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Euro Chocozone Buyer

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  1. The entire developed world is now actively "taxing to death" Chinese flight capital. Australia is the latest. Peter from the Property Club has several videos about the dramatic tax increases occurring in AUS/QsLand. For non resident owners 3pct of the value of the homes will be taxed. This is the highest in the world. This will cause a fall in prices, just as the S&L crisis in the early 80s was also partially caused by government policies. 3pct is a lot. You can basically say that the government is nationalizing the rental income. So there you have it. All the - especially English speaking - developed countries have made property ownership a big hassle now. But maybe all the these policies might cause more investment in Philippine real estate.
  2. Euro Chocozone Buyer

    SECONDHAND Market in Makati - Data points

    https://www.olx.ph/item/rush-sale-most-affordable-unit-in-avida-cityflex-bgc-ID8zs4M.html?h=a214f5332c https://www.olx.ph/item/studio-for-sale-in-makati-ID8xKhJ.html Surprise. Surprise. I think both sales are what I call "below the market value". Megaworld one central MAKATI for php125K psm and Avida Cityflex BGC for 130K psm and suddenly -- the ads are gone -- the links no longer work. There is a secondary market in PH real estate. If you drop the asking price below a certain level, buyers will step in, and this proves it. My idea of a normal market price for Megaworld second hand in Makati is around PHP140K to PHP145K psm, that is based on other ads that i have seen posted. For BGC the price is around PHP135K for Avida style buildings. That is my market price. Filipinos will not pay more. But Chinese pay more, far more. Real estate is an "imperfect" market, -- it takes longer for "abnormal" low offers to be absorbed by the market. There are no "market makers" in this market like in the stock markets. So it appears as if there is liquidity in this market.
  3. Euro Chocozone Buyer

    BGC / The Fort: Uptown, Park Avenue, etc... How Bullish?*

    Yeah, adding insult to the "BGC" injury, here's another ad with a unit for sale in Avida Citiflex. The psm is only PHP130K. - A far cry from the PHP200K+ official price. https://www.olx.ph/item/rush-sale-most-affordable-unit-in-avida-cityflex-bgc-ID8zs4M.html?h=a214f5332c Is the market spiralling down? Are interest rate rises starting to take their toll on the market?
  4. Hi There is more news about Avida Verge. https://www.facebook.com/AyalaLandInternationalHongKong/ It seems that Avida has developed a new business strategy now that most of its land in BGC has been developed. They are "pumping" this project as a way to get into BGC at a lower cost than the official preselling prices of their existing projects in BGC. Verge is quite expensive, it seems. It looks as if they are charging PHP180K psm. For Boni Shaw area - this price is very high. 4.2M for a 22.80sqm Junior 1 bedroom and 7M for 35sqm 1 bedroom. according to comments posted on SSC - the Verge thread. not cheap. ECB comment. It is quite IRONIC as BGC is on the "verge" of COLLAPSE. Rents have collapsed already but it is capital values which are at risk now due to rising supply, falling rents and rising interest rates. "Rents collapse first", capital values are next. IMO.
  5. Euro Chocozone Buyer

    BGC / The Fort: Uptown, Park Avenue, etc... How Bullish?*

    https://www.olx.ph/item/rush-sale-and-for-rent-avida-cityflex-bgc-executive-studio-ID8kx3f.html?h=b7476991be I have seen this ad for quite some time. There have been close to 1000 views so it has been around for quite some time, yet, despite it being one of the lowest price "resale" properties on the market, it has trouble getting sold. (Avida cityflex is a SOHO type condo, and location wise located on the fringe of BGC -- and the finishing of the CITIFLEX units was extremely limited, with f.i. vinyl flooring), but it indicates that the psm resale price for this unit is probably 10pct below what the owner is asking; like PHP125K to PHP130K psm. This resale price is a far cry from the official prices. https://www.olx.ph/item/avida-cityflex-bgc-semi-furnished-1br-for-rent-ID8znp6.html?h=b6d5975f14 An unfinished unit for rent in CITIFLEX. PHP25K for 50 square meters. That is just PHP500 psm. This rental price is UNIMAGINABLE in PASAY/MAKATI. In 2019 there is still 8,000 units that are going to be turned over in BGC, so the pain will last for another year. My idea is that the market in BGC will therefore recover in 2020 when there is less supply in BGC. Also in 2020 the SKYTRAIN that connects BGC with MAKATI will open, and that will have a big impact on both BGC and MAKATI. For MAKATI, in 2020 you're looking at 16,000 new units in all of Makati, plus the fact that BGC will become an attractive alternative destination should Makati become too expensive with the help of the SKYTRAIN. The SKYTRAIN will further lower the rental rates in MAKATI (already under pressure by this 16,000 unit increase in Makati), so Makati will get some hits, and the beneficiary of the skytrain will be the BGC unit owners because eventually BGC and MAKATI rents will converge to each other. BGC rents will start to rise in 2020 while Makati rents will start to fall. Lastly, you forgot to mention that the BAY AREA is also an ISLAND. Also a "fairy tale" island, - "the city of dreams" and the BAY AREA has not been hit by lower rents, yet. And because it will not be connected to the new underground metro, and no skytrain, there might be a chance that rents will stay elevated for quite some time. It will now be interesting to see where the second trainwreck - in terms of rental rates - will manifest itself. Either Makati or the Bay AREA.
  6. Euro Chocozone Buyer

    BGC / The Fort: Uptown, Park Avenue, etc... How Bullish?*

    BGC -- the devil is in the details. (in colliers report) Dr Bubb, how accurate are the rental price data reported in the latest 3Q2018 Colliers report? Could it be that Colliers is "massaging" the rental numbers because when I look at the lower bands of rents received, it is really worrisome what I saw. For the Avida projects in BGC, it looks like the rental rates have decreased about 15pct yoy. If you then add 5 to 6 pct general price (like fi food) inflation, then BGC investors are facing a massive 20pct decline in purchasing power. When I look at the ads on rentpad for selected BGC Avida buildings like Avida 34th, Citiflex, 9th Ave and Verte, then I am seeing prices more or less as the following Unfinished flats 1Br approx 600php/sq meter, Finished 1Br approx 800php/sq meter Unfinished flats 2Br approx 500php/sq meter, Finished 2Br approx 700php/sq meter When I calculate the yield, and I assume a purchase price of PHP100K / square meter, then for a 2BR unit, the gross yield will be close to 5pct, net yield perhaps 4pct. For 1Br units, the yield will be 0,5 to 1pct higher. But PHP100K was the norm until the middle to end of 2013. From mid 2016 to late 2016 prices ballooned higher to PHP180K and later PHP200K, and net yields are now probably 2pct. Anyone who is paying more than PHP200K per square meter is going to be "grilled" alive. (and there are still greater fools out there) -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- The questions I now have. + How does Colliers gather rental data? Maybe they are just guessing these numbers.. That is my idea. + When will the pain stop for BGC investors? + Will it spread to other districts? + When will the primary market crack? Because interest rates have just been raised again in PH to 4,5pct for the discount rate i believe, so commercial lending rates are now probably close to 6 to 6,5pct? 1pct to 1,5pct net yield for new projects in BGC really are no match for this, so when will the market face reality? When will we start to see developers face problems with unfinished and unsold inventory?
  7. 3 property research companies - Colliers, JLL and Knight Santos Frank - and three completely different reports. As usual, KSF is the most bullish amongst all 3. And JLL sees a huge supply increase in Makati in 2020 which Colliers doesn't report. What I find strange in Colliers report is that they don't add the new AIR RES + RISE MAK units in the 2020 new units list for Makati (Maybe because they're not located in Salceldo or Legaspi village). (and thus not in Makati CBD) (Or maybe they have then been given money by their developers friends not report it to not cause a panic amongst property investors???) (Maybe not reporting future events can be profitable?) And then the real shocker: BGC vacancy rate going from 15pct to 16pct. The lower band of rental rates in BGC dropped sharply. From PHP620 per square meter to PHP530 per square meter. That is down 15pct. And a 1pct decline in rental rates for Makati. In terms of rental income, BGC is the first train wreck. Avida is the lower band supplier of buildings in BGC and investors see their projected income decline. It is the same what I see based on data from rentpad from Avida 34th street and Avida Verte. Rental rates are plainly awful. Horrific. I will try to highlight that in the data section at a later point in time but it doesn't look good. http://www.colliers.com/en-gb/philippines/about/media/3q2017_philippine_property_market_reports
  8. Euro Chocozone Buyer

    SECONDHAND Market in Makati - Data points

    Makati is really a "bloodbath" and that will become very clear once you look at the following website https://81property.com/properties/?id=buy It is unclear whether the previously mentioned unit has been sold or not, as yesterdays ad URL is no longer functional, - maybe there is some "negotiation" going on behind the curtain, - but looking at that website you can see that a unit in the Beacon was sold for a mere PHP110,000 per square meter. That happened probably in the secondary market and should further serve as a severe warning that all the hype about rising prices is nothing but "smoke and mirrors" and "hot air". https://81property.com/properties/?id=buy-details&uID=Beacon-4215.16 And that probably indicates that the smart money is leaving and more money is "exiting" Makati. Because no matter how you look at it. The Beacon is a high quality building, yet it cannot fetch even a decent sales price. These examples confirm my thesis that MAKATI is spiraling down and that is even before the huge supply increase starting at the end of next year. Again these prices are UNIMAGINABLE in PASAY. Yet in Makati it is the order of the day. "the mighty MAKATI" has fallen. (out of favor) There is no liquidity left in Makati. There are insufficient "new entrants" who can provide a floor under the secondary market and so investors will be at the mercy of the "unknown". Combine a huge supply increase in 2020 with a - who knows - dramatic decline in the local and international share markets, and you have the recipe for a total collapse. Rents, capital values might decline by 30pct or more in a couple of years from now when "the dust finally settles". I don't believe any of the reports coming out from Colliers. They're all in bed with the major developers. There is no honest system of tracking prices but these little "anecdotal" stories tell the real story and it doesn't look "fine". There are going to be major disappointments and it won't be "pretty".
  9. Hi Your reasoning looks faulty to me. BGC has also welcomed many multinationals and large corporations setting up their new HQ in BGC. The likes of GOOGLE, You tube, Megaworld, DB, Citibank, HSBC and so many others. However, the expected "uptick" in rental prices did not materialize as of today. Why would there be an "uptick" in prices when AFT is completed? It is exactly the same thing that will happen in the "HOT AIR" district of Makati. Why would the outcome be different this time??? Most of the tenants in those buildings will pay the locals just a very small salary. It won't be enough to break the downward spiral in rental prices. The reality is that it is the Chinese who pay and sometimes over pay, and their favorite spot remains the Bay Area. Some of them are now even contemplating setting up factories in PH to avoid the US-China trade sanctions/tariffs. In other words, Makati can become another "pearl harbour". When all these flats will be completed in 2020, it will be a total devastation for existing landlords. Better sell now while the market still "appears to be " reasonably strong.
  10. """ Manila Bay has overtaken Ortigas Center starting 3Q2018 and we expect the reclaimed CBD to overtake other established business hubs such as Makati CBD by 2021. By then, Colliers sees the Bay Area having a total of 29,500 units, higher than Makati CBD’s 28,700. """ http://www.colliers.com/en-gb/philippines/about/media/manila-likely-to-outpace-2017-condominium-sales
  11. Euro Chocozone Buyer

    SECONDHAND Market in Makati - Data points

    MAKATI. The rise and fall of Makati and a lot of "hot air". Voila, to prove my point here is a recent ad that i just saw in olx.ph https://www.olx.ph/item/studio-for-sale-in-makati-ID8xKhJ.html This is a MEGAWORLD studio unit, almost 41square meters that is being sold for PHP5Million. This breaks down to PHP121,000 per square meters. It is a MEGAWORLD condo, so no questions about quality here. Dressed up by OASIS interior design. Such a price is UNIMAGINABLE in PASAY CITY. The secondary market is very strong in PASAY and almost ABSENT in MAKATI. bgc = Better Go to the C(sea) I have heard stories of other people who couldn't resell their preselling condo's in Makati due to the lack of a resale market, and it goes on and on. Megaworld condo's that couldn't even get sold at PHP150K per square meter. In Pasay you get PHP180K per square meters easily. Makati is a lot of hot air and "past glory".
  12. JLL 3Q 2018 Property Market Overview is online. + On page 15 of the report I notice that there will be a huge increase in new supply in PASAY during 4Q2018 and the whole year of 2019, + Taguig city will see a moderate increase during 4Q2018 and a rather large increase in 2019. +BIG SURPRISE. MAKATI will have the biggest supply increase in 2020. That probably has something to do with the RISE and AIR residences In 2020 the supply increase in MAKATI will be twice that of PASAY+TAGUIG combined. Their forecast is for 76,800 new residential units to hit the market FROM 4Q2018 until the end of 2020, of which 23pct will be for MAKATI and 23pct for PASAY city so 17,600 new units will be added in each of both districts 4Q2018 until end of 2020. In terms of rents, surprise here, the median rent is already higher in PASAY city than in MAKATI city. The rent varies between PHP1,100 to PHP1,700 per square meter in PASAY, so the average is PHP1,400 while the rent varies between PHP510 and PHP1900 per square meter in MAKATI district, so the average is PHP1,200. For taguig city the average rent varies between PHP600 and PHP1500, so average PHP1,050. Yes that is what I noticed also. Taguig and BGC are not popular with the Chinese, Chinese like the sea and the area of Makati that borders PASAY, (chino roces). Even buildings like San Lorenzo Place on Chino Roces command higher rents than similar Avida style buildings in BGC. BGC is really having a hard time getting good rents. I see the same thing on rentpad. The asking rents for buildings in BGC are too low, compared to buildings in PASAY/MAKATI. For the moment, BGC is the trainwreck. And they're launching new towers costing PHP300K + per sq meters. ""IN 3Q2018 rental rates in PASAY CITY move up, ranking second to MAKATI city, primarily due to employees of Chinese online gaming companies. Landlords are asking higher rates due to the willingness of Chinese companies to pay at initial asking rates to house their employees" +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ It now remains to be seen how the big supply increase will be absorbed by the market. According to some commentators thousands of condos are needed in the bay area to satisfy the new demand. Everything will -primarily - depend on the growth of online gaming in China. And another warning for MAKATI. Big supply increase is coming in 2020. So the pain will be felt everywhere. BGC rental rates are low but except for a little spike in 2019 relatively little new supply is coming available. Pasay CITY will experience a massive supply increase starting now for 5 quarters, while MAKATI will be hit in 2020. http://www.jll.com.ph/philippines/en-gb/research/122/metro-manila-property-marke-overview-3q2018
  13. It seems to me that mr/dr Bubb has underestimated the potential of this area. """"" According to a report by property firm Santos Knight Frank, residential rental rates in the Bay Area surged by a whopping 62.2% during the 2nd quarter of 2018 compared to the same period in 2017. This rate of increase is much faster compared to the other central business districts in Metro Manila. """" https://www.rappler.com/newsbreak/in-depth/212443-how-china-online-gambling-addiction-reshaping-manila
  14. One motivated seller "We are still paying the rest of the loan in the bank.Selling it for a lower price as we cannot manage it anymore" https://www.olx.ph/item/condo-in-breeze-residences-ID8yeIe.html?h=5a12353675
  15. Euro Chocozone Buyer

    SECONDHAND Market in Makati - Data points