Property firms seen to suffer rout after ‘Ondoy’

By Chino S. Leyco, Reporter
The Manila Times
Wednesday, 30 September 2009

AFTER signs of recovery in recent months, the local property sector may suffer a rout in the wake of the record flooding unleashed by Typhoon Ondoy. Prince Christian Cruz, Global Property senior economist, said the industry would suffer the most from the devastation caused by Ondoy. While it is hard to estimate the financial impact of Ondoy on the local property sector after it struck Metro Manila and a large part of Luzon, Cruz said there will be a definite “wait-and-see attitude” in the minds of potential buyers after seeing the devastation that Ondoy wrought on cities already congested by several property developments.

In the first half, listed companies in the property sector suffered a 3.6-percent contraction in profits, but the Philippine Stock Exchange (PSE) said this was largely due to one-time gains last year. The combined earnings of all listed firms, however, surged 46.3 percent.

“[The flooding] has an impact on the industry because many of our developments right now are concentrated in Marikina or Cainta. Because there’s no more space in the center of Metro Manila, there’s no way than to go in these areas,” Cruz said, referring to areas to the east of the capital.

The value of properties in Pasig, Marikina and Cainta are expected to drop, but Cruz said it is still difficult to say how huge would be the decline.

Ramon Jose Aguirre, Colliers International research manager, said there might be a shift in preference from horizontal to vertical developments in the Marikina, Cainta and Pasig areas.

“It is possible that people would now prefer condominiums than the other developments,” he said.

Aguirre said the hardest hit subdivision in Marikina “would be a hard sell in the next two to three years,” adding that the marketability of that property will now depend on how the government will rebuild the city’s image.

Cruz cited a seller who claims that even if his house was spared from last weekend’s flooding, the value of that property will still drop because of news that Marikina, Cainta and Pasig were the worst hit areas.

Both Cruz and Aguirre agreed the present disaster will have dampen the sales of real-estate companies, especially those with on-going and up coming developments in the flooded areas.

For people who plan to buy houses, Cruz said they should look not only at the property’s accessibility, design and ambiance, but also the drainage system of the development.

“They should now demand that the developer [ascertain the] drainage system of the development, like how much volume of water it can accommodate. This aspect was often set aside before this tragedy happened. All they cared about was the ambiance and the design,” he said.

At the PSE, the property index inched up nearly two percent, but individual issues were broadly flat on Tuesday.