‘Invest in low-cost housing’-A A +A
Tuesday, August 7, 2012
ASIDE from building high-end residential projects, real estate developers should also invest in low-cost housing projects to prevent a real estate bubble, an economist said Friday.
Winston Conrad Padojinog, senior economist and dean of the School of Management at the University of Asia & the Pacific (UA&P) warned a real estate bubble may happen if developers will continue building high-end residential projects without serving the huge demand on socialized and low-cost housing.
“There is no glut yet but people are buying units not out of need but because of other purposes, like investment. It is important for developers to look into underserved markets so they’ll be assured of sustained demand” said Padojinog.
Padojinog was one of the speakers during the UA&P Strategic Business Economic Program (SBEP) hosted by the UA&P/SBEP-Cebu Alumni Association in partnership with the Cebu Business Club in Marco Polo Hotel Cebu last Friday.
He said buying more properties for other purposes is prone to speculation, which pushes property prices up. Padojinog said there is already an oversupply in certain property segments, specifically in the middle to high-end markets.
Padojinog said that in order to “avoid a bubble or asset inflation,” the industry needs to address an “underserved market.”
“The country still has a huge housing backlog that needs to be addressed,” said Padojinog.
He said Cebu’s housing backlog is still 200,000 units. Prices of socialized to low-cost housing range from P400,000 to P3 million.
Cebu Landmasters president and chief executive officer Jose Soberano III supported Padojinog’s observation, saying there is opportunity in the middle, low and socialized housing segments.
He said his company is building residential projects that cater to the demand of the low income market segment. He also said a real estate bubble is “nowhere in sight in our country.”
“It would be very difficult for developers to proceed on a project where the market is untested. If there is a slowing down of high-end development, it is with such realization that the demand of such products is waning,” Soberano said in a text message yesterday.
Padojinog also urged banks to extend loans to mainstream market or to consumers who can afford to borrow up to P3 million in residential loans.
The BSP earlier reported that the exposure of the banking industry to the real estate sector reached its highest level at the end of the first quarter due mainly to record-high loans extended by banks to support purchases of residential and commercial real properties.
Outstanding real estate loans extended by thrift and universal and commercial banks amounted to P524 billion. This was 21 percent up from P433.05 billion as of the same period last year.
The BSP said the demand for real properties is being supported by the continued increase in remittances from overseas Filipinos. Supply of credit is also robust because banks remain awash with cash.
Published in the Sun.Star Cebu newspaper on August 08, 2012.