To live in or to invest in a house, that is the OF question

The conditions are right, if one asks online property portal Lamudi. In its 2015 research report using data from its Q2 2014 to Q1 2015 onsite search, the results of a 2015 survey involving real estate professionals and the site’s users, and its listings data, 11 key findings were revealed, including the conclusion that Filipinos in general were optimistic about home owning, and the real estate professionals’ observations for 2016 were bullish.

Lamudi’s survey showed that 79.6 percent of respondents said they’re looking to move house in the future. An overwhelming 94.86 percent were searching for houses, while 2.42 percent were looking for condominiums, and 1.21 percent for townhouses. Thirty-six percent of real estate professionals who responded in the survey said that banks’ more stringent housing loan approval would have little to moderate effect on the housing market, specifically on the buyer side.

In addition, 51 and 53 percent of property professionals surveyed said that the political climate and economic uncertainty would have minimal effects on the housing market. The survey also revealed that 79.57 percent of respondents used the Internet (property websites, social media sites, etc) as their starting point for a property search.

Inquirer Property asked experts what they would advise overseas-based Filipinos (OFs) who are seeking to buy property in the Philippines: Should they buy to invest, or to live in in the future?

No to speculation

Claro dG. Cordero Jr., Jones Lang LaSalle Philippines’ associate director and head for research, consulting and valuation, said: “At this point, I would advise OFs to buy property for their future home rather than for investments. Property speculation is also not healthy when we foresee a correction in the property cycle horizon. There are more than 150,000 residential condominium units that are still to be completed in the next four years and this will likely increase vacancy rates. This will cause a relatively slow growth in rental rates and capital values which will result in flat movement of yield rates.”

Cordero added: “OFs should also buy property for future homes rather than for investment because they often relegate the leasing administration to their relatives here in the Philippines who do not have the market knowledge to perform such tasks. This will often lead to higher risks and financial exposure—e.g., poor maintenance and mismanagement.”

Nontraditional options

On the other hand, Monique Cornelio Pronove, CEO of Pronove Tai International Property Consultants, advised: “One should never be attached to property. They should make their properties work for them by deriving income from these particularly since they are over
Pronove added: “There are many ‘disruptive’ mediums nowadays to meet the overseas Filipinos’ desire to derive rental income and be able to live in their flats (condo units) whenever they wish to come visit short term such as including their units in the developers pool of ‘serviced apartments’ and time sharing. OFs should explore these nontraditional options now available to them and make that a deciding factor when they choose which development and developer to buy from.”

Enrique M. Soriano III, Ateneo program director for real estate and senior adviser for Wong+Bernstein Business, said that “it depends on what the set of needs are and which of those needs (investing or personal use) should be prioritized.”

Soriano stressed: “Personally, I strongly encourage OFs to focus first on what they are familiar with. Real estate investing is a high-risk and high-return business, but it also involves the whole gamut of purchasing, owning, managing, buying and selling, fixer/upper or improvement of a property.

So, those with money to invest must be very clear on a set of objectives. Is it purely rental income or passive income or is it an active buy and sell activity? Again, it pays to be educated as each mode requires varying forms of cash investment and a commitment on time.”

He added: “If Pinoys are contemplating on their retirement in the next five years, then my advice is to acquire real estate geared toward passive income e.g. property leasing. Depending on the investment option, real estate is also a high cash-flow-dependent business. So, by exhibiting prudence and familiarity with the different investment models, plus a set or allocated fund when done right, can truly be a worthwhile financially rewarding revenue stream.”

OFs and OCWs

Alejandro S. Mañalac, former National Real Estate Association chair and ThinkInvest chief adviser, said: “For our overseas contract workers (OCWs), first homes will always be their priority. It is everybody’s dream to someday have their very own home no matter how small it is.”

Mañalac added: “For permanent residents of foreign host countries, yes, I would strongly advise them to have an investment here in the country even if they do not have any plans of coming back here in the near future. Right now, even foreigners who have not been to the Philippines before are investing here because of the great potential that they are seeing in our country, Filipinos abroad should also take a closer look at these opportunities.”