Experts are optimistic that the real estate industry will help hoist up the financial system, as more people see the value of properties as a primary residence, a place of refuge during a crisis, and as a passive income source.
In the latest Lamudi Webinar Series, Arch. Henry L. Yap, Senior Vice President and Business Unit General Manager of the Residential Division of Robinsons Land Corporation (RLC), digs deep into the most compelling reasons why real estate remains to be a promising investment for different kinds of people, from millennials to overseas workers to first-time buyers.
Here are some of the highlights of the episode:
Secrets from Seasoned Investors
Considering that some people looking to delve into the property market are first-time or beginner investors, typically millennials, Yap shared time-tested advice coming from seasoned entrepreneurs. He started by saying that the best time to invest is in a downturn market.
“At this point in time, we have a lot of choices for our investors. They have the opportunity to select what best fits their requirement, either from a budget point of view, from a lifestyle point of view, or many other considerations,” he said.
Aside from the wide range of options, you can also take advantage of the reduced interest rates since banks encourage borrowing in the time of crisis, Yap added. Millennials can treat units as income properties, generating rental yields that are far more profitable than cash sitting in the bank.
“For investors who put it in big developers, they will immediately recognize profit or income appreciation because the properties will tend to go up in prices periodically,” Yap said. In RLC, for instance, the prices increase twice a year. For this reason also, there will be a substantial windfall in the property prices, in the event that property investors would prefer selling the units in the future.
The Future of the Rental Economy
While recognizing that there will be changes, Yap is positive that rentals would remain a good source of passive income. He also believes that the sharing economy will thrive, despite the slowdown in travel. “Once a vaccine has been found, I think the economy will again improve for tourism and that will again augment income for Airbnb,” he shared.
In the previous webinars, experts expressed this same sentiment, while acknowledging the ‘new normal’ in terms of cleanliness in rental units, such as alcohol stations in common areas.
First Property Purchase
Those who are new to the property market can draw a lot of insights and opportunities even in the midst of a pandemic, according to Yap. “They can actually compare where to put their money, where to invest.”
“Here, they can see the big difference between a boutique developer and a well-established developer. From a well-established developer, you’ll see the opportunity for them to provide all the requirements despite the downturn. Here, they can provide you business continuity, they can service your requirements, they can respond to your questions, even during the downturn. These developers continue to have skeletal forces that can service you.”
Discernment is crucial, Yap shared, in the context of choosing a developer to do business with, since there’s a lot of uncertainty that comes with the times today. “We don’t know if the developers that are selling their units now can last that long, so it’s important that we have a discerning investor.”
Investments from Overseas
Similar to his advice to millennial investors, Yap urged Overseas Filipino Workers (OFWs) to invest in the Philippine market now. Filipinos working abroad would want to see their hard-earned money has gone to a good, profitable investment. “Real estate is that one good venue,” Yap said.
There’s financial security in income property, as it generates savings. OFWs don’t need to worry about monthly amortization or rental fee, since they were able to settle these already while working overseas.
Identifying strong markets, Yap shared that most investors come from the Americas, Asia, and the Middle East. “The units they buy vary, depending on the affordability,” he said. In general, investors from America generate purchases in the mid to high segments. Those in the Middle East tend to invest in their first home, which are typically more affordable units.
Property Investment Characteristics to Watch Out for
“Fortunately, in the early part of this year, we launched projects that are considered part of smart homes. This has actually been the most in-demand type of units now, given the pandemic,” Yap noted.
With home features accessible remotely through a smartphone or a gadget, RLC is able to provide convenience and safety to property owners. There’s little to no physical interaction in the set-up, according to Yap. Thus, smart homes make for good investments, either as a residence or a passive income source.
In the same way, destination estates, which are part of RLC’s portfolio, are likely to enjoy sustained attention from the market post-pandemic. These are projects located in areas where there are amenities or conveniences of shops and stores. Residents have everything they need within reach, without a hassle.
“Our destination estates actually allow a lot of convenience. Within these estates, you can already live, work, and play,” Yap said. He added, “The problem of traveling a distance away from your work site will be eliminated if you buy one of our units.”
Robinsons Land’s Digital Transformation
Acknowledging that the times are changing swiftly, Yap said that they’ve been using virtual systems to cater better to the market’s needs in the last years. “We have actually embarked on our digital transformation about three years ago. But more than ever, the current pandemic has allowed us to visualize and reap the rewards from the investments we had done,” he mentioned.
Today, RLC’s sellers interact and transact with buyers even in their homes. Empowering the market further, Yap mentioned these online home buying solutions their company has rolled out:
- Buyers portal, which allows clients to check the records they submitted, including statements of account
- Electronic library, where clients can see types of projects
- 360-degree virtual tours, where buyers can take their time exploring a particular unit
- Online brochures that help buyers compare developments
- Official Facebook page, which contains programs and new announcements
- Digital payment system, which includes three simple steps: sign documents, scan proof of payment, and send via email
Yap believes that RLC’s digital transformation helps them sustain operations in the midst of the new normal that is social distancing.
Safe, Secure Viewings
While covering digital solutions, the company nonetheless accommodates buyers who still want to view properties before purchasing. “We have put safety measures in our showrooms. By the time we can allow our buyers to go there, they will not have to worry about safety or security risks.”
Yap mentioned the following protocols they have in place:
- Regular cleaning and disinfection
- Limiting the number of people that may enter the premises
- Temperature checks
- Appointment scheduling and booking
The employees themselves comply with protocols to ensure the safety of colleagues and clients. Yap said that each worker is required to submit a daily health declaration form. Those that exhibit COVID-19 symptoms are discouraged from reporting to the office to reduce the risk of spreading possible disease.
Although there’s a lot of uncertainty surrounding businesses amid the coronavirus pandemic, one thing’s for sure: real estate remains to be a viable investment. In fact, the purchase of it may be more sensible during a crisis, as it offers much-needed security.