Our "modern day heroes" are credited for our booming real estate industry, and they are only going to make it stronger as the holiday season kicks in.
For the real estate industry, holiday season is also OFW season. At this time of the year our OFWs (overseas Filipino workers) prove once again that they are still the driving force of the residential real estate industry. Branded as the Filipinos’ “modern day heroes,” many research institutes’ reports have shown that a huge majority of residential real estate purchases come from OFWs, and these purchases are what keep the Philippine real estate industry going strong.
According to Urban Land Institute’s and Pricewaterhouse Coopers’ Emerging Trends in Real Estate 2014, Metro Manila is ranked as the fourth top real estate investment destination in Asia-Pacific, and the country’s real estate sector benefits largely from our OFWs’ strong remittances. The housing backlog, which is predicted to increase to 5.6 million units by 2016, is also largely due to OFW’s demand for residences.
The real and increasing housing demand from Filipinos abroad not only continues to boost the real estate industry but also helps the country avoid any property bubbles. The real estate bubble fears stemmed from the perception that many buyers are purchasing condo and housing units as mere speculators who are looking for investments and not as end-users. However, real estate analysts believe that this is untrue, as more OFWs are spending a large chunk of their remittances to own homes in the future.
This year, cash inflow from workers abroad reached 12.7 billion in the first six months, a 6.2% increase from the same period last year. Though remittances accelerated slower compared to the past year, much of these cash inflows are still channeled towards purchasing residences reserved for when OFWs retire in the country or for their loved ones to own.
After a good performance from January to September of this year, it is projected that the residential sector of the real estate industry will only get stronger as the holiday season approaches. Overseas Filipinos who are coming home to the Philippines for the holidays will also be scouting for houses or condo units to purchase with their Christmas bonuses. In an article from the Inquirer, Jones Lang LaSalle Philippines Head of Research, Consulting and Valuation Claro Cordero Jr. stated that as remittances from OFWs peak during the holidays, the purchases of real estate, particularly residential developments, go in the same direction. CBRE echoes this sentiment and also reported that sales associates of developers historically experience their numbers going up every Christmas season.
Enrique Soriano, Ateneo Program Director for Real Estate and Adviser for Wong and Bernstein Philippines, explained that the residential property purchases have yearly cyclical patterns. “The purchasing pattern slows mid-year, as priority payments such as education and repairs take center stage. The cycle then accelerates toward the yearend when overseas money meant for real estate purchase finds its way into the system. It is important to note that OFs account for a third of residential purchases, effectively making the Philippines a remittance economy,” he said.
In terms of meeting the demand, real estate developers are now focusing on creating condo units that fit the budget of OFWs. According to KMC Mag Group’s Midyear Report, condominium production has shifted to serve the middle-income market, and a bulk of the buyers from this bracket are OFWs. It is also projected that the residential supply will peak in the coming year, which is good news for OFWs searching for the perfect home in the country.
Are you an OFW looking to buy a home for you or your family? Read our guide first before you begin your search.