What a year 2013 was for the Philippines! Credit-rating upgrades from the world’s major rating agencies, record-breaking economic growth, newfound reputation for transparency, and scores of new projects unveiled by the country’s top developers. The year was also marred by a couple of natural calamities, which I’m sure will test how better we have become when it comes to rehabilitation and rebuilding.
It cannot be denied that the real estate industry has contributed immensely to our economic growth. Buoyed by healthy sales, the industry’s optimistic outlook will continue to 2014, unless a significant economic shock affects the Philippines, says Ateneo Graduate School professor Enrique Soriano III. “It’s safe to say that the industry’s direction is shifting, which is a good thing, and developers, whether they like it or not, should heed what their customers are clamoring for.”
And the industry won’t be doing itself a favor if it gets complacent. Booms don’t last forever and many experts now agree that the Philippine market is headed for a slowdown. The industry’s stakeholders then should get creative to sustain healthy growth, and we at ZipMatch offer a few pieces of advice we hope will be useful to those who work for the industry.
1. For Developers, Product Quality and After-Sales Services Matter Greatly
Say one real estate developer after exerting all effort managed to deliver its product on time. Customers were so happy they right away started occupying the condominium; others rented them out. Seems like a success story, right? Except that the developer’s job doesn’t end here.
Buyers should ask: Did the developer deliver a quality product that will keep its customers happy, not to mention safe? How about the company’s property management? Is it up to the task of keeping tenants satisfied?
We all have heard tales of ceilings collapsing (horrors!), doorknobs falling off, and clueless property managers telling a tenant to arrange her own Internet installation (the last one is supposed to be an upscale condo), and we all know that after-sales service in the Philippines sucks, but there are property developers that take this to an exasperatingly whole new level.
According to Prof. Soriano, if developers plan on staying profitable, they should take a hard look at how they do business. Gone are the days when condos are an alien concept to most Filipinos. Now, for example, most Filipinos know why they need to pay exorbitant condo dues, that’s why they want the master bedroom’s ceiling fixed or the door’s lock replaced—right now.
2. For Developers, Customers Are Now Well Informed and Educated
For years many Filipinos are blissfully ignorant of the concept of real estate investing. However, in the advent of the Internet (not to mention Filipinos nowadays have greater spending power), many are now informed and educated and they’re using this newfound knowledge to choose properties wisely. This may mean sales dips for some developers, but otherwise just a minor correction in the market. (Some may even go as far as blame the economy for poor sales when in fact low-quality products are causing their sales to plummet.) Lesson for developers? Don’t take advantage of customers’ inexperience for they will eventually come back with a vengeance (and won’t buy from you).
3. For Investors, Condos Make More Sense if You’re Buying a For-Rent Property
They say that the daytime populations of Metro Manila’s CBDs are 11 times higher than their nighttime populations. The main challenge for our policy-makers then is to find an efficient way to shuttle them from the CBDs to their places of residence; however, this creates an epic vehicular traffic in the metro’s main thoroughfares.
One way to ease this problem is to make available condo properties at reasonable rental rates to provide this army of office workers homes close to their places of work. Many office workers are now discovering the convenience of not having to commute to work every day, and a good number of projects now specifically target this market segment. As an investor, a portfolio of for-rent, small condo units near the CBDs makes for an attractive option.
4. For Investors, A Developer’s Reputation Matters a Great Deal
Ready-for-occupancy properties, although pricier, are pretty much a straightforward deal: what you see is what you’ll be getting. Preselling or off-plan properties are a bit riskier, as you’re purchasing nothing more than a plan and you’re basing your decision to the real estate salesperson’s people skills and the developer’s swanky showroom. This is why choosing the right developer, based on its reputation, matters a great deal. If you’re unsure, research on the developer’s track record. Does it have a reputation for not delivering condos on time? How about quality? Ask around, especially those who have already bought properties. Online forums also make for a good ground from where you start your digging.
5. For Sellers, Listen to Your Broker’s Advice
Planning to sell your property? You’re not alone. It’s a buyer’s market out there and people are looking for the best deals. You may think that your house or condo unit is special, but so do other sellers think of theirs. If you plan to get the best from a property sale, better listen to broker’ advice. And start with a reasonable price for your property.
“Often many sellers think they can overvalue their property and get away with it,” says Tantelly de Guzman, a seasoned real estate broker and national president of the Real Estate Brokers Association of the Philippines (REBAP). “Although we cannot blame them for wanting to profit from their investment, it’s also our job as brokers to educate them.” Brokers will do well, for instance, to educate their clients about the concepts of fair market value and zonal value and how these affect a property’s selling price.
6. For Sellers, Set a Realistic Timeframe
Although in a really dire situation a seller must get his property sold at the soonest possible time, this doesn’t always turn out favorably for him, at least when it comes to the price the property will be sold for. According to de Guzman, a reasonable timeframe is four to five months, depending on the property’s location, type, and other factors. This will allow the broker enough time to plan a marketing strategy, list the property, screen inquiries, schedule viewings, and negotiate in the seller’s behalf.
7. For Brokers, a Properly Executed Listing Will Go a Long Way
Many of us have encountered property listings that have nothing more than a single photograph and very general description (e.g., 2BR w/ T&B condo 5 mins from Makati CBD). Granted it’s too much to ask brokers to publish listings’ complete addresses (for fear that their listings will get poached by other brokers—yes, it happens), a detailed description of the property’s best attributes accompanied by nice photos won’t hurt. After all, property buyers are naturally drawn to beautiful photographs, and are turned off by poorly executed, vaguely worded property listings.
8. For Brokers, Traditional Practice Works, But Not for Long
Traditional marketing has worked in the past (and still does), but it doesn’t mean that it will continue to do so for eternity. Why, you may ask. This is because most homebuyers now start house hunting online. In fact, statistics from the U.S.-based National Association of Realtors (NAR) show that a staggering 90 percent of American homebuyers source their information online, and it’s safe to say that Filipinos aren’t far behind (we are, after all, world’s leader in social media usage). This only shows how powerful the Internet is in generating leads.
