Default payments in real estate investments on the rise

MANILA, Philippines - The financial crisis has increased the number of default payments in real estate investments like condominium units and house and lots, property developer Extraordinary Group said.

In an interview, Extraordinary Group president Victor H. Manarang said the crisis has accelerated the increase in the number of defaults.

Manarang explained that the default rates have a cycle. There are times that it increases. For the past years, the good economy has pulled down the default rate but the financial crisis has accelerated the increase in the number of defaulting buyers.

Manarang said they are still cautiously optimistic on the prospects of the real estate industry.

On the positive side, he said cancellation rates are expected to be better this year when compared to last year.

“We have more stable buyers than our competitors,” he said. This is because they did not focus on one particular segment of the market.

Manarang reported that despite of the slowdown in the global economy, they expect sales to remain flat or the same as the P2.4 billion it posted last year.

“The performance for the first quarter supports this target,” Manarang noted. In terms of sales volume, he said they will be down by 15 percent to 20 percent but this will be offset by the development of new projects.

Earlier, they announced they will be investing P2 billion this year for the development of subdivision projects in Imus and Dasmarinas Cavite. Manarang said they will be building low cost mass housing project.

According to Manarang, the improvement of the Daang Hari extension project has paved the way for the development of subdivisions in that area. He said this can improve the accessibility of the area making the project more viable.

The houses are for lower to middle income families with house and lots starting at P600,000.

Meanwhile, the group has relaunched its Jubilation NewBinan project yesterday. The P5-billion project is already 70 percent sold and half of it has already been occupied.

Manarang said they were able to sell most of the subdivisions that they have already opened within the area.