The Case for Real Estate as a Sound Investment Despite The Crisis
It’s clear to all by now that times have changed drastically. A pandemic has brought the world to heel, and its most immediate effects are clear and present: government-imposed lockdowns, a new normal under quarantine, healthcare shortages, and of course, a tragic and unprecedented death toll.
But less certain are its long-term effects on the economies of the world. It’s difficult to predict precisely how things will go from here, and that uncertainty is also something we must grapple with today. In the face of downward expectations for the post-COVID world economy, people have been prompted to ask: What should I invest in?
There are economists who believe that like gold, real estate is a very sound investment option. Despite occasional market swings, the real estate industry is expected to remain stable in the long term. This stability and sustained demand are important, not just for potential investors, but also for the recovery of the national economy.
Jose Mari Banzon, president of residential real estate developer SM Development Corporation (SMDC), understands why real estate remains resilient, and here, he shares his insights about the industry’s prospects as the world moves forward.
How has the Philippine real estate industry been faring during this crisis?
JMB: Surprisingly well. The real estate industry has been known to stand up well in past economic crises. An investment in real estate is sound because it is generally impervious to the deflation caused by economic stress.
There are industry experts who say that there is usually a lag of six to twelve months before macroeconomic and geopolitical concerns begin to impact real estate prices. By the time we get there, we will have already made the necessary adjustments and returned to normal.
What is it about the real estate industry that makes it resilient?
JMB: The beauty of this industry is that the asset is real, tangible and permanent, as opposed to other investment options like securities. Also, shelter is a basic human need. In the Philippines, we are looking at a housing backlog of approximately six million. During crises, people are not inclined to sell their real properties unless dire circumstances force them to do so.
Is this a good time to buy real estate?
Yes. Buyers should capitalize on the opportunities that abound at this time, as developers are currently offering special promos and incentives. In addition, banks are expected to reduce lending rates and offer better loan terms in response to the lowering of interest rates by the Bangko Sentral. This is the trend among banks globally, to encourage borrowing and spending.
What should buyers look for in a real estate purchase today?
JMB: The track record of the developer is one of the foremost considerations. A solid financial standing will ensure that the developer can withstand financial stress, offer buyers easier terms, and ensure the safety and protection of its communities, especially in a time of crisis.
At SMDC, we do not stop at making a sale. We take care of our communities well after turnover. As the world grapples with an unprecedented crisis, we’ve made it a point to keep working and serving. Our service staffers have continued operating at full strength. We have been conducting regular disinfection and sanitation across our properties and finding ways to make this episode as stress-free as possible for our residents.
Another major consideration, which has been highlighted during this pandemic, has to do with the make-up of the development. Our properties have either built-in commercial establishments or an SM Mall right beside them. Thus, residents have ready access to the essentials—grocery, pharmacy, service center and ATM—all within the community.
Why should people invest in an SMDC development now?
JMB: Moving forward, we see a movement towards work-from-home arrangements. Our developments have been designed to integrate work, life and play within one community. Our wifi-equipped lounges provide the perfect setting for this. SMDC developments are situated in major central business districts and near transport hubs, providing our residents with easy access to the essentials and to their workplaces. All these taken together are a great form of assurance for any investor.
It’s not difficult to see how SMDC could win the confidence and trust of an investor. Its developments boast of quality amenities and services—the marks of luxurious urban living—in vertical villages perfectly integrated with a retail environment.
Properties are strategically situated in key areas across Metro Manila, especially the CBDs of Mall of Asia Complex, Makati, Ortigas, Taguig, Quezon City, Manila, Pasay, Parañaque, and Las Piñas. SMDC has also expanded to CBDs in the provinces like Cavite, Pampanga, Iloilo, Bacolod and Davao.
In times of lingering uncertainty, it’s important to invest in established industry players and durable asset classes that are more capable of weathering a crisis. Consider, in that case, an investment with SMDC.