Lesson 4

Overview of the Opportunities in Real Estate

Practice Today
Lesson Description: This lecture will give an introductory overview of the real estate
practice. The updates on relevant memorandum approved by the PRBRES on the practice. The
lesson will also give an overview the current market for the real estate practice.

LESSON OBJECTIVES
• Provide an overview of the real industry practice
• To be aware of the current industry status

LESSON LEARNING OUTCOMES

• Be motivated and be inspired by the current market for real estate practice

Real estate in the Philippines today is now on its recovery stage. After a decade of unprecedented growth
before the pandemic, the country’s economy is now poised to take off again. Considered as one of the
fastest-growing economies in the region, with its young population – the country is projected to post
robust macroeconomic condition paving a way for different sectors to further flourish, especially that of
real estate.

The real estate industry’s growth in the past decades is attributed to the increase in demand for residential
and commercial properties driven by various factors. These demand drivers are: the ever expanding
middle class, rising urban population growth; housing needs of BPO (Business Process Outsourcing)
employees, since a growing number of these workers need to live near their workplace; and remittances
from overseas Filipino workers (OFWs), more than half of which are real estate-related, the influx of
foreign investors, the establishment of technology companies, and multinational corporations, the vibrant
labor market, and flexible workspaces will further boost the real estate market again

This phenomenon gave the real estate industry the most in demand and the highest income earning
opportunity among other professions . Real estate has provided a great income, a flexible schedule, and
incredible investment opportunities. There are many ways to make money as a real estate agent or broker.
There will be a continued demand for real estate brokers and sales agents, since people turn to them when
looking for a larger home, relocating for a new job, and for other reasons.

There are different areas in which to explore being a real estate practitioner in the Philippine market.
These can be explored by the practitioners according to their circumstance, competence, skills and
resources.
REAL ESTATE INVESTING

Many people earned well in the real estate sector from buying a property at a low price and selling or
renting them out at marked-up rates. They even seek out run-down properties and do a makeover to
increase the value, most often in attractive neighborhoods for flipping or wholesaling. Some people even
rent out their vacation homes to tourists to earn quick money. Others may go for ancillary profits by
doing micro
businesses near a property like food stalls at cinemas, in-flight snacks, or car wash at gas stations.

Demographics
These are the data that describes the composition of a population, such as age, race, gender, income,
migration patterns, and population growth. These statistics are an often overlooked but significant factor
that affects how real estate is priced and what types of properties are in demand. Major shifts in the
demographics of a nation can have a large impact on real estate trends for several decades.

For example, the immigration boom to other countries is a demographic trend with the potential to
significantly influence the real estate market. The transition of these baby boomers to retirement is one
of the more interesting generational trends in the last century. They may be downsizing, selling their
houses, moving to condominiums, to farms or most especially moving back to the Philippines.

Interest rates
Interest rates have a major impact on the real estate markets. Changes in interest rates can greatly
influence a person's ability to purchase a residential property. That is because the lower interest rates go,
the lower the cost to obtain a mortgage to buy a home will be, which creates a higher demand for real
estate, which again pushes prices up.

The Economy
This area is one key factor that affects the value of real estate. This is generally measured by economic
indictors such as the Gross National Product (GDP) employment data, manufacturing activity, the prices
of goods, etc. Broadly speaking, when the economy is sluggish, so is real estate.

However, the cyclicality or the boom or bust of the economy can have varying effects on different types
of real estate.

For example, if a REIT has a larger percentage of its investments in hotels, it would typically be more
affected by an economic downturn than a REIT that had invested in office buildings. Hotels are a form
of property that is very sensitive to economic activity due to the type of lease structure inherent in the
business.

Renting a hotel room can be thought of as a form of short-term lease that can be easily avoided by hotel
customers should the economy be doing poorly. On the other hand, office tenants generally have longer
term leases that can't be changed in the middle of an economic downturn. Thus, although you should be
aware of the part of the cycle the economy is in, you should be aware of the real estate property's
sensitivity to the economic cycle.

Government policies/subsidies
legislation is also another factor that can have a sizable impact on property demand and prices. Tax
credit and incentives, lowering of interest rate. penalty condonation and subsidies are some of the ways
the government can temporarily boost demand for real estate for as long as they are in place. Being

PS 1 Fundamentals of Real Estate Management --- Lyceum of Alabang : SY 2024. ---- Prof Ann V. Villareal
Please do not reproduce/share without permission
aware of current government incentives can help you determine the supply and demand and identify
potentially false trends.
Key Notes:

• There are a number of factors that impact real estate prices, availability, and investment
potential.
• Demographics provide information on the age, income, and regional preferences of actual or
potential buyers, what percentage of buyers are retirees, and what percentage might buy a
vacation or second home.
• Interest rates impact the price and demand of real estate—lower rates bring in more buyers,
reflecting the lower cost of getting a mortgage, but also expand the demand for real estate, which
can then drive up prices.
• Real estate prices often follow the cycles of the economy, but investors can mitigate this risk by
buying REITs or other diversified holdings that are either not tied to economic cycles or that can
withstand downturns.
• Government policies and legislation, including tax credits, incentives, interest rates, penalty
condonations, and subsidies can boost or hinder demand for real estate.

CURRENT ECONOMIC OUTLOOK

Real estate in the Philippines today is now in the recovery stage. After a decade of unprecedented growth
before the pandemic, the country’s economy is now poised to take off again. The country is considered as
one of the fastest-growing economies in the region fueled by its young demographics. This robust
macroeconomic condition continues to pave the way for different sectors to further flourish, especially
that of real estate.

All these factors gave rise to a bullish real estate market outlook ahead. Increasing home prices haven’t
deterred buyers from acquiring real estate, with many property seekers opting to take out housing loans to
help finance their purchases.

Real Estate the most in demand and the highest income earning opportunity among other professions .
Real estate has provided a great income. A flexible schedule and investment opportunities.

There are different areas in which to explore being a real estate practitioner in the Philippine market
explored according to their circumstance, competence, skills and resources.

OPPORTUNITIES IN THE REAL ESTATE SELLING:

PROJECT SELLING
This is where a “rawland” is subdivided into smaller lots for selling to individual buyers. The
development offers amenities and features to make the project an attractive and sustainable community.

This maybe the easiest and the most common entry level in the real estate profession. From the earliest
simple subdivisions, these sector has now exploded into townships where whole cities have grown to cater
to the primary needs of the population in these hubs.

Features of Subdivision Selling

• Easy to get into - all support, training and tools are easily available. Once basic training has been
achieved, The only thing needed from the practitioner is to tap into their network and developing
 digital selling skills
•

There is an abundance of “listings” – meaning, there is a huge supply to offer to the buyer • There is a
huge demand fueled primarily by population growth in the country • With the advent of the internet
and digital selling, there is a wider reach and efficiency in real estate transactions
• There is a system for easier engagement for the seller

Other Kinds of Project Selling

Condominium Selling – almost the same as project selling, condominium selling has grown by
leaps and bounds. The shift towards smaller living, need for accessibility to work manageble
 lifestyle has driven this sector off the charts.

Industrial Selling these are the sales of lots designed for manufacturers, processors and
producers of goods sold to commercial businesses. These are factories, storage facilities, mining,
shipping operations. Examples are Suntrust’s Ecotown, FPIP

Club Shares –This is the kind where time, membership, use of facilities is sold for the enjoyment
of the buyer. Examples are golf and country club shares, time shares, memberships in resorts

Memorial/Columbarium – investing in memorial lots are now growing in popularity among

local investors as they see a high return on their investments. The simple memorial parks before
has now become more developed and is a very lucrative both for the developers and sellers.

General Brokerage/Rawland Selling - with the fast paced real estate development in the
country, there also came the rawland buying frenzy of real estate developers. More notably
known as land banking or land assembly, this is definitely requires more diligence and network
network than project selling. Rawland selling is also fraught with conflict and heartache.

Leasing – this is where an owner of a property allows another the use of the property for a fee. A
contract is drawn outlining the terms under which one party agrees to rent property owned by
another party. It guarantees the lessee, also known as the tenant, use of an asset and guarantees the
lessor, the property owner or landlord, regular payments from the lessee for a specified number of
months or years. The usual professional fee for this kind in the one month rental.

Foreclosed Properties – Foreclosure is the legal process by which a lender attempts to recover
the amount owed on a loan by taking ownership of the mortgaged property and selling it.
Typically, default is triggered when a borrower misses a specific number of monthly payments,
but it can also happen when the borrower fails to meet other terms in the mortgage document.

Asynch Activity: Lesson 4

1. Research on the different niches in Real Estate.
2. Based on your research and experience, what do you think will be your
niche based on what you think is your strength, inclination and resource 3.
This is a self reflection. No submission needed.

*************** OoO****************