Real estate still the Safest Investment With the global financial crisis continuing to pose bleak prospects for many countries, Fitch Ratings' stable outlook for the country's economy should give Filipinos some glimmer of hope. Even the World Bank, in its report released in November, said the Philippines has greater chances to weather uncertainties brought by the slowdown, citing fiscal reforms and strict measures undertaken by the government over the past few years. One of the sectors that stands poised to benefit from the global credit crunch is real estate, with foreign property investors starting to turn away from Europe and looking at other markets like Asia, showing particular interest in countries such as the Philippines. Global property consultants aver that real estate continues to be the best and safest investment especially during times of crisis since over time, these will appreciate in value. Add to this the fact that the industry is fundamentally sound, with safety nets and conservative lending policies that have limited their exposure to high-risk ventures. Unlike in the US, Philippine property developers usually break ground for a project only when about 60 percent of the units have been pre-sold to avoid the problem of unsold units. Property consultants have disclosed that a lot of foreigners from the UK and the Middle East are showing interest in buying second homes, particularly buy-to-let condo hotel units that offer better returns ranging from eight to 14 percent since investors can derive income by having the unit rented out. Luxury housing also continues to be a robust market, with demand for high-end properties in Metro Manila and nearby areas still strong. One of these high-end projects is Dubai-based Kingdom Hotel Investments' Raffles Residences. Located in Makati, the project posted a record-high one day sales of over $45 million in July despite the fact that it was still in its pre-construction phase at the time. While the US financial mess has been in large part driven by the collapse in the housing market, Filipinos will always consider owning a house their priority in life. Perhaps this is why developers are gung-ho about middle and lower-end projects that target the OFW market. One of them is AboitizLand which is expanding its project in Talisay City and has started construction for a condominium building in Cebu City. Another is the SM Group with its Sea Residences condo project targeting a younger crowd and small families in the middle-income segment. Most developers offer homes for as low as P1 million and up to P2.5 million for condo units and townhouses, with the government's Pag-IBIG fund providing financing for up to 90 percent of the contract price. Payment schemes are spread over a number of years, with monthly amortizations that go for as low as P8,000. Many of these developments are located in Antipolo, Cainta, Laguna, Cavite and other areas that are relatively near Metro Manila. Many Filipinos may not be able to buy "tierra firma" in prime areas like Makati, but owning property like a mid-range condo unit nevertheless gives them that same sense of security. After all, property is still property, and there's nothing as reassuring as knowing you will always have a roof over your head. Having their own home is also a tangible proof of the progress they have made in life, and serves as a shining testament to all the hard work and sacrifices they endured working in a foreign country. If one will remember, the real estate industry went into a slump due to the Asian financial crisis, but went on to recover, getting a big lift from the business process outsourcing industry that spurred renovation activities for old buildings and drove demand for the construction of new buildings. Then as now, a lot of analysts agree that the real estate sector will weather this current financial storm and will prove to be the safest investment after all. Courtesy from: Land Asia Institute Philippines