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Real Estate Market in the Philippines

VAT News Vol.1/2001

Charlie A.V.Gorayeb <dipc@pacific.net.ph>
2001President, Chamber of Real Estate and Builders' Association (CREBA)
Vice President, ASEAN Association for Planning and Housing

1. The situation of the real estate market in Year 2000
At the start of the year 2000, the Estrada Administration was optimistic that the economy could attain its target GNP growth rate of 5.5% and GDP growth rate of 5.0%. However, adverse events confronted the nation in the year 2000 such as the persistent oil price increases, the five-month old hostage crisis in Mindanao, and until lately, the charges of graft and corruption against the President. The housing spurt that started in the late 80s up to the middle 90s has not been sustained, and is obviously now completely stalled.

Part of the blame may also be attributed to the quagmire to which our country has been thrown by the economic aberrations in the Asean region which started three years ago (However, the case of Malaysia and other neighboring countries have shown that a crisis of any magnitude may be overcome by a proper dose of political will and an appropriate mix of remedial measures).

The reality is that the Philippine economy is still in a moribund state: the shaky political situation, the peso remains unstable, prices continue to rise, purchasing power continues to sink, interest rates are again on the upsurge, business activity is aimed more at survival than growth, and with the oil price crisis gripping the world we brace ourselves for worse to come. Moreover, the shelter infrastructure has become dysfunctional. However, a thorough analysis has shown that this is not due to any conceptual or structural defect in the system, but rather spawned by inappropriate government policies.

2. The trends in the real estate market in 2001
The country's economic planning agency, the National Economic Development Authority (NEDA) targets a 5.5% GNP growth and a 5.0% GDP growth in 2001. Inflation was estimated to hover at 6.5%.

Government remains circumspect over the performance of the real estate industry in the year 2001. The rising property prices and weak purchasing power of consumers would continue to challenge the Estrada administration's aggressive efforts on its housing program. Although the demand for shelter is increasing, Filipinos would rather put their hard-earned money on goods for daily consumption. Another factor that affect spending on housing is the employers' lukewarm position on granting wage and salary adjustments.

We hope that our economy and the industries would gain headway in the year 2001. This is by allowing continuing reforms and introducing sound investment, financial and macroeconomic policies, resulting to recovery and full growth thereafter.

The direction of the economy and the industry in year 2000 can be viewed as both promising and cautious. While most industries believe that the flight towards growth and progress is likely to come, they would rather be cautious at the same time, making certain their business interests and investments would remain safe and viable.

The litmus test to which the country's economy and industry will grow shall always be the capability of government and the private sector to do their share all in building and sustaining mutual support for one another.

3. Major market niches, new innovations or lessons learnt
The real estate sector can look forward to a heightened awareness and interest in their area, owing to the much anticipated passage of House Bill 11794, "An Act Creating The Field Of Land Title", which will focus on increasing activity in the sector as well as assuage concerns regarding documentation among buyers.

Proposals had been made for the inclusion of real estate development as part of the curricula in universities and colleges, following the path of countries such as the US, Singapore and Japan that offer courses on such area.

4. The real estate appraisal industry in the Philippines
The Philippine real estate appraisal industry is made up of professionals backed by years of appraisal education and experience and are highly respected by those seeking professional opinions of value - individual property owners, investors, government agencies, corporations, the courts, and others seeking professional appraisal services.

The professional opinion of the appraiser influences the decisions of people who own, manage, sell, purchase, invest in, and lend money on the security of real estate. And because the appraiser is trained to be an impartial third party in the lending process, he serves as a vital "check in the system," protecting real estate buyers from overpaying for property as well as lenders from overlending to buyers.

In the Philippines, the services of a professional real estate appraiser covers:

* Appraisals * Arbitration * Absorption Studies
* Business Valuation * Counseling and Consulting * Evaluations
* Litigation Preparation * Cost & Benefit Studies * Feasibility Studies
* Management Advice * Market Analysis * Rent & Trend Studies
* Zoning Testimony * Tax Assessment * Review and Advice
* Operating Expense Analysis    

In terms of new developments, it is highly noticeable that computers have a significant affect on appraisals, from using personal computers to produce reports to the increasing use of automated valuation models for valuation, also:

* Communicating with other appraisers online using email lists and * * chat boards
* Digital photos
* EDI (Electronic Data Interchange)
* Internet Database Facts and Figures

Moreover, to provide appraisers with valuable information to support and encourage their professional development, the trend points to educational offerings and publications developed by experts in the field who have practical knowledge and skills:

Seminars: Most appraisers take seminars to obtain continuing education. Like all educational offerings, seminars concentrate on helping to improve and build real skills necessary in the real estate market.

Briefings : Briefings range from two to four hours and focus primarily on local issues and valuation problems. Through briefings, appraisers learn to apply the valuation methodologies and skills learned to simulated valuation problems in their local markets.

Publications : Appraisers have access to a wide variety of publications, including the authoritative and specialty textbooks focusing on timely topics such as appraisal review and geographic information systems, and practical handbooks.

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