Analyst cautions real estate newbies

CEBU, Philippines - While it seems that Cebu’s real estate sector will remain upbeat until the next few years, entrepreneurs were however warned to take caution as this complicated business is not for the greenhorns.

Real estate analyst and professor of marketing cluster at the Ateneo Graduate School of Business Enrique M. Soriano III made this warning as there is a noticeably growing number of new entrants in the real estate industry who don’t have enough know-how to commit themselves to a business such as the property sector.

Soriano said first timers in the real estate business are more likely to fail and lose their investments especially if expert consultations and feasibility studies are taken for granted prior to entering the business.

Soriano, who is also an advisor of the Wong and Bernstern Advisory Group for Asia and Western Europe, said that it takes years and experience to be successful in the real estate development business. Those who have already etched a track record in real estate are the ones more likely to reap profits from this booming sector.

“I’ve seen developers failed in the management side, because it’s not their forte,” said Soriano who was in Cebu Tuesday to brief clients and prospective buyers of real estate products in Cebu, hosted by Worldwide Central Properties Inc., the developer of Sundance Residences in Banawa area, this City.

A group of wealthy and landed friends and first timers in the real estate development sector or what the industry dubbed as “greenhorns” should re-think and plan carefully if they plan to enter into the real estate development business.

Because of the popularity and the tempting business opportunities offered by the property sector, with demand now skyrocketing in both residential and commercial developments, Soriano reiterated the importance of commitment and deep immersion to the complexities of the business before pouring millions or billions of pesos in investments.

In the end, it’s not only the companies that will lose money, but the market will also suffer from the failure of some developers to continue with their services to buyers if things get more complicated.

Likewise, Soriano also cautions the existing developers to be mindful of their price points, as some are over pricing their products which could not be good for both industry players as a whole and the market.

He said Cebu is now one of the hottest destinations for real estate investments, in fact almost all giant developers from Manila have already made its presence here except for Lucio Tan’s real estate arm Eton Properties, all real estate conglomerates are already in Cebu.

As the market continues to grow, so with the competition among the developers, Soriano warned that the key factor for developers to stay on profitable level is to find their “niche” in the market, as this is considered as one of the most powerful “value” propositions that gravitates the market to the product.

Because of the lack of property available, with very demanding market, Soriano said more joint ventures by developers is expected, although this trend is not new to the country’s real estate sector.

Recently, Ayala Land Inc., and AboitizLand Inc., announced their partnership in developing a mixed use project at the north reclamation area in Mandaue City. — (FREEMAN)