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BUBBLE Debate: Is there a Bubble in PH Property?

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"Dr Bubb, when is the Philippine Real Estate market going to run out of bigger fools???"

- ECB, on previous page

tRpNS8J.gif

Greater Fools look only at the rising Prices of New Properties, and ignore Rental yields and Secondhand prices.

In the PH, it is impossible to see accurate Secondhand prices for the Overall market, and RENTS that are most visible on the internet are only Asking Rents, not the final negotiated Rents that people actually pay. So in watching market trends, I  have to partly rely upon a parallel market, the Philippines Stock Market to get my most timely readings on what is actually happening in the current market.

In I am now monitoring SMPH's prices closely, because I think it may be the best bellwether for what will happen to overall Manila Condo Prices.  SMDC is probably the most active developer in the Manila Bay area. which I think will be "Ground Zero" for the next downcycle in PH property.

(SMPH, is the quoted stock market entity, one of the highest market cap companies in PH, that owns SMDC.)

SMPH / SM Prime Holdings Inc ... 5-yrs / 10-yr : 3-yr : 1-yr : 10d / Last: P32.30 -1.40, -3.87%

GxeXDjY.gif

SMPH is right now. late morning today, trading at P 32.30, and if it closes there, it will break below the uptrending channel, going back to 2014.

Next big Support test would be the old high at P31.  If that gets broken with strong volume, and trading pushing below that support, it could be an early sign that the long bull market in Manila Condos is ending.  Indeed, I am expecting that because:

+ SMDC could hide the reality of Oversupply, when they are just selling expensive Condos to over-eager buyers, who believe their hype. But once the projects are completed, the reality shifts:

+ When the Owners get their keys, and those who are investors try to rent them out, they will soon discover the Law of Supply and Demand.  If there are too many condos in the market, more than there are Tenants for them, Rents will be forced lower.  Certain areas of Manila are most vulnerable now to falling Rents, and SMDC has been (probably) the largest developer within those vulnerable areas.

+ The Statistics will show us the most vulnerable area(s), and they are not hard to spot:

Area SUPPLY : 12/2017: 2018 Completions : 2019 Completions > 2018-19 :
Manila Bay--- : 11,000 : 11,900,  +108.2% :  + 2,600,  + 23.6 % > +131.8 %
BGC/The Fort :  27,500 :  +9,300,  + 33.8 % :   + 3,000,  + 10.9 % > + 44.7 %
Makati CBD--- :  25,000 :  +2,600,  + 10.4 % :   + 0,600,  + 02.4 % > + 12.8 %
Ortigas Center: 17,400 :  +1,100,  + 06.3 % :   + 0,600,  + 03.4 % > +  9.7 %
---- Gr. Manila > 101.6k :  27,200,   + 26.8 % :   + 8,200,  + 08.1 % > + 34.9%

> source: http://www.colliers.com/-/media/files/marketing reports/4q2017_colliers_quarterly_residential.pdf

Despite the projected huge rise in supply, Collier's estimated vacancies at year-end 2017 were "flat" at 12.6% for Greater Manila "due to delays".  Vacancies  are expected to rise "to the mid-teens" in 2018-19,  before falling back.  But not all areas in Greater Manila are equally easy to Rent.

For Manila Bay, the prospects are likely to be far worse.  The statistics show a doubling of supply in a single year and 130%+ over the next two years.  This is a grim scenario for those who own Condos in Manila Bay.  Where are all the new tenants going to come from?  Right now, SMDC is telling buyers of 1BR condos, costing over P7 million (a gigantic P280k psm) to expect a rent of P 30-35,000 Monthly. At P30k, that's gross Yield of just 5.1% on today's inflated prices.  Indeed, there are some condos advertised for Rent at those prices, but who knows what the actual rents are when a serious tenant is through negotiating.  (I do have some suspicions that Asking Rents are being inflated to make potential Buyer's calculations look better - ie some ads may be "planted".)  In any case,  those are rents being asked today, BEFORE the doubling of supply.  What will Manila Bay rents be in 2-3 years after all the new supply hits the market.  Maybe 30-50% Lower?  Maybe even below that for restricted view or poorly looked after units, because New hotels are coming into the area, and Condo Associations are beginning to restrict and prohibit short term AirBNB type tenants.  The area hotels, which are still expanding want to protect their business franchise, so they are pushing for more restrictions and more taxes on short term tenancies in condos.  How easy will it be to find Long Term tenants in the area, when a commute to Makati or BGC can mean battling traffic, and there are cheaper (older) flats within those areas.

I do not see rapid growth of new tenant being easy in the area, especially for businesses servicing tourists.  I am thinking of a factor not much discussed, the limited size of the nearby NAIA airport. Right now, NAIA is operating at close to 90% of capacity. (Takeoffs are 41-44 per hour, and the maximum is 48 per hour.) And given the small size of the airport, there is not enough space for a second runway.  The logical growth, is to move future growth to Clark Airport in the North.  Are new people, the tourists whom the growth in Clark will be servicing, be willing to take a 2-3 hour bus, van, or cab journey across crowded Manila to stay in a new hotel or new condo in Manila Bay?  I have serious doubts that will happen.  There's no easy and obvious place for the new tenants to come from.  I'm not expecting aggressive expansion of offices in Manila Bay, because land is no longer cheap in Manila Bay, and the area is too cutoff (by heavy traffic congestion) from other places of business.

I am expecting this New Reality (of "obviously Excess Supply") to effect stock prices first.  Institutional investors who were happily buying SMPH stock last year, probably because they saw SMDC raising Condo prices aggressively, and it seemed to be sticking - But now...

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HOW SOON is a Bubble Corrected?

Was just One Year enough to make a bottom in Ontario (-30% for some properties)

First, a prediction from last year

Real Estate Crash 2018 | The Canadian Bubble Bursts

Is this pundit premature?

Real Estate Crash OVER Already? - Garth Turns BULL

I agree with the Video. "the advice to Buy Now may prove bad advice"

I have seen most Corrections on the Long Cycle upswing (12-15 year up), take at least 3-5 years to the downside

Example: 12-15 years Up + 3-5 years Down = 15-20 year Cycle.

Even so, the Correction may come in 2-3 bursts of 1-2 year drops. So Toronto Ontario may get a rally, after a drop,

and the downcycle may be less than Halfway over

Formafist says, "you are only going to know a bottom, when you are Past the Bottom"

Here:

IMPORTANT: How to Time the Real Estate Market

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Not so fast, Dr Bubb.

 

Harry Dent talks about real estate investment dynamics, but then suddenly we found out he has bought a VACATION home in Puerto Rico.

And he is apparently following the "GREATER FOOL" theory. I mean, i haven't seen any information in this video about the SUPPLY of vacation homes in Puerto Rico, and I can only conclude that the reason why he has made this investment is because there are going to be more people buying vacation homes -- there is a second wave of people who buy vacation homes and peak at the age of 65 --.

 

And VOILA, here you have it. And I have seen BABY BOOMERS in Breeze Residences. Especially American Baby boomers, and I have seen them in the sales offices of Avida Land and other places, and lo and behold, the number of people reaching the age of 65 is going to increase until 1961+65 = 2026 for American Baby Boomers and 1964+65  for European Baby Boomers = 2030 (Thailand will be Europe's favorite while PH will be an American vacation land).

(This is the reason why Thailand will become the most prosperous nation by 2030 -- because the traditional spending wave only looks at domestic spending, and Thais births peaked like Europe-China's birth peak -- but I take into account INTERNATIONAL SPENDING)

 

So the theory goes something like this. MOAR baby boomers vacation home buying peaking at age 65 and this trend rising until 2026 for PH, MOAR fools . And MOAR fools leads to "GREATER" fools and GREATER fools leads to HIGHER PRICES.

 

In any case, BABY BOOMERS, and for PH especially, American Baby Boomers are going to minimize and mitigate the effects of a supply shock coming to the Bay Area. Therefore I do not expect a 50pct retracement. We might see a slight cooling of the market but as MNL becomes one of the most densly populated areas in the world, the ECB is confident American Baby Boomers will step in and prevent a melt down.

Agreed, SMDC is a proxy for the Entire Philippines. SMDC is especially concentrated in VACATION homes.

I still expect 27sq meter Breeze units official SMDC price to reach PHP7M by year end. And that's the offical price which is totally decoupled from the secondary market.

The stock market is not always a good indicator of the real estate market. 2007-2009 proved that. The stock market fell 50pct but real estate indexes were down only 4-5pct. Normally that loss can be overcome with rental proceeds. 

The stock market would have to fall more than 50pct for it to have any meaningful impact on PH property prices. I still expect the BSP index for 1Q 2018 to be up as I have only seen price increases with most developers.

http://systemisbroken.blogspot.com/2018/02/bsps-reserve-requirement-ratio-cut-is.html

In this article you see the stock market index and the property index, and stocks are far more volatile than RE.

 

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But there is also a danger in my line of reasoning.

While everywhere in the developed and developing world, life expectancy is RISING, IN the USA life expentancy - especially for most while males is declining - due to drug use, opiod, depression and alcohol -- and thus many baby boomers might not live until the age of 65.

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"... I have seen BABY BOOMERS in Breeze Residences. Especially American Baby boomers, and I have seen them in the sales offices of Avida Land and other places, and lo and behold, the number of people reaching the age of 65 is going to increase until 1961+65 = 2026 ..."

The must get terribly bored at Breeze Residences.

How much shopping & gambling can you do?

Personally, I get bored at the beach - that's why I prefer a genuine urban environment like Makati or BGC.

AUB-chart.jpg

I do see many older foreign people in and near Greenbelt Mall, but not a flood in the way I have seen a flood of Chinese over the last 2-3 years

Tourists_Arrivals_PH_CNNPH.png  

This makes China the third country of origin of tourists in the Philippines, next to South Korea and the United States.

> http://cnnphilippines.com/news/2017/01/28/Chinese-tourists-surge-in-PH-after-Duterte-state-visit.html

1 / Colliers said Chinese investors accounted for 10 percent of SM Prime's international condominium sales in 2017, an improvement from less than five percent in 2016,

2  / Ayala Land noted that the Chinese buyers accounted for nearly 50 percent of its international sales last year,” Colliers explained

 

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Re: Market Situation ... 1st post on this page

(I received this comment of the MM Real Estate, Viber chat):

I agree with you ...on the assessment on the current market, and that is hard to get real numbers to get an accurate picture of if we are close to a large correction. Colliers market report is the best I found so far (not sure how reliable the data is ?) In Colliers report the expected vacancy for the Bay area is 18 % !!


I think long term the Philippine property Market looks good with an increase in average wages and an overall increase in economic activity and near-term infrastructure projects. However, I can’t see how the huge supply in some areas would be sucked up by local rental demand. And as you said as long as the developers can manage to sell properties to foreign buyers on “made up performas” the party would still go on. However, at some point the music would stop.


I know from other markets a good indication on that there is issue on the rental demand side is to look into the Banks quarterly reports and look for the loan default rates, if it start to creep up that should be a red light that both developers have issues with some of tier projects but also that private investor starts to default on the property investment loans

-  R.L., on a Viber chat

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A warning signal

 

This article was written early 2016 and that is just before we saw the dramatic price increases in places like the bay, bgc

 

"""""""""""""""""""""""""

In many cases apartments are not old, and are selling for millions below what they bought for from the developer

https://theexpatangle.com/aroundtown/manila-property-market-to-buy-or-not-to-buy/

 

""""""""""""""""""""

 

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On 4/23/2018 at 8:58 PM, Euro Chocozone Buyer said:

A warning signal

This article was written early 2016 ...

In many cases apartments are not old, and are selling for millions below what they bought for from the developer

https://theexpatangle.com/aroundtown/manila-property-market-to-buy-or-not-to-buy/

Supply/Demand

... From my balcony I can see two other buildings, which have been completed within the last 18 months. At night there are very few lights on. Again this is only anecdotal evidence but if these buildings have all been sold out, yet no one lives there. You can safely assume a lot of these are being held as investments.

With so many investors looking for tenants there is a flood of available rental stock. If the underlying demand for housing is not strong enough to meet this then rents are likely to fall as owners compete to secure tenants. I recently negotiated 33% off the asking rent for my current lease, and it really didn’t take much to do this. Can you imagine if you were holding an investment and the income was one third less than you were expecting, after a period of no income?

Again from just standing on my balcony I can see five more buildings under construction, adding another few thousand apartments into this market. Off in the distance is Circuit Makati where another cluster of buildings will from a mini condo city over the next few years. Again many of these have already been sold by the developers, but is there room for further price growth in the future? To me this looks unlikely in most areas.

 

holiday.png

Very few Condos will have all or most of the lights on - this is probably a hotel

"ANECDOTAL"?

That old "light test" is not reality.  In my experience, Do that anywhere and you will find a small number of lights on,

The RENT test - getting 33% cheaper is more meaningful, but he did not give facts & figures how can we know it means?

From my own experience on the Fringe of Makati's CBD, I have seen the market absorb a big jump in supply, and Rents for small studios are rising.

Colliers says 3BR rents are falling, but for small units Rents seem steady to firmer, and there are fewer units advertised for rent where I live, and they are mostly at higher levels.

 

Manila needs better transparency - and more sharing of anecdotal info - that's one of the purposes of this site

I do not think that relying on the "rising prices" ASKED by developers is a truly good way of assessing the market.

The big marketing machines of the major developers are scouring Manila, PH, and now The World to find someone willing to sign and installment purchase contract with high purchase prices quoted in it.  The Buyer will not know if he/she has truly made money, until it is sold and all the sales costs deducted. The fact that another buyer paid a higher price 3 or 6 months later, does not really mean you can sell YOUR unit at a higher price - you do not have access to the same buyers on the same terms.

Do not believe the "false reality" presented by the Developers quoted Sales price.  That is not YOUR reality, as someone who can only sell in the secondhand market

 

 

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RED Residences - Why has SMDC inflated prices so fast?

red-building-facade.png?resize=660,763

Some posters on SSC think it was in order to make Bulk Sales to Chinese buyers ("discounted" by 35%)

red-location.png?resize=768,707

1-BR price : P7,136K / 26.04sqm = P 274.0k psm / Paid as: 15% over 47 mo. +85% @ completion, Apr.2022
Note: @ completion: (85%): P 6,066K /26.04 = P 233k psm, "a price from which a buyer might easily walk" in a weak market

> source

+ 584C :

In China, property developers often offer "bulk purchase prices" to individual or groups of individual buyers who buy many units at one go. Chinese buyers have come to expect "heavily discounted bulk purchase prices".

Hence, SMDC and Chinese agents collaborated to give the Chinese buyers what they want. If one can buy in sufficient bulk, 35% discount is easily obtainable for SMDC condos. In early 2017, one Chinese millionaire was offered 70+ remaining units of SMDC AIR inventory at ~110-120k/sqm, while AIR's list price at that time was ~170k/sqm.

The way I see it, 265k/sqm for RED means the Chinese bulk buyers probably get in at ~180k/sqm, which is still high and gives fat profits for such a location.

Megaword gives at least 25% discount for bulk purchase made in cash. That is how they cleared their remaining inventory in One Central at 2017. There was a 300+m peso bulk purchase then by a major POGO company for use as staff dorm. List price was 180k/sqm then if I am not wrong.

Look it from another angle. If your product is worth 1000 peso, will you want to sell it for 650 peso?

+ Azum. :

Do SMDC still have control on the pricing for when the chinese decides to offload them?

With Megaworld, I understand that the price youll get regardless if a unit came from developer's inventory or from an investor will be the same.

265K per sqm im afraid is a price not anymore based on fair market value in that area.
Im sure they wont have a problem selling them to kapwa mainland Chinese but goodluck offloading such to locals.

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'Inflation' SENSE posted on SSC's Red Residence thread...


"Developer's inflated price.  That is the correct term.
Just last week a family friend wanted to resell their unit at Shore for 6M. I asked why 6M and they said SMDC says its the current value of their unit now. Had to educate them of the real basis of fair market value vs developer's price increases then showed them a list of resale units with prices starting at 4M to 4.5M."
> http://www.skyscrapercity.com/showthread.php?t=1943080&page=2


2MN is a big gap!, that's 50% higher than the secondary market prices

(What is the "Real" price?  The above comment was a response to the following):

Originally Posted by 584C View Post
I don't think SMDC retain control over pricing because many Chinese agents' sales pitch for resale Sea Shell Shore units are "2m peso below market price". It is absolutely garbage lie. Market price is the price where people buy at. It should be "2m peso below developer's inflated list price".

In the last one week, I saw at least 10 preselling resale Shell/Shore units being offered at "24-27sqm" for "3.85m-4.20m". SMDC list price is at least 6m.

I doubt Megaworld retain control over prices. One Uptown Residences are being turnovered now. Can find preselling resale units there for 150k-160k/sqm compared to Megaworld's 220k/sqm inventory. Megaworld sold lots of Gentry Manor to Chinese at 250k/sqm list price. Quite sure there are discounts in Gentry Manor, because in Q4 2017, another developer sold preselling condos at a nearby lot at ~150k/sqm to Chinese buyers. I think there were so many buyers that the developer didn't even bother to do a sales launch. I know because my Chinese friend got an entire floor together with some friends.

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A Disaster WARNING? 

That's how I regard this chart of DMCI, one of the major PH property developers

DMCI Holdings Inc. / DMC ... update

qre4ibo.gif

Keep an eye on DMC next week.

DMC looks set to break or test support at P 10.40 (next week?) and may soon test the 5-Year Low at P 9.00. If that gets broken too, it would be a very bad sign.  Investors seem to be losing confidence fast in the PH property developers. Not only in DMC.

DMCI  / DMCI Holdings- ... update / Last: P 10.80, pe: 9.91, yield: 2.59% - support: 10.40, 9.00


SMPH / SM Prime Hldg ... update / Last: P 32.40, pe: 33.9, yield: 0.15% - support: 31.00, 23.00, 14.00

OCdrbkB.gif


ALI     / Ayala Land Inc.  ... update / Last: P 40.15, pe: 23.2, yield:  n/a-  - support : 39.00, 30.00, 23.00

mstqKJB.gif


MEG / Megaworld Corp ... update / Last: P  4.31, pe: 10.8, yield: 1.26% - support : 4.00, 3.00

SFCzbwr.gif


PSEI / Phil. Stock Index ... update / Last: P7,546.2. (range: 7,499.3 - 9.078.4) - support : 7,500,  7,000,  5,800

YkvpJhr.gif

==

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Wow! USD Rates are rising!

I went to my bank today to rollover a Time deposit.
Rates are now about DOUBLE what they were about two months ago @ Hang Seng bank
06 mos.: HKD : 1.3% , USD : 2.0% p.a.
12 mos.: HKD : 1.6% , USD : 2.2% p.a.
My further thoughts: this will raise mortgage rates, & (eventually) bring down HK property prices


I decided to look at the correlation between USD ST & LT rates and PH Property Developers.
There definitely seems to be a correlation, if you look at the charts.
ST Libor rates started rising fast last Sept. Most PH developer prices peaked later,
like Nov'17 (MEG), early Jan'18 (SMPH) or late Jan'18 (ALI)

 

Philippines Property Developer stocks are Falling... Why?

Partly, because the market is anticipating the higher CONDO SUPPLY & more housing that is pouring out in greater Manila over the next 1-3 years.

But more than that, is the Big Picture, global interest rates are rising.  We can see this in the following charts:

DLBR : Short LIBOR ETN - falls when USD Libor (st rates) are rising

TMF  : 20+ Year US Treasury Bull 3X Shares  - falls when 20+yr US Treasury Bond rates are rising

SMPH, ALI, & MEG vs. Rates / SM, Ayalaland & Megaworld vs. Rate etfs: Inverse Libor (DLBR) & 2x Bear on Bond rates (TMF)

Longer term, since... 10/07/2015 : SMPH : ALI : MEG : dmc : cpg / DLBR : TMF

BcFRs2l.gif

Shorter term, since... 09/04/2016 : SMPH : ALI : MEG / DLBR : TMF

... 10d :

sWSYWfM.gif

USD interest rate indicators - related etfs etc ... update : TMF : DLBR : TLT : TNX :

sMBSUoe.gif

==

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From the Colliers Report for Q1


Looming bubble burst?
Given the strong demand, significantly increasing prices, and record high supply, real estate
stakeholders have expressed concerns of a possible housing bubble burst.
Colliers believes however that a closer look at the recent trends in the market would reveal otherwise.


Typically, housing bubbles are characterised by the following:
(1) Dramatic rise in prices, driven by strong demand, speculation and exuberance;
(2) The strong demand exceeds the pace of supply completion;
(3) Developers attempt to chase the demand and start to build more units;
(4) Speculators enter the market further driving demand for more houses (in this case, condominium units);
(5) At a certain point however, demand slows down while supply continues to increase;

(6) This results in a drastic drop in prices, leading to a bubble burst.


While various stakeholders may debate on the intention of buyers
– whether for end use, investment, or even outright arbitra ge through resale, it must be noted that at l east two unique trends in the Metro Manila market would assuage fears of a bubble burst. Firstly, the downward adjustment in 2018 supply from 27,000 units to 12,700 units effectively softens fears of an oversupply.


And even at 12,700 units, we expect more delays toward the latter part of the year. Secondly,
vacancy improvement in the secondary market within the key submarkets of Makati CBD and Manila Bay Area proves the existence of real demand rather than pure speculation.


We also note that sales to Chinese nationals have risen in 2017 and continued through this year. We attribute
this to the influx of Philippine Online Gaming Operators (POGO) which sustained the office mar ket and c consequently impacted residential sales as POGOs often supply housing for their staff. Many of the major developers have reported increased international sales and cases where buyers are buying multiple floors or in bulk  
 > 1q2018-colliers-quarterly-residential

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HOTTEST PROPERTY?

Is named as what country, do you reckon?

(points for guessing #2 and #3)

> Link: http://uk.businessinsider.com/us-news-best-countries-to-invest-in-now-2018-3?r=US&IR=T/#8-thailand-13


## : Country--- : Population : GDP$B : Grew : /capita :
 1. : Philippines  : 103.3 Mn. : $ 304.9 : +6.9%:  $ 2,952 :
 2. : Indonesia--- : 261.1 Mn. : $ 932.3 : +5.0%:  $ 3,571 :
 3. : Poland-------- :   37.9 Mn. : $ 469.5 : +2.9%: $12,388 :
 4. : Malaysia----- :   31.2 Mn. : $ 296.4 : +4.2%:  $ 9,500 :
 5. : Singapore--- :     5.6 Mn. : $ 297.0 : +2.0%: $53,036 :
 6. : Australia------ :  24.1 Mn. : $1200. : +2.8%: $49,793 :
 7. : Spain----------- :   46.4 Mn. : $1200. : +3.3%: $25,862 :
 8. : Thailand------- :  68.9 Mn. : $ 406.8 : +3.2%: $ 5,904 :
 9. : India------------ : 1300. Mn. : $2300. : +7.1%: $ 1,769 :
10.: Oman---------- :     4.4 Mn. : $  66.3 : - nil?- : $15,068 :
===
>10 : Czech Republic, Finland, Uruguay, Turkey, Ireland
>15 : Netherlands, United Kingdom, Brazil, France, Chile

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Higher Treasury Yields (just under 5% over 3 ys) could blunt interest in property

After expenses, most new properties have Net Yields BELOW this level.

And owning the RTB comes with FAR less hassle, & no capital risk

3 YEAR RTB's 4X Over-Subscribed !

RTB-May-2018.jpg

The Bureau of the Treasury (BTr) has raised Php121.8 billion in fresh capital from its latest issue of three-year retail treasury bonds (RTBs),

The Bureau of the Treasury (BTr) has raised Php121.8 billion in fresh capital from its latest issue of three-year retail treasury bonds (RTBs), according to a press release dated June 11. That is more than four times the original Php30-billion offer size announced last May 25.

The BTr raised Php66 billion during an auction to institutional investors last May 30. It received an additional Php55.8 billion from retail investors during the offer period, which was held from May 30 to June 8.

“As with the past issuances of RTBs, we are glad to have generated strong and continued support from the general investing public,” said National Treasurer Rosalia De Leon in the press release. “We are encouraged by the results of this latest offering, as this is proof that more and more Filipinos are getting into the habit of investing, while doing their share in nation-building.

The proceeds from the offer will be used to partially fund the government’s Build, Build, Build program, which aims to roll out massive infrastructure projects around the country.

The RTBs have a coupon rate of 4.875 percent per annum, slightly higher than the 4.6-percent inflation rate set last May. It is also higher than the current annual returns of a majority of mutual funds and unit investment trust funds (UITFs) available in the market.

> https://www.entrepreneur.com.ph/news-and-events/sold-like-hotcakes-investors-bought-php121-8-b-worth-of-retail-treasury-bonds-4x-the-offer-size-a00200-20180611?ref=home_feed_1

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SECONDHAND Market in Makati - Data points
Got some interesting data yesterday.  Found a rare sight: a property agent with an office
at street level on a nice Makati street (such offices are everywhere in Hong Kong, not in PH.)
She told us that she specialized in renting out residential properties to Corporations and
Expats.  She also handles Buying and Selling properties in the secondary market.


She was interested to show places like Rockwell (which have high prices & high commissions.)
When we informed her that we were looking for something much closer to GB, and also cheaper,
she said there is not much supply.  We asked why, pointing out that there is a huge market
for secondhand sales in Hong Kong and other gloabl markets.  She said that the older places are
typically owned by Filipinos who have large families, and will hold onto a property "for generations",
with older people passing ownership on to children or relatives.


She said that it might be easier to find newer buildings, like maybe five years old, where
people had bought them with the idea of reselling at a profits a few years after completion.

/ 2 /

860093-Medium-exterior.jpg : Shang Grand on Emporis

The agent reported a big jump in 2nd-hand prices at Shang Grand.
She said she had sold a high floor unit at over P250k per sqm!  
That's a big advance on the P150k psm level that I had heard prices were offered at 1-2 yrs ago.
Even so, there was an older units (Century Plaza?) which had been sold at P114k psm late last year.


(Interesting comments, & Food for thought!)

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Can it (this) also happen in the PH?

https://www.zerohedge.com/news/2018-08-23/how-turkeys-lira-crisis-was-written-across-istanbuls-skyline

 

Well there are some similarities.

1.

What is most worrisome is that the BSP is totally behind the curve, and that lending rates are lower than the inflation rate,

which could lead to reckless lending and explosive money growth. (and a loss of confidence in the currency).

BSP needs to act and the sooner the better.

I believe this was also the case in Turkey. 

(Turkey was worse because the central bank lost its independence but the core issue is the same).

2.

""""""

The construction industry is a prime example of that dependence. Much of its capital comes from loans denominated in foreign currency

"""""

I don't have the time nor expertise to go thru all the official filings, but exactly how much of this new construction is financed thru foreign loans in PH?

 

Over Reliance on imports + construction being 18pct of the Turkish economy. Sounds familiar??

I guess PH won't be any better.

 

3.

""""

Up to half the buyers of luxury properties built by companies such as Kiler Holding were expected to be wealthy investors from Gulf countries, Bulut said, especially after 2012 when legal barriers to foreign ownership were lifted. But the demand from the Gulf failed to rise to the level hoped for by Turkish real estate developers. Now the lack of demand, alongside rising costs for iron and steel, has caused many projects to stall.

"""

Here one could make a case that it is the Chinese that the Philippine property developers have been courting.

Every property pusher, from even Colliers to the stock salesman from last week pumping his Manila Bay projects, has been promoting the Chinese as the "holy grail". According to them, the Chinese are the ones who are going to solve every and all problems in PH Real Estate,

but there's a catch folks. The Chinese themselves are now in big doo-doo.

FYI Here is James Richards article. Prepare for a YUAN maxi devaluation.

https://dailyreckoning.com/prepare-for-a-chinese-maxi-devaluation/

 

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

 

What should the worried property investor do now?? Any suggestions??

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CAUTION - during the possible "last rally" ?

What should the worried property investor do now?? Any suggestions??

IF you are going to buy, then Buy Carefully:

+ Secondhand, cheaper properties

+ With better prospective yields, like 8-10%+ Gross yield

The Good news is the recent Downtrend in PH property stocks was broken, as  USD Libor eased somewhat

Reverse Libor (DLBR) vs PH Property stocks ... update :

5Ao1HlS.gif

This trend change, suggests a possible new high - or retest of highs - in these stocks, and that the bull market in PH property is still alive

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WILL THE REAL ESTATE MARKET CRASH?

SMPH-etc vs Rates, inverted ... update : MEG+ : MEG :

XcCiUR9.gif

The drop since P2 came as the PH govt announced 6.4% inflation

These “Gradual” Rate Hikes Start to Add Up: US Treasury Yields up to Three Years Hit 10-Year Highs

An entire generation working on Wall Street has never seen Treasury yields this high.

The one-month treasury yield rose to 2.0% yesterday at the close and is at about the same level today, the highest since June 10, 2008. It is starting to price in a rate-hike at the Fed’s September 25-26 meeting. This rate hike, the Fed’s third this year, would bring its target to a range between 2.0% and 2.25%.

The three-month yield, currently at 2.14%, has reached the highest level since February 26, 2008. Back then, as the Financial Crisis was taking its toll, yields were going through enormous volatility, as the chart below shows. During that volatile period in mid-2008, the three-month yield spiked for a day to 2.07% on June 16, but never got back to the 2.14% in February that year:

US-Treasury-yields-3-months-2018-09-05.p

It hasn’t been exactly a whirlwind rate-hike cycle with one-percentage-point rate hikes per meeting, à la Paul Volcker in the early 1980s, but in their “gradual” – as the Fed never tires to point out – easy-to-digest, no-surprises manner, the rate hikes are starting to add up. There is an entire generation working in the finance industry and on Wall Street who has never seen Treasury yields this high. They’re in for a learning experience.

US-treasury-yields-10-year-2018-09-05.pn

The yield curve has been on “inversion” watch since last year, where long-term yields would be lower than short-term yields – a phenomenon that in the past has been followed by a recession or worse. In recent days, the yield curve has steepened a tiny bit, and everyone is expelling an equally tiny sigh of relief. In that spirit, the spread between the two-year yield and the 10-year yield widened to 24 basis points, a smidgen off the 18-basis-point spread on August 27, a low not seen since before the Financial Crisis:

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