Phl real estate bubble looms says economist

CEBU, Philippines - A real estate bubble is bound to happen if developers continue to build residential units and subdivisions that no longer align with the real market demand, an economist projected. While the sector is still enjoying the “best” performance in the recent years, economist Winston Conrad B. Padajinog, senior economist and Dean of the school of management at the University of Asia & the Pacific (UA&P), warned that the real estate industry in the country is now hitting over-production of middle to high-end products, which is not solving the country’s problem of housing supply shortage.

Padajinog said that amid the “real estate boom,” the Philippines is still suffering from housing backlog, while the socialized or low-end demand is left behind with no choices being offered.

“Although, the bubble is still yet to happen may be in the long term, there is a need for developers to shift their interest in providing residential products, and re-focus to the strong demand for socialized and affordable housing developments,” he said.

What is happening now, he described is developers are supplying the market that does not need housing, but merely for investments, second home, and even for gifts.

“The market is leading towards glut, if we are not to address the multiple needs across the real estate market segment,” he said.

Likewise, Padajinog urged the banks to open its doors to lending the mainstream market segment—those that can afford to borrow an average of P3 million residential loans.

Padajinog emphasized that both developers and banking institutions are now overly biased in opening their doors to the middle to high-end consumer based in the real estate sector.

With the favorable interest rate environment, many monthly income-earners can afford to get financing from banks, not necessarily from Pag-ibig.

He said there is a growing number consumer base now that still need to own residential units, but are left with no choice, because what developers are building are units that are much expensive for the middle-low income earners to purchase.

“People are buying units not out of need but out of other purposes, like convenience, investments, and these are prone to speculations,” he said adding that there is a need for developers to be educated of the market movement now, and the critical market or the growing underserved market those that can afford to purchase houses worth from P100 thousand to P3 million are ignored.

In Cebu alone, record shows that there are at least 200 thousand consumer base who are needing housing units priced between P100 thousand to P3 million. This particular market base can be tapped by developers, although building economic housing developments both for horizontal and medium-rise building is not as profitable as building units for the middle to higher markets.

Padajinog’s impression on the real estate sector, is also confirmed by industry player, real estate broker Anthony Leuterio, saying that Cebu is now suffering from shortage of middle-range to economic housing products.

Leuterio, who is the president of the Philippine Allied Chamber of Real Estate Brokers and Licensed Salesman (PhilAcre) confirmed that the huge segment of buyers now are demanding for house and lot products, or residential units that are priced between P1 million to P2.8 million.

“We hope developers will be able to introduce more affordable residential package to the market. We are running out of options,” Leuterio said. (FREEMAN)