Homebuying today has never been so easy, thanks to technology. And ZipMatch firmly believes that it’s not only the homebuyers who benefit from the latest innovations in technology, but also the real estate professionals – both beginner and veteran – who now get to work at a level playing field.
That’s why we sought out our like-minded mentor Jojo Salas, Director for Research and Consulting of the Pinnacle Real Estate Consulting Services Inc., to also share his thoughts and enlighten us on how technology plays a big role in the current landscape of Philippine real estate.
ZipMatch: Jojo, thanks for taking time to speak with us today. You’ve had several years of experience in the real estate industry. What does your business specialize in?
Jojo Salas: The Pinnacle Real Estate Consulting Services Inc. provides a full range of services to buyers, real estate lenders and investors. A team of experienced professionals is dedicated to enhancing the value of client investments throughout the Philippines. Pinnacle’s primary business lines are real estate asset management and brokerage, real estate closing and advisory services, and non-performing loan asset management.
In the field of real estate management, Pinnacle is involved throughout the entire lifecycle of a property from acquisition to disposition. Initially, we discuss asset strategy with our investors and prepare detailed business plans to map out the life and expected performance of an asset. Our real estate asset managers then work closely with third parties such as property management firms, operators and brokers to ensure that pre-approved plans with investors are smoothly executed… To date, Pinnacle has sold over 1,200 properties all over the Philippines through the efforts of its real estate sales and marketing professionals.
What’s different about the Philippines Real Estate industry today versus 5 years ago?
JS: The Philippine real estate market and industry had undergone a tremendous growth in the last five years, aptly declared boom years. All sectors were up, from the cycle-resilient commercial-retail sector, to the international market-driven office sector, to the blistering residential and hotel sectors, and even the industrial sector.
What is more relevant is the demand for all of these sectors has been sustained. For commercial-retail and malls, the growing population and propensity to spend of the Filipinos has been a boon to retailers. The business process outsourcing (BPO) industry drove the pent up demand for office spaces. Overseas Filipino remittances and increasing family income have been pushing the demand for residential products up. Record-breaking tourist arrivals in the past years have been benefitting the hotel and leisure sector. There is a renewed demand for industrial spaces coming mainly from Japanese and Korean manufacturers. The various real estate sectors have been benefitting from these demand drivers.
What will it be like in another 5 years? 10 years?
JS: With the tremendous growth of the various real estate sectors and the corresponding rapid increase in land and property prices, Pinnacle Research observes signs of flattening growth in the coming years. Developers have been aggressive and are practically building supply to service the pent up demand in the various sectors. In some business districts, land prices are becoming prohibitive that developers may experience diminishing returns. For the office sector, the robust demand from the BPO industry is estimated between 12% to 18% in the next five years, which will sustain the growth of the sector. Since developers have been constructing office buildings, office rents have been stabilizing as well. For the commercial-retail, tenants are still lining up to get a space in strategic malls. Big retailers are building various platforms of retail shops to service the needs of the small retailers and the spending public. The industrial sector will be sustained, especially with the various tax and non-tax incentives of the government to attract locators and developers alike.
The competitive market in the next five years is the mid-market residential condominium, especially in Metro Manila. Otherwise, the affordable and socialized residential segments are underserved, while there is still room for growth for the high-end residential condominium projects catering to discerning expatriates and local executives.
How has technology changed the way Professionals sell or lease properties today?
Technology is an equalizer for professionals who are selling or leasing properties nowadays.
JS: In the past, big real estate service companies have the advantage of accumulated information and market intelligence.
Due to various technology and web-based platforms, small players and savvy individual practitioners can compete with big firms at certain segments of the real estate market.
And what about homebuyers?
JS: Homebuyers are likewise benefitting from the various information available in their smart phones and computers.
Looking for suitable options as well as checking for comparables have never been so easy for buyers.
This is another reason why the residential market grew rapidly in the past five years.
Related Article: 5 Ways Technology is Changing the Way We Buy Homes
Are condominiums in Central Business Districts like Makati, BGC, Ortigas and Eastwood as popular as before? Is there an oversupply today?
JS: Condominium projects in main business districts like Makati, Bonifacio Global City, Ortigas, Alabang, and Eastwood will remain very relevant due to demand to be near one’s workplace. This is the reason why most, if not all, of the big players targeted this market segment. For the big players, there is no doubt that they can build, sell and deliver their projects. For the small to medium size players, they may have to compress their margins to compete with the big boys, especially if they did not do their homework properly.
There is no oversupply yet as the big players are not stopping with their project launches, albeit at a steadier pace. What needs to be monitored in the coming months and years is the appetite for the rental market since a good number of the buyers were promised of “good investment.”
We’ve been in a “boom” market for a long time. Will this last?
JS: The property boom is steadily transitioning to a flatter terrain in the coming years. The demand drivers of the various sectors are still very strong, but the construction of supply has been brisk, thereby almost meeting the pent up demand. Real estate developers should be more vigilant in monitoring the market, and should not scrimp their expenses in due diligence and market intelligence.
What’s the next “up and coming” areas in the National Capital Region?
JS: The creativity of the real estate developers is limitless. The site may be relatively raw like the “Bay Area” and the recently privatized government lands the former Food Terminal, Inc. (FTI) site, or redevelopment play like the former Reedley International School and former Santa Ana Race Track, or fringes of the Metro Manila like the boundary districts, the big players will continue to build townships or micro-cities to optimize their product offerings and profits. The up and coming areas are the Bay Area, Circumferential 5 (C-5), Quezon City, Caloocan City, and other border districts that have substantial land area for mixed used developments.
What advice do you have for Philippines Real Estate Professionals today? How can they get an edge on the competition?
Real estate professionals in the Philippines should always be at the cutting edge of technology and service platform to broadcast at the widest possible audience, capture the most number of inquiries, and service the most number of clients at the most effective way.
JS: Of course, size matters. Small outfits and individual practitioners should be willing to invest in continuous improvement and partner with like-minded companies.
Related Article: 6 Tips We Picked Up from Philippine Real Estate Successful Pros
What changes do you expect in the industry from the new administration?
JS: Based on the pronouncements and new policies of the new administration, there are reasons to believe that the government would be more business-friendly as well as more populist. At the heart of the matter is the proposed reduction of individual and corporate income taxes, as well as the fiscal and non-fiscal incentives to investors… Pinnacle Research opines that the strong economic fundamentals of the country combined with robust demand drivers of the various real estate sectors would sustain the steady growth of the industry. In short, we are cautiously optimistic after more than five years of property boom.