Philippines, said this increased spending is expected as remittances from OFs traditionally peak during the last quarter of the year. Property purchases, especially residential developments, go the same direction during this period.
Enrique Soriano, Ateneo program director for real estate and senior adviser for Wong+Bernstein Business, also said overseas money allotted for home purchase are remitted at yearend or during the beginning of the year. By this time OFs would have saved up sufficient equity—representing their downpayment—for their first homes.
“However, we have also seen the inflow of new OF money slowing since the global financial crisis. The average annual growth of remittances was only 6.9 percent from 2009 to 2013, compared to 16.8 percent annually from 2004 to 2009. Based on our monitoring, and validated by World Bank, the slowdown in remittances is primarily due to most OFs having owned homes already, political uncertainties in host countries, and the growth slowdown in advanced economies,” Soriano said.
Cordero agrees with Soriano’s observation.
“On the other hand, I think the slowdown in purchases by OFs may be partially offset by the ramp-up in demand from other overseas sources, such as investors from these advanced economies who are looking for more stable yields, which are not existing in their home countries,” Cordero said.
Still, there’s no stopping the growth of the Christmas “money tree.”
Cordero said, “There are more property purchases at the end of the year when OFs come home as sales deals normally happen as soon as the buyers (led by the returning OFs) are able to confirm or have performed oculars of the property they are buying.”
CBRE said some balikbayans and other OFs home for the holidays still visit residential developments for possible acquisitions. “Common among these groups is the availability of their extra spending cash during this time of the year, some of which is set aside for the downpayment or reservation for a residential unit. There have been some stories wherein the monthly quotas of these sales associates were met in a single day during the holiday season.”
Soriano said that being more than just seasonal, residential property purchases usually experience “cyclical fluctuations.”
Soriano observed: “The purchasing pattern slows mid-year, as priority payments such as education and repairs take center stage. The cycle then accelerates toward the yearend when overseas money meant for real estate purchase finds its way into the system. It is important to note that OFs account for a third of residential purchases, effectively making the Philippines a remittance economy.”
Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.