personal Perception:how soon2sell BGC condo #economist

Posted on by tiger40490 rendered_on [ Fri, 7 Mar 2025 ] 01:18 UTC

An 8VIC trainfer said — buy property only if you are convinced the local economy would grow over the long term. In such a context, property is a good inflation protection.

[2017/9/14] Hi Raymond,

I briefly described my Philippines property investment to a professional economist at Macquarie. He briefly pointed out a few basic principles applicable to any residential property market, across countries (I will add some principles of my own).

* Is the local population growing? I think so in our case
* is the population young or old? Young in our case. I think population aging is more common in Japan, Europe and developed countries
* Is their income level rising? I think the rise is reasonable
* Do you have 10 (or even 20) year horizon? I think at our age we can afford to wait 10 years.

He felt if all the answers are favorable, then we will witness positive return, in terms of rental income + appreciation.

I feel normal inflation would also boost property valuation. I think in a high-inflation economy, property is even more important, as an inflation protection.

I believe foreign investors are less reliable. Their hot money can come and go more quickly. They are likely to be “investors” rather than residents. Residential (local or foreign) demand is more stable and more “real” in my view.

[Market risk] Are our units affordable to the local buyers or only foreigners? I guess our small units are more affordable than the bigger units. One Philippines colleague said the price level is affordable to locals.

[Market risk] Did we buy overpriced? I don’t think so, as compared to other properties at that time. Did we buy at the peak? No idea. If we did, then we need to wait 10 years.

I also feel that way, at least sometimes. There’s bubble tendency in many top cities. Some feel Philippines also shows bubble tendency. Even the price level in Phnom Penh (much lower than BGC) is sometimes seen as bubble.
I like to judge real estate overheating by three ratios: price-to-rent; price-to-income; home price to non-housing monthly expense.

[Market risk] Are there many other locations that can be developed, causing an oversupply?

I tend to focus on a lot of theoretical risks. I can list more potential risks, but some are more likely than others. I feel the single most likely risk to hit you and me is currency risk. PHP is not a hard currency.

Based on these subjective perceptions, I decided last year (before U.S. relocation) that I will hold this MegaWorld condo for as long as I could, perhaps 5, 10 or 15 years.

–[2018] Some recent observations + minor notes

  • 腾飞 take-off in BGC/Cambodia valuations are less likely than in Chinese cities presumably because Chinese investors prefer first-tier metropolises like London, Toronto, Sydney etc. Mind share remains low for Manila and Phnom Penh.
  • PH economy feels not as strong as Korea or China (or India). Subconsciously (without any hard evidence) I tend to single out a few developing countries as strong and resilient. PH is not one of them.
  • For residential real estate, in the long term local demand is much more important than foreign “hot money”. I guess economists would agree with me. I feel the BGC location and price level creates reasonable local demand.
  • PH interest rate is high, so it’s best to minimize your mortgage amount.
  • One reason I feel unsure about PH economy is the PHP currency. Since I started in 2015, It has dropped more than 20% against SGD (32 to 39). I feel I have to wait longer for bigger appreciations to compensate for currency depreciation.