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BGC Prices: Park Avenue, Active North... More Bullish?


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#1 Euro Chocozone Buyer

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Posted 11 January 2017 - 08:58 PM

BGC Prices: Park Avenue, Active North... More Bullish?

 

Original title: "Park Avenue in BGC: Insanity"

 

"If the property market is soft, then why is the per square meter price of (the recently launched Federal Land) Park Avenue so high?

When I read about the sq meter price, I tought they had typed a mistake.

I knew that I had seen an offer for Times Square West -- just two years ago -- and the price was around PHP120,000 per square meter,

and now suddenly this developer "shamelessly" raised the price for its new project to PHP210,000 per square meter..."

- ECB, from the merged thread, see post #3, below

 

Details of the pricing is not available yet, but it will be in P210K/sqm range

 

https://parkwestglobalcity.com/



#2 DrBubb

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Posted 11 January 2017 - 10:38 PM

The developers seem to challenging each other...

to see who can be more Bold (and "excited") in their pricing,

at a time when Rents are actually softening, thanks to over-supply

The appeal here seems to be the Grand Hyatt, and the "shopping experience" at the Apple Mall (not yet finished)

 

veri_map-1.png?w=732&h=367

 

in a great community like the Veritown Fort, that is home to the world-class Grand Hyatt Manila Residences, you’ll surely feel the sense of excitement in the air.

1014706_614515691951880_891222782_o.jpg?1782263_614516945285088_432160122_o.jpg?

Below are information about the Times Square West.

Standing beside Times Square West home, you gain access to the exclusive hotel benefits of the Grand Hyatt Hotel, adding already luxurious experience.

And at this tower, we always provide you generous amounts of lights with our skillfully made sky gardens: a great mixture of landscaping and architecture crafted for you by Federal Land.

 

7th-to-23rd-floor-plan.jpg?w=640&h=454

 

(some pricing examples):

UNIT SIZE

  TCP (VAT Incl) SRP/ sqm (w/VAT)     Min - Max

1-BR

39 -- 5,232,511 -- 6,278,647 ----- 134,167 - 160,991  

40 -- 5,366,678 -- 6,439,638 ----- 134,167 - 160,991  

42 -- 5,635,012 -- 6,458,212 ----- 134,167 - 153,767

2-BR

51 -- 6,839,027 -- 7,524,467 ----- 134,099 - 147,539  

58 -- 8,196,709 -- 8,976,229 ----- 141,323 - 154,763

56 -- 7,258,640 -- 9,350,538 ----- 129,619 - 166,974   cheapest - priciest

61 -- 8,244,917 -- 9,303,877 ----- 135,163 - 152,523  

89- 12,318,541 - 13,514,701 ----- 138,411 - 151,851

2-BR

55 -- 7,806,621 -- 8,545,821 ----- 141,939 - 155,379

SKYGARDEN

2-BR

66 - - 9,844,730 - 10,731,770 ---- 149,163 - 162,603

100 14,916,257 - 16,260,257 ---- 149,163 - 162,603

 

Amazingly, the market seems to be absorbing P 150k-162k prices in BGC and Makati.

But I do wonder if investors are going to be disappointed when they try to rent their flats out.

 

In Makati, residential vacancies are said to be about 10%, and should rise to 15%+ by year-end,

with all the new supply hitting the market.  BGC has even more supply coming, but thankfully has

many office completions too in 2017.

Office vacancies in Makati are near 1%, and I am wondering when we will start to see Home > Office

conversions - a logical development in Makati, but not needed (yet) in BGC where the build-out is

more balanced.

 

I expect that the big challenge if living in BGC will be getting in and out of the place.

McKinley Avenue cannot cope with the rush hour traffic now, and it will just get worse and worse,

as the 25%-30% annual additions to supply continue


The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#3 Euro Chocozone Buyer

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Posted 05 February 2017 - 10:40 PM

BGC Active North, the event of 2017

 

 

"""  Right from the start BGC Active North was designed for indivuals and families with active lifestyles.

BGC (Active North) is called the "fitness capital of the Ph".  ""

 

If the property market is soft, then why is the per square meter price of (the recently launched Federal Land) Park Avenue so high?

When I read about the sq meter price, I tought they had typed a mistake.

I knew that I had seen an offer for Times Square West -- just two years ago -- and the price was around PHP120,000 per square meter,

and now suddenly this developer "shamelessly" raised the price for its new project to PHP210,000 per square meter, and I received an email

from evelin maliwat with offers for this new tower, confirming that the per square meter is indeed around PHP210,000,

meaning the price has gone up 50pct in two years??????????????????????????????????????????

What is going on here??????????????????????????

https://federalcondos.com/

 

Is the price going up because more people want to live a healthy lifestyle???

 

In any case, this is a major event because it negates the fact that the market is "post (its) peak".

 

A "two tier" market. For ordinary folks life is becoming more difficult, but maybe we are witnessing an "influx"

of high net worth individuals and other "economic" refugees -- and they show up at the more prestigious projects

and locations... And we might go higher... Any "preselling" property along Sukhumvit Road in BKK will easily fetch 350K-400K

per square meter so it looks as if there is a lot of momentum left. -- this rally might have more legs...

 

And by the way -- its not only the developers and the agents who are pushing the "don't worry, everything 's OK" scenario,

the newspapers --- perhaps paid by the developers -- are telling the same story.

http://www.businessm...-momentum-2017/

 

In any case -- facts like these prove my thesis -- that makati is not so prime anymore... And Federal Land has major

assets in the new hot spots.

 

And that other development in the North, "pampanga". Metro Manila could not expand in the west and in the east, as the sea is there. And in the south, there's very little land, so the only real option would be "the north" -- pampanga.



#4 DrBubb

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Posted 06 February 2017 - 11:52 AM

This is highly aspirational pricing - but not as high as the P300k being asked for the high floors in Park Tower, Makati.

 

Maybe you saw the comments from JLL:

"

For properties above P 15mn, prices continue to rise "towards Singapore levels"
Mr Lindsay Orr, PH chairman of JLL sees "pent-up demand for luxury... until the next 5 years"

 

park-central-towers-5.jpg
He points to Ayala's Park Central*, where the most pricey units are already fetching SG like prices - P300k psm."

 

> Excerpted from here: http://www.greenener...ic=20877&page=3

 

Those high prices (for the newest luxury lauch) may be fine for someone who wants to "buy the best" and live there and hold for the long term.

But if they think they are going to be able to rents these high priced properties out an earn a decent yield, I think they are kidding themselves.

The tenants who shop around over the next 2-3 years are going to get some terrific bargains - well below current rents.

 

As for whether or not the market is past its peak, I do not judge that from the shocking prices that developers put on their latest launches

(which may catch buyers who are still in dreamland or can afford the "prestige" of chasing the latest luxury offering.)

I watch rent levels and Collier's market assessments.  This way, I compare Apples to Apples; not Apples (existing properties) to Oranges (new luxury launches.)

 

The data for Q4-2016 will be out soon.  Let's see if it is up or down.  I think prices will be down again.


The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#5 Euro Chocozone Buyer

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Posted 06 February 2017 - 11:12 PM

What should i do then???

 

 

Hi I just looked at my Times Square West unit, it was booked in march 2015 for PHP 7,360 Million  -- 55 sq m,

and now suddenly 8 Park Avenue, from the same developer, probably the same finishing, PHP 12,4 Million. (including the launching discount)

Same unit 55 square meter. Up 68pct in less than 2 years.

And my agent is not Evelyn Maliwat. I have an even better one.

And it does not even look like a luxury posh project by the way.

 

I have never seen anything like this before.



#6 DrBubb

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Posted 07 February 2017 - 04:34 AM

/ I changed the title to:

"BGC Prices: Park Avenue, Active North... More Bullish?"

* and will merge it with a similar thread /

 

You may be confused...

There is a difference between BID and OFFER, and for primary and secondary market sales..

 

The PHP 12.4 million price is where Federal Land wants to SELL 8 Park Avenue.

To get people to pay that, they need to send a fortune on advertising and marketing expenses convincing people it is really worth that

 

Why don't you ask your 'excellent agent' what sort of Bid she can get you for your property.

If you can get a buyer at P 10 million or better, I would be surprised, and I would recommend that you take it.

 

BTW, the secondary market is not at all transparent to buyers of new properties, and so those being asked to pay P 12 million next door, may not know that

they could be a property at P 10 million (or whatever) next door in Times Square.

 

One of the functions of this website, is to make the PH property market more transparent.  I think that would be in the interest of buyers and sellers,

but not necessarily to all the developers and their agents, who seem to now exploit the lack of transparency

======

 

*This reflects better what the thread is about,

If ECB is not happy, he can send me a message, and I will change the title back


The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#7 Euro Chocozone Buyer

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Posted 07 February 2017 - 11:51 PM

Well we have major disagreements as to the future (price) direction of this part of BGC. 

In my opinion, Federal Land doesn't have to spend a fortune to attract customers to live there,

they will come by themselves, and they will notice this project.

The price of these units which will be bought by international economic "refugees" is set

on the world market, not on the local market.

 

The purpose of the thread was not to talk about the pricing of units, but to examine the

factors which have caused this microcosm of BGC to appreciate significantly.
In my opinion, their project was severely undervalued a few years ago, and is has

gone from moderate undervaluation to significant overvaluation. But over time,

that overvaluation will be worked off and might form the basis for further gains.

 

In any case, if possible -- do a field trip there -- and please let me know

what are the causes. It is fitness related, -- or a good masterplan -- or

the Federal Land tower (Grand Hyatt)?? Probably a mixture of all these

and I must repeat that I am surprised by this sudden steep price increase as well.

 

Because I get the impression, -- you're always chasing the losers

Makati, the old Manila city, -- while forgetting the winners.

 

Federal Land was like buying Megaworld but 20pct cheaper which aims

to be 30pct cheaper than Ayala Premier. 

 

2 years ago -- I also thought about putting off this investment --

but given the prices that I see today, I am glad that I decided to go ahead.



#8 DrBubb

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Posted 08 February 2017 - 12:34 AM

"The price of these units which will be bought by international economic "refugees" is set

on the world market, not on the local market."

 

The (sophisticated) people I talk to in Hong Kong are reluctant to buy right now, because the oversupply worries them.

They are concerned that Rents may go down, or it may be hard to get a good tenant.

The rental market in PH is not transparent, and it is not easy to research what levels you can actually earn now,

so people see all the buildings under construction, and the investigate the data, and they are concerned.

 

As recently as this week, I got comments like this by email:

 

"Looks like oversupply will bite sooner or later, and it's better to wait."

 

And I have no real answer to this.

 

OFW's seem to be willing to buy without examining any solid data.  I reckon that many will be disappointed when the building is completed,

and they do not get the rental they expected.

 

Of course, if you can afford it, and you want to live there as an owner-occupier, there is no problem, and I would agree the area is very nice.

I visited last week, and took a photo:

 

(I will share later)

 

But experienced people in sophisticated and transparent markets like Hong Kong have learned to buy based on various numerics, not just how a place looks and the asking prices of developers


The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#9 DrBubb

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Posted 08 February 2017 - 12:43 AM

"factors which have caused this microcosm of BGC to appreciate significantly."

 

Has it occurred to you that we are witnessing a bubble, which will pop within the next 1-2 years?

:

Cost push factors include:

+ Rising land prices,

+ Rising build costs, as some materials rise in price, and competition for experienced labor is still fierce

+ The habit of market leaders like Ayala, to keep pushing their prices up at 6-10% per annum

 

But if the developers raise prices beyond what the market can absorb, they can create a bubble - a bubble that will pop when reality hits.

 

Higher prices, to be REAL, need to be confirmed by:

+ Rents also rising, so investors can get a reasonable return on their investment

(I spoke to an 80 year old guy who visits a coffee shop that I frequent, and he told me that

"rents have hardly risen at all over the last 10 years")

 

+ Secondary market prices should also rise, so those who buy at high prices can exit and reinvest.

Do you want to pay P180-200k psm for a new property, and then find when you go to sell, you can only get P120-140k psm?

 

The problem in a non-transparent market like PH, people do not get strong signals about the level of rents and secondary prices.

So a big bubble can build in primary prices (new properties), and I think that is what we are seeing now.

The sales machines can go on promising high future rents. and the naive buyers do not know the reality is the rents are falling.

 

Makati Prime is one of the few websites were you can find the data, and see an honest discussion about it.

The developer's agents are too tied with the existing machine to want to discuss it.  Right now, it is hard to sell to a client who has all the facts.  The way I see it is, that MP is thinking long term, and by discussing the data honestly, we can build credibility for the long term.  I do not expect to get everything right here, but I do consider it important to do proper analysis, and not just repeat the half-truths, and misinformation that comes out of the sales machines.

 

(When I post this way on SSC, I get banned.  Hence the need for a forum like this.)


The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#10 DrBubb

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Posted 08 February 2017 - 01:39 AM

"Makati is not so prime anymore"
(sounds like you are repeating a line from a Federal land or Megaworld* sales agent)
The data suggests otherwise.

The two highest recent launches in Greater Manila which I know about are:
+ Park Central, where units have sold well at prices as high as P300k psm
+ Alveo Financial Tower, and office has sold well at P225-250k psm
(I bought a unit next door in Kroma at about 125k psm in early 2015.)
+ Ayala is finding their sales of high end units in BGC has been "slow"; hence their focus on Makati launches.

They also have a land bank with property in "prime locations", better than other developers have in Makati

"I get the impression, -- you're always chasing the losers

Makati, the old Manila city, -- while forgetting the winners."

I focus on: Yield, and proximity to high-paying jobs and transport hubs.
I would rather buy something with an expected good yield, rather than chasing a "hot" area, which is getting overbuilt.
Have you tried traveling to BGC recently....

I did last week.  It took me well over an hour door to door from Makati, and more than 1 1/2 hours to return (when it was raining.)  The buses were over-crowded, and I had to wait for 2-3 buses and stand up during the journey.  Even taxis between Makati and BGC are slow, because the traffic moves at a crawl.  And it will get worse, far worse, as BGC gets built out, and people move in.  See BGC becoming and island, insulated by the traffic surrounding it.

 

(MORE LATER)

 

=====

* see my comments on stock charts : here
 


The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#11 Euro Chocozone Buyer

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Posted 10 February 2017 - 11:07 PM

The value of doubt.  (anyone remember Voltaires bastards??)

 

Where there exists great uncertainty, there s always that tendency to come up with easy answers and simple solutions. 

Which is why I believe the "experts" got it wrong this time... I mean they were all betting on the "oversupply"

thesis... And it is all based on the "easy" and "transparant" part. With transparant i mean the number of units

available in the market... Prices paid can remain a mystery but they don't need that to justify their "oversupply" thesis.

As they do not have a "clue", and i mean the slighest clue about "demand" -- as there are no precise data for this

part. It is a method of guessing, feeling, relying on obscure models and even international migration.

 

In any case, -- the "oversupply" doomsayers -- they have been telling and repeating their story for several years now,

and the procastinators --- the ones who believe their story -- they're the ones who got slapped in the face

because now they realize they've got to pay MORE for that same square meter.

 

I am not going to deny that we are in a bubble, -- but being in a bubble is irrelevant, in my opinion. The only real

thing that interests me is price direction. Bubbles can (slowly) expand for years, decades. And in my opinion

we're only in the beginning stages of the PH bubble. Listen we might go down a few years, -- and foreign 

money propels the PH RE market. But we will likely recover by early 2020-2021, and that's when the real

rally will start --- for me this is just a warm up. It is a glimpse of what is coming.

 

The better areas probably will not even suffer any major price declines. That is my opinion. Sales might be

slow. I remember Anchorland complained about slower sales a few years ago, but the sales price of their

units has not declined. No doubt Federal Land Park Avenue will see much slower sales volume than

any DMCI's neighboring (Pasig/mandaluyongs) buildings, - which I see as in indirect bet

on the attractions of BGC Active North  --- but DMCI is not maximizing shareholders value.

 

And that is my opinion. Could I be wrong??? Absolutely, but the pricing of Park Avenue, which

came as  a "black swan" event to the "oversupply" experts, confirms my longer held belief

that PH will emerge as a very rich country, and incredible wealth will be generated

in the real estate arena.



#12 Euro Chocozone Buyer

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Posted 11 February 2017 - 11:07 PM

http://www.valuewalk...erhousecoopers/

 

The lord has given many promises for the Philippines. The PH is going to be one of wealthiest nations on earth.

You need to put all your eggs into the PH and invest and go there and buy condos...

 

What is striking by the way is the fact that (this district of) BGC is so unaccessible, and that despite

these hardships, 2-3 hours of traffic every day -- the lack of transport -- and transport is one of the drivers of RE according to

the founder of this site, -- people want to live there, especially in that northern district.

Why does everyone want to live there that much, and not anywhere else?

I would like to get answers.

 

Yes I have also invested in "transit oriented developments" but the developer was not/never able to

raise his price so much, -- so I have difficulties factoring in "transport" issues in the price setting process.

 

The market may go down overall due to the interconnected of the PH economy with the global economy,

but the "hot spots" will not decline that much in my opinion.

 

And apparently PCW agrees with my "vision". The west, the north, will become poor, and the south,

the east will become rich.



#13 Euro Chocozone Buyer

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Posted 13 February 2017 - 10:23 PM

Minute 39:40 Fort Bonifacio that's a mistake... Stay away from...

 

Around minute 12 he talks about why he choose Makati for his real estate investments, and one of them was the stock exchange.

But I have a problem with that line of reasoning, because the stock exchange will move to BGC, and a lot of the "high rollers"

who live in Makati can be expected to move to BGC. 

For me that was the "go ahead" I needed to invest in BGC, because it indicates wealth moving to another area.

Losing the stock exchange is a tremendous phychological loss for Makati

 

As for the "bay area" -- another "hot spot" -- and again - Federal Land involvement here -- I think it was the clean air which

drove me there because inner city air quality cannot be that high, and also because there were several posts on

that other forum where bay area real estate always appears to fetch the highest prices. But I admit, the "true believer"

spokesman - who runs a dating business - talks about the difficulties in renting out units over there because

you only have shops there -- offices are coming in a big way later, -- he claims many owners are having difficulties

attracting tenants.

 

So these are the hot spots --- and transports, and easy connectivity -- was (and still is) missing there, but the price level

appreciated significantly over the last years, so that's what I wanted to highlight.

 

(By the way, casinos which are prevalent in the bay area, also tend to attract "high rollers" and that was a remark

made by another contributor on SSC --- we live off it as well -- huang gua). (And the stock market is also a casino btw).

 

To sum it all up: follow the money trail, follow the high rollers. There is your "fourth" secret ingredient.



#14 DrBubb

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Posted 14 February 2017 - 12:22 PM

What is "the REAL market" ?

 

I am not going to deny that we are in a bubble, -- but being in a bubble is irrelevant, in my opinion. The only real

thing that interests me is price direction. Bubbles can (slowly) expand for years, decades. And in my opinion

we're only in the beginning stages of the PH bubble. Listen we might go down a few years, -- and foreign 

money propels the PH RE market. But we will likely recover by early 2020-2021, and that's when the real

rally will start --- for me this is just a warm up. It is a glimpse of what is coming.

 

The better areas probably will not even suffer any major price declines. That is my opinion. Sales might be

slow. I remember Anchorland complained about slower sales a few years ago, but the sales price of their

units has not declined. No doubt Federal Land Park Avenue will see much slower sales volume than

any DMCI's neighboring (Pasig/mandaluyongs) buildings, - which I see as in indirect bet

on the attractions of BGC Active North  --- but DMCI is not maximizing shareholders value.

 

To me, the real market is not what the developers get, when they price a hot new launch -

It is the RESALE market, if it can be confirmed by RENTAL yields

 

Because after all - to book a profit on your investment, you need to EARN the yield, and eventual EXIT your investment.

You will never get paid, based on what the developers can achieve using all their marketing prowess.

 

(here's part of a post I just added to the Bubble thread)

 

It is now officially a two-tier market:

+ the developers get a much higher price, by offering finance and selling properties through their "marketing machines"

+ secondhand resellers get a lower price, because the handful of cash buyers are seeing many bargains, and there is much competition among sellers chasing those few cash buyers willing to pull the trigger

 

The Losers may be those who pay the high prices for "hot new launches", since they may never achieve expected cash yields.

With the high and rising vacancy rates, rents are likely to be lower than "promised" or expected for at least 1-2 years, maybe longer.

Might a headline story about falling secondhand prices, cause even Primary (new) sales prices to get hit - if buyers back off?

 

A DISCONTINUITY in Capital Values : Moving from Apples to expensive Fruit salad ?

 

BUYERS of new properties look set for disappointing yields (when their properties are completed)

 

There is a major discontinuity in the data that Colliers is now reporting for Capital Values, and it may be masking a drop in secondhand like-for-like prices for a single property owned in the real world.

 

The problem is that Colliers want to accommodate the much higher prices being achieved on new luxury launches, so reported prices have been "stretched" to the upside to include these new luxury properties. So in some way, we are moving from comparing the old "apples" with new "luxury fruit salad", making it meaningless to try to use the Colliers data as an indication of how the price of a particular property is performing over time.  Even as these Colliers values are being pushed higher, I am hearing several anecdotal reports that secondhand resale prices have been dropped - and that the resale market for completed properties is very soft now.  Perhaps it is down in line with falling rents - now some 6% below the highs of 2nd-half 2015.  And someone who is in a hurry to sell may have to accept an even larger discount.

 

> http://www.colliers....residential.pdf

 

Qtr/ Year : Mak-Mid. QonQtr : Yr.onYr. / Low - Makati - H / Low -Bonfacio- H / Low -Rockwell- H /

4Q /2015 : 151,300 : +0.20% : + 4.71 % : 106,400- 196,200 : 114,700 - 185,400 : 121,700 - 202,100 :
1Q /2016 : 152,000 : +0.46% : + 3.16 % : 107,000- 197,000 : 115,000 - 185,000 : 121,700 - 202,100 :
2Q /2016 : 147,575 : - 2.91% : - 0.96 % : 103,770- 191,380 : 111,760 - 180.760 : 120,390 - 200,040 :
3Q /2016 : 146,485 : - 0.74% : -  2.99 % : 103,010- 189,960 : 109.790 - 177,580 : 119,090 - 197,870 :
===
3Q /2016 : 145.4ka*: - Not/A : - N/Avail. : 103.0 - 187.8a / 145.4k :
4Q /2016 : 150.6Ka*  - Not/A : - N/Avail. : 109.0 - 192.2a / 150.6k :

===
3Q /2016 : 176,150 : -  Not/A : - N/Avail. : 084,000- 268,300x70% : 097,200- 222,200 : 170,800 - 206,300 :
4Q /2016 : 191,800 : - 0,00% : - N/Avail. : 109,000- 274,600x70% : 110,500 - 226,400 : 188,400 - 207,700 :
Qtr/Year : Mak-Mid. QonQtr : Yr.onYr. / Low- Makati - H/ adjust / Low-Bonfacio- H / Low-Rockwell- H /
========

 

I have adjusted the new data, so that it is more comparable with what was reported before.

My adjustment is to multiply the new high-end price by 70% and then average it with the low-end price.  The result for Q-2016 was P 150,600 which is only 2.8% above the P 146,485 reported for Q3-2016.  I will have to monitor this adjustment for a few quarters before I will have any real confidence in this adjustment.  But I do not think it would be meaningful to push my chart values up from P146.5K to P191.8K (that is +30.6%), since I do not think that anyone has seen appreciation like that in an actual Condo that they own.

 

I find this comment to be very telling:

"Take-up in Metro Manila’s residential secondary market remains soft amid the influx of new supply across submarkets."

. . .

 

Here's more evidence of buyer's abandonment of a traditional focus on cash yields.  Do they even realise that rents are falling?.  I reckon some Colliers clients who do consider yields in their investment criteria have begun to complain.  And Colliers would like to see the developers address this so investors will not be too disappointed  :

"Given the falling occupancy rates in CBDs, it would practical for developers with projects under construction within and outside the established business districts to organize their own leasing arms in order to assist their buyers to lease out their units and attain the promised yields"

In other words, buyers are going to be sorely disappointed with the returns they make after completion, unless the developers do a better job at marketing to end tenants the virtues of these expensive new properties.  Right now, the landlords are mostly "on their own" or working with a handful of agents who specialize on prime tenants (like expats seeking well loacted 2BR and 3BR flats).   One wonders if there are enough good tenants to go around to maintain a balanced market?.  Colliers is now separating the market into PRIME areas within the main CBD, and Fringe areas with "10-15% lower rents", where Filipinos may rent smaller places as "halfway houses" to have easily access to their places of work, and avoid the massive traffic congestion.

==


The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#15 DrBubb

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Posted 15 February 2017 - 08:40 AM

"Why does everyone want to live there that much, and not anywhere else?"

 

I am not seeing (yet) evidence that people actually want to live there in Huge numbers - that would be seen in rising or firm rents.

What I am seeing is evidence that PEOPLE WANT TO BUY THERE - and that is not (necessarily) the same thing.

 

The area does look nice, now that some key buildings approach completion - so the marketing staff of the developers may find it to be an easy sale.  But we will need to wait some months or years before we know how keep people are to live and Rent there.

 

Meantime - the challenge presented by a 64% rise in supply in BGC over the next three years will be a big one.

 

(here's an excerpt from my comment on the BUBBLE thread):

 

> http://www.greenener...ic=20877&page=3

 

WHEN WILL THE LOW be in place?
Completions due in 2015 and 2016 got delayed, so as of (Early 2017, for Q4-2016).

 

Estimate, -------------------- : Est, made in early 2017 ---->
Previous: End'14 : late'15 : Latest  // forecast completions:
Est. for---: 2016E : 2016E : 2016E // 2017F: + Pct. / 2018F / 2019F / End'19 : chg>'19
=======
Makati - : : 24,735: 23,485: 21,633 // 4,784: +22.1% : 1,072 : 0,598 / 28,087 : + 29.8%
B.G.C. -- :: 29,755: 29,137: 24,275 // 8,566: +35.3% : 3,858 : 3,022 / 39,721 : + 63.6%
Ortigas-- :: 17,616: 17,605: 16,250 // 1,489: +9.16% / 0,782 / 0,570 / 19,091 : + 17.5%
Rck+Ewd:: 12,614: 12,695: 11,707 // 1,334: +11.4% / 0,492 / 0,901 / 14,434 : + 23.3%
================================
Total-of-5 : 84,720: 82,922: 76,208 / 16,173 +21.2% / 6,207 / 5,091/ 103,679: + 36.0%
Total-of-8 areas :  ----------> 90,784 / 22,890 +25.2%/ 15559/ 7,707/ 136,938: + 50.8%
==
> source: http://www.colliers....residential.pdf

 

With the big jump in completions in 2017, and vacancies expected to exceed 15% for most of Greater Manila,

the next year looks like a tough one for Property: especially rents, and particularly in BGC, where the growth in Supply

is monumental.  After a tough 12-18 months, it will probably take another year or so to absorb the near record vacancies,

before the market can be considered truly Bullish again.  Thus, I am looking for a bottom in 2019 or so.

 

BGC has huge supply coming in 2018 and 2019 too (before delays.) 

Fortunately for that area, there will be many office completions too, and so that will help bring people to BGC seeking a place to rent or to live as owner occupiers.  The increasingly serious traffic jams getting in and out of BGC mean that it may be desirable for those with jobs there, to live there also - else they might be left with 3-4 hour roundtrip commutes.  But not everybody can afford to live in this new district.  Perhaps employers will find they are expected to pay a premium to attract new workers to their offices in BGC.  This might encourage some business owners to seek office spaces elsewhere, if a BGC location is not essential for them.

 

The need to begin construction of transport linking BGC, Makati, and the bay area becomes more evident every month, as the traffic worsens.

 

"follow the high rollers"

That is great advice early in a Bull market.  But maybe not so great advice when a cycle is rolling over.

I do analysis in the depth I do, so I can avoid the traps that so many others may fall into.

As it is, I have intentionally under-invested, spending less than I might, on smaller flats, until I thought the cycle was more optimal, and until I knew the city better.  Of the three properties I bought, two are below the P 3.2 million VAT threshold, saving me the 12% VAT tax,


The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#16 Euro Chocozone Buyer

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Posted 15 February 2017 - 11:42 PM

Hi

 

 

Patience is of course also a virtue in investing. But my analysis of the 1996-1998 Asian financial crisis pointed to a drop in demand caused by the drop in births about 40 years ago as a result of the (soldiers fighting in the) Korean War. That is demand model, and we should not suffer such a large drop in the "transitioning period" to 2020. I see an acceleration

in demand 2020-2027, and i have developed a chart on that but I cannot reveal more at the moment. We are "transitioning" to a higher demand wave, it is clearly visible on the charts. There will an another transition 2029-2030 and still another around 2050 and a last one 2073 which will be the "bubble peak". I am not saying that it is perfect, but it sheds light on the future, and provides a roadmap for what could happen in the future. 

 

Not all developers have raised the selling prices of their projects. The low to middle end developers, like Empire East and DMCI, they hardly raised their price for all their projects during the last five years. It is only the more higher end developers who did so, and only in some locations -- BGC Active North and the Bay Area.

But then Avida, I believe their "motto" was something like "affordable condos" and they dropped "affordable" due to the BGC price escalations.

Quite frankly -- Megaworlds makati projects -- developers prices haven't changed for the last year and were quite stable. They cannot raise these 68pct like Federal Land did.

 

And of course it is also "age related". If you are middle aged, like 45-50, you can wait out the downturn more easily than when your 60-65 so I have an understanding of this.

But bargains can always be found in real estate since it is an "imperfect" market.

 

Real estate appears to be more predictable than stocks because the buy and sell orders can be "guessed" more easily than any individual stock. Stocks can have horrible earnings

and massive buy orders so it is completely unpredictable for me.

 

The supply increases do not worry me at all... Well - I believe - you said it yourself, BGC is like an "island" within another "island". Harry Dent is quite bullish on Great Britain because it is "an island". This looks familiar to me.



#17 Euro Chocozone Buyer

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Posted 16 February 2017 - 09:30 PM

 

The investment implications of this trend for BGC???? 



#18 Euro Chocozone Buyer

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Posted 17 February 2017 - 11:22 PM

Somebody is ringing the alarm bells

 



#19 DrBubb

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Posted 20 February 2017 - 01:56 AM

Hi

 

 

Patience is of course also a virtue in investing. But my analysis of the 1996-1998 Asian financial crisis pointed to a drop in demand caused by the drop in births about 40 years ago as a result of the (soldiers fighting in the) Korean War. That is demand model, and we should not suffer such a large drop in the "transitioning period" to 2020. I see an acceleration

in demand 2020-2027, and i have developed a chart on that but I cannot reveal more at the moment. We are "transitioning" to a higher demand wave, it is clearly visible on the charts. There will an another transition 2029-2030 and still another around 2050 and a last one 2073 which will be the "bubble peak". I am not saying that it is perfect, but it sheds light on the future, and provides a roadmap for what could happen in the future. 

 

Not all developers have raised the selling prices of their projects. The low to middle end developers, like Empire East and DMCI, they hardly raised their price for all their projects during the last five years. It is only the more higher end developers who did so, and only in some locations -- BGC Active North and the Bay Area.

But then Avida, I believe their "motto" was something like "affordable condos" and they dropped "affordable" due to the BGC price escalations.

Quite frankly -- Megaworlds makati projects -- developers prices haven't changed for the last year and were quite stable. They cannot raise these 68pct like Federal Land did.

 

Okay.  So you believe in cycles too.

 

Here's my chart of historical prices, based on Colliers data

(But I warn now that data going forward will be distorted, since Colliers has added in certain "premium priced" flats, to prevent a price drop):

 

MakatiCondos-2016Q3_zpsflygcxrd.jpg

 

For me, there is an 18-year Cycle*, which is generally: 14-years up, and about 4 years down:

 

+ That cycle seems to have bottomed in about 2002-3 at maybe P 63,000 psm
+ And the most recent peak was in early 2016 (at P 152,000 psm, Q1-2016): that's a +141% gain
+ A 3-5 year correction would suggest a low in 2019-2020, followed by rise through at least 2030.
+ The truly massive increases in Supply that the demand must eat through, is a sign the correct is underway.

: It is hard to imagine that any market could continue to rise with a 15%+ vacancy rate and a 30% gain in supply, 2017-20 - that's Makati.
And BGC shows an estimated supply gain of +64% over the next three years, but is also adding massive Office supply.

+ Another sign of the correction is the Drop in Rents : from P875 in Q3-2015, to 830 psm just reported for Q4-2016 (that's -5.2%)

 

For Makati, I would not be surprised to see Rents fall 10% or so and Capital Values to fall to maybe 125k-130k psm by 2019-20.

At that level, Rents and Values would give up the excessive gains they made against general inflation.

And a drop like that might be enough to undermine confidence by potential purchasers, and the shift it sentiment would help to slow the additions of new supply.

and give Demand time to catch up with Supply.

 

I do not expect to see Developers cutting their prices that much.  There may be some discounts quietly offered, but not widely advertised.

I think the brunt of the price drop will be in the secondary market.  Developers will try to prop up prices through financing schemes, and

incentives like free furniture, or rent-back schemes. 
==

* More on Fred Harrison's 18-year cycle, here: The 18-Year Property Cycle


The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#20 DrBubb

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Posted 20 February 2017 - 08:51 AM

Somebody is ringing the alarm bells

 

 

The headline is just plain wrong! Is says: "Colliers sees a 2-6% decline in Office Rents"
Not true!  They were talking about a decline in RESIDENTIAL rents. 
(Was someone paid to hide that?  I would not rule that out.  Seems like the bursting residential bubble is being disguised.)

 

Comment:

"Listen carefully, and you may understand that there IS A BUBBLE right now in the RESIDENTIAL market. And it is getting bigger.

Prices of newly launched properties continue to be pushed up, while actual Rents are falling.

Isn't that GAP in yields the very definition of a property bubble?

To me, it is. It seems to me that Ms Yao was not listening, or wanted to push in an assessment ("no bubble") that is wrong."


The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix



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