The COVID-19 pandemic caused the world to go on a lockdown, causing job losses and business closures. With the damage the pandemic brought upon the global economy, the market is hard pressed in making decisions. How does investing in real estate figure in a pandemic-stricken economy?
“Governments and central banks around the world have been moving the fiscal and monetary levers in efforts to support families, encourage spending and promote businesses,” says Jojo Romarx Salas, head of Global Research for Leading Real Estate Companies of the World (LeadingRE), a Chicago-based think tank.
“Stimulus packages that boosted liquidity and stock markets all over the world already benefited from these. However, fund managers would likely allocate a portion of their portfolios to hard assets like real estate because of the volatility of the equities market,” he says.
This is because real estate is least likely to be affected by the deflation caused by economic upheavals. The asset is real, tangible and permanent, its price movement goes steadily upward even in times of crisis.
The demand for shelter will not be waning anytime soon in spite of the economic dislocation. Salas says that the Philippines is still a top choice among foreign buyers. He says
that expatriates living in the Philippines may still opt to buy condominium units. Countries with resilient currencies like Japan view the Philippine real estate as still attractive.
“In the Philippines, a backlog of six million residential units and a strong demand among the middle and upper classes are expected to sustain the property market. There will be disruptions and a rebalancing of priorities, and some may even discontinue their existing purchases. But shelter is still a very high priority among Filipinos,” Salas says.
Location, connectivity, convenience
“Location, connectivity and convenience will continue to be major considerations in a decision to buy a residential unit,” Salas stresses. Projects located near key infrastructural facilities, business districts, schools, churches, malls and supermarkets will continue to command higher rental yields and enjoy steady capital appreciation.
SM Development Corporation (SMDC) president Jose Mari Banzon agrees.
“Consumers are making smarter decisions nowadays. They choose to live close to places that are relevant to their lifestyles and needs, are easy to maintain and are affordable,” he says.
It is for this reason that SMDC makes sure that developments have the features that buyers are looking for, that products are priced correctly and that flexible payment terms are provided, Banzon says.
Being part of the SM Group, SMDC is able to build communities with malls, schools, offices and a convention center. “Ours is an ecosystem that integrates work, life and play into one district. Residents get quick access to transportation hubs, public and private offices, hospitals and schools, essential goods and services,” Banzon says.
This design philosophy is aligned with SMDC’s efforts toward creating communities that minimize carbon footprint, the direction in which the future is headed. With the new normal requiring more people to work and study from home, the need for space conducive to these demands has increased. In addition, SMDC’s WiFi equipped open-air lounges, co-working spaces and study halls provide the perfect setting for this new normal. SMDC units have ample, natural lighting and ventilation and outdoors that have vast spaces where residents can strictly adhere to social distancing.
Priming the economic pump
Despite the economic downturn that the world is experiencing, the real estate industry has shown resilience and sturdiness.
SMDC’s remarkable year-on-year 23-percent increase in revenue in the first quarter of the year, and the strong performance in the past few months, prove that the market continues to have a strong appetite for its products.
Salas believes that SMDC is well-placed to give the Philippine real estate industry the boost it needs to help the economy move forward. “SMDC is an industry leader with a solid financial standing, a robust strategy and a product that is responsive to the needs of the times,” he says.
As such, SMDC is poised to continue with its 2020 expansion plans and is launching a number of high-rise projects in major CBDs in the metro in the last two quarters of the year, starting with Gem Residences in C5-Pasig, a home designed to bring work-life balance, wellness and connectivity to its residents.
“We believe that we have a responsibility to help prevent the further decline of the economy and to protect jobs and incomes. To downscale or scrap projects at a time when the economy needs support would not only damage the economy’s recovery, it would also disrupt SMDC’s development schedule,” Banzon says.