Can tourism-focused real estate help the Philippine property market rebound?

It feels a bit odd talking about tourism-focused real estate when most visitors are unable to travel to the Philippines at the moment. However, it can be an important driver of a Philippine property market rebound once the situation returns to normal.

Philippine Department of Tourism (DOT) data showed there were 8.26 million foreign arrivals in 2019, more than a 15 percent increase from the previous year. That number is dwarfed by the country’s regional peers. In 2019, Indonesia recorded roughly 16 million international arrivals, Malaysia welcomed more than 26 million tourists, Vietnam received an estimated 19 million visitors and Thailand surpassed 40 million arrivals.

So, what gives?

It has nothing to do with a lack of interesting destinations. Tourists who visit the Philippines almost always praise the country’s warm hospitality and beautiful scenery. Arrival numbers elsewhere in Southeast Asia are buoyed by inter-region travel, something not seen in the Philippines due to its isolated location.

But this isn’t really a huge issue, especially as it relates to tourism-focused real estate. Apart from some demand from Singapore, there isn’t a lot of intra-regional property buying. The bulk of tourist arrivals to the Philippines in 2019 came from China, South Korea, USA, Japan, and Australia.

Tapping into the retirement market could also benefit the country. The Philippines has one of the best retirement visas available in Southeast Asia. This could help it attract more long-stay visitors.

On the domestic front, an additional 60 million trips are made by locals each year, an important figure to note. This means there is a large base of both international and domestic property buyers who will likely return to the country’s popular tourist destinations once the COVID-19 situation has improved.

Being ready to tap into this market and deliver tourism-focused real estate could be a catalyst in a Philippine property market rebound. Of course, it is also much easier said than done.

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Why does the Philippines need to develop tourism-focused real estate?

What’s holding the Philippines back?

According to the Philippine Statistics Authority (PSA), tourism accounted for 12.7 percent of the country’s GDP in 2019, up from 5.6 percent in 2000. Both government and private sector investment in the tourism sector has grown as well.

The PSA found that private investment rose by an average of 19.3 percent annually between 2010 and 2019. Government investment in tourism infrastructure and other related fields increased by 4.6 percent on average from 2012 to 2019.

This is good, but not nearly enough. While tourism infrastructure has improved in some parts of the Philippines, such as Cebu and Puerto Princesa, more work is needed to make the country a viable destination for real estate investors.

Apart from improving infrastructure, developers must be more in tune with the needs of tourism-focused real estate buyers. There are a few companies getting it right (we will get to those a little later in the article) but too many firms aren’t being innovative when launching new projects in tourist destinations.

Looking at tourism-focused real estate success in Southeast Asia

Developers in the Philippines don’t have to look far to find tourism-focused real estate success stories. Bali has been attracting foreign property investors for decades in spite of complex laws that prevent freehold ownership. Having a first mover advantage has helped the island with homebuilders and agents now boast decades of experience in helping property buyers.

In Thailand, the rise of the condotel helped attract a new wave of property buyers who can enjoy the best of both worlds–investment returns and a holiday home. If you are unfamiliar with the condotel concept, it is a project sold similar to a pre-selling condominium but operated like a hotel.

The main difference between most condotels in the Philippines and ones in Thailand’s tourist areas is management. Thai homebuilders are partnering with well-known, 4- and 5-star hotel brands to manage their condotels. These are more attractive to buyers since they trust the brand and are more popular with guests ensuring strong rental returns. In the Philippines, many developers try to manage the property themselves which can be off-putting to potential investors.

Tourism-focused real estate in Vietnam has taken off during the past five years despite foreign buyers being unable to access this market. Driven entirely by domestic demand, developers here have been able to take advantage of the country’s rapidly growing tourism sector. Similar to Thailand, most projects are condotels or other properties that provide on-site management for investors.

If tourism-focused real estate in the Philippines is going to grow, developers need to understand what property seekers are after. Most require a hands-free investment being operated by a hotel brand they trust. They also like having the option to stay at the property for a week or two every year. This is something a handful of real estate developers in the Philippines have adapted to.

Early movers

Grand Land tourism-focused real estate
Grand Land is leading the tourism-focused real estate efforts in Cebu

While there hasn’t been a lot of activity when it comes to tourism-focused real estate in the Philippines, a few developers have recognized the potential of the sector. In Cebu, Grand Land has been at the forefront. The Grand Tower, a mixed-use project containing the Dusit Princess Cebu, was one of the region’s first condotels targeting users/investors.

The project will be operated as a hotel with unit owners sharing net room revenue. Additionally, they are entitled to stay at the property 15 days each year. Dusit Princess Cebu proved to be popular among both local and international investors which saw it quickly sell out. Construction is ongoing and the development remains on schedule.

The Chancellor Hotel from Global-Estate Resorts, Inc, a subsidiary of Megaworld, is another tourism-focused real estate project making waves in the country. Located in Boracay, this condotel is perhaps the most ambitious to date. It allows property buyers a chance to invest in one of the country’s most popular destinations.

Can tourism-focused real estate help the Philippine property market rebound?

It’s important not to get carried away about what type of impact this can have. Tourism-focused real estate can help the Philippine property market rebound, but it is only one part of a larger equation.

Ultimately, this sector serves as a link between the property and tourism industries that can elevate both. Tourism-focused real estate in the Philippines won’t single-handily turn things around. However, it could help the Philippine property market reach new heights once the current situation has passed.

Developers may think demand isn’t there, but this seems like a miscalculation. Overseas buyers are already active in places like Cebu, but there are many more on the sidelines waiting for condotel projects that provide a hands-free form of investment.

There is likely to be greater demand for tourism-focused real estate from both domestic buyers and OFWs. That is because it ticks a lot of boxes in terms of what they are looking for. The potential for returns is good, there is no need to worry about management and it doubles as a holiday property.

That being said, it is necessary to mention the risk which we are living through now. Another global pandemic would harm tourism-focused real estate more than traditional properties. Both developers and investors will be keenly aware of that.

If you look at some of Southeast Asia’s other tourism destinations, you’ll see the property markets bounced back here faster than urban locations. Both Bali and Phuket have overcome catastrophic events to maintain their upward momentum.

At the very least, it won’t hurt the property sector to consider tourism-focused real estate moving forward. As we have seen elsewhere in the world, doing so may benefit everyone.

lifted from: DOT PROPERTY

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Residential demand in Cebu is likely to pick up this year

Residential demand in Cebu is expected to increase this year with lower real estate prices and key infrastructure projects driving the market forward. The city has been the preferred investment destination outside of Metro Manila and that trend will continue in 2021.

“Colliers projects a potential rebound in residential demand in 2021 (in Cebu) and thus sees a faster pace of price increase from 2021 to 2022 to reflect a stronger residential market,” Joey Bondoc, Colliers Philippines Senior Research Manager explained to the Philippine News Agency.

He continued, “The residential sector of the area is at a discount as compared to projects located within the country’s capital. The proliferation of both local and national developers in Cebu has raised land and property values.”

Research from Colliers Philippines found that new project launches and take up both fell in 2020 due to the COVID-19 pandemic. However, the consultancy believes both will recover this year on the back of strong residential demand in Cebu.

What’s driving residential demand in Cebu?

Two key factors have been responsible for driving residential demand in Cebu over the past ten years. Firstly, home prices are significantly less than those in Metro Manila which is appealing to buyers. Secondly, a number of infrastructure projects will improve the region’s connectivity and boost property prices in the future.

“Over the past few years, we have observed the transformation of Cebu’s skyline with large-scale residential, commercial, retail and hotel developments. The property boom in Cebu offers an alternative metropolitan-paced business lifestyle at a discount to Metro Manila,” Bondoc stated.

Several key infrastructure projects remain in the pipeline and these could support the growth of the Cebu and Davao property markets. In Cebu, the Cebu-Cordova expressway, Cebu bus rapid transit, Cebu monorail, and Metro Cebu expressway are a few of the possible improvements.

(c) https://www.dotproperty.com.ph/blog/residential-demand-in-cebu-likely-pick-year

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4 things OFWs need to know before buying property

There are still overseas foreign workers (OFWs) are buying property, although the number is less than it had been in previous years. Attractive investment returns coupled with affordable real estate prices in the Philippines have seen OFWs become increasingly active in the country’s property market. And with prices falling and discounts widely available, OFWs with cash in hand may be able to take advantage of some favorable deals.

However, preparing for the property buying process isn’t always easy if you’re an OFW. Burning vacation days flying home to search for and purchase a property isn’t ideal. That is valuable time you could be spending with friends and family. But if you’re prepared, buying real estate in the Philippines from overseas doesn’t have to be troublesome. Here are five things OFWs need to know before buying property.

1) Start your search

If you are living outside the Philippines, there are a number of websites where you can search for properties back home. For example, Dot Property Philippines – the very website you’re on – has the country’s best selection of real estate spanning the entire country. You can search for a property based on your budget, location and multiple other factors making easier to find the right condo or house no matter where in the world you happen to be.

2) Pick the right seller

These days, some property developers and real estate agents specialize in working with OFWs. If you want a smooth process, it is best to find one of these sellers. Not only can they advise you on common issues OFWs must deal with, but they may also be able to facilitate a deal that doesn’t require to be in the Philippines.

3) Get your documents ready

Don’t procrastinate getting all the necessary paperwork ready. If you want to buy a property, you will need to have all of these documents:

  • Signed and consularized Special Power of Attorney (SPA)
  • Photocopy of important IDs (passport, driver’s licenses, etc.)
  • Proof of billing of utility bills
  • Proof of income
  • Tax Identification Number (TIN)
  • Certificate of employment

4) Understand how the property will generate income

Chances are, you want your property to generate income while you are overseas. Maybe you are planning to have family live there and this isn’t a concern for you. But if that isn’t the plan, someone will have to manage your property in order for it the generate rental income. It’s important to understand how this will work before you buy.

A number of condo developers now offer property management services meaning they will find someone to rent your unit and take care of it for a percentage of the revenue generated. Alternatively, the are several companies who can do this as well. Whatever you decide, make sure you have done your research ahead of time to ensure you aren’t stuck with an empty property.

lifted from: https://www.dotproperty.com.ph/blog/4-things-ofws-need-know-buying-property?utm_source=ActiveCampaign&utm_medium=email&utm_content=4+Things+OFWs+Need+To+Know+Before+Buying+Property&utm_campaign=DP+Philippines+Newsletter+24FEB2021&vgo_ee=jwsNAJBEZx3iDwqabbNmVdSYFmrMikCwlKFARSZoYAo%3D

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4 Tips to help you get the Best Price during real estate negotiations

Getting the best price during real estate negotiations doesn’t have to be a painful process. In fact, it can be a very hands-off affair if you hire the right real estate agent. The key is knowing what to do and when to do it.

There are two important things you should note. First, don’t take things personally. This is about getting the best price during real estate negotiations, not making new friends. Second, you should have an idea of what is acceptable regarding terms before starting any negotiation. This will ensure you can reach a positive result.

Tips to help you get the best price during real estate negotiations

1) Let your real estate agent do the heavy lifting

Unless you like negotiations or are good at them, you don’t really need to be involved with much of this process. Your real estate agent is more than capable of fighting to get you the best possible deal. A lot of buyers end up costing themselves money by being in the room. That’s because they either give away just how much they like the property or are afraid to drive hard bargain.

2) Respond quickly

If a seller names a price or gets back to you with a counteroffer, respond as soon as possible. The more time you take allows them to field other offers from potential buyers. You don’t need to get back to them right away, but you can lose the upper hand in a negotiation if it takes weeks to respond.

3) Don’t put all your eggs in one basket

You have no idea how negotiations will play out. It is vital you keep your options open or at least appear to be doing so. Failing to do this allows the seller to negotiate from a position of strength since you don’t have any backup plans.

4) Walk away and let the seller come back to you

If you really want to get the best price during real estate negotiations, sometimes it pays to walk away. If the process has reached a standstill where no progress is being made on a deal, stepping away from the table may be a way to break the deadlock.

This is risky and it is a strategy you need to discuss with your real estate agent beforehand. Some sellers may not come back, especially if they have other offers out there. However, those serious about selling and without other buyers will likely return willing to negotiate.

lifted from: https://www.dotproperty.com.ph/blog/4-tips-help-get-best-price-real-estate-negotiations?utm_source=ActiveCampaign&utm_medium=email&utm_content=4+Tips+To+Help+You+Get+The+Best+Price+During+Real+Estate+Negotiations&utm_campaign=DP+Philippines+Newsletter+24MAR2021&vgo_ee=jwsNAJBEZx3iDwqabbNmVdSYFmrMikCwlKFARSZoYAo%3D

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Why Real Estate Is The Best Investment For Retiring OFWs

by Silingan, a Primary Homes blog

Being an Overseas Filipino Worker is not easy. It takes a lot of sacrifices and you can only imagine how difficult it must be to work in a foreign land away from your loved ones. OFWs endure the loneliness and hardships just to give their families a better future.

As the years go by, you realize that you cannot be an OFW forever. You eventually want to rest and retire but of course, you need to make sure you have enough funds to do this. Saving is most people do but is it enough? Here are the reasons why investing in real estate is the best way to go:

  1. Real estate is a safe investment. The value of land always keeps appreciating. With the volatility of the stock market these days, you would want to invest your money into something that is tangible and real.
  2. Can be used as leverage. Say there is an emergency and you need to get a loan as soon as possible. Owning a property means you can use it as leverage to get a loan. Lenders usually check your credit history, income, debt, and credit score to verify if you could pay back the money you loaned. By owning a property, you can secure the loan by having your property as collateral so that you can surely get that loan approved.
  3. Can be monetized. You can earn a passive income by having your property rented. Many applications in this digital world can help you earn money by allowing guests to stay in your place for a limited period of time. This is perfect because you can still use your place any time but if when nobody is using it, at least there’s money that goes in which you working extra hard to make it happen.
  4. You can use it. You don’t need to worry if you too tired to go home after a long day with the kids. By owning a property in a prime location, you can rest easy knowing that you are not wasting your precious time being stuck in traffic on your way home!
  5. Legacy Investment. Real estate is one of the common things passed down from generation to generation. Bypassing it on to your kids you can assure them that no matter what happens in life whether the economy is booming or not, they will be assured that there will always be roofs on their heads and they have a place to call home.

The original article is lifted from this site, all credits are yours: https://silingan.com.ph/why-real-estate-is-the-best-investment-for-retiring-ofws/

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