Real Estate Scenarios During Pandemic (Part 1-3)
From the beginning of mankind, the three basic necessities of human beings have always been listed as Food, Shelter and Clothing. If we relate shelter to the real estate sector, one can assert that even in the midst of the ongoing pandemic and especially after it is put under reasonable control (say, two years from now), real estate is and will continue to be a good investment at all economic levels of society. For the households that have monthly incomes ranging from Php 20,000 to P70,000 (classified as low-middle income and middle-middle income by economists from the Philippine Institute of Development Studies ) there is effective demand for low-cost and economic housing units that can range from P800,000 to P5 million per unit. These households constitute 36 per cent of all households which in 2020 are estimated to number about 22 million. Thus, there are about 8 million households which are actual owners or potential buyers of low-cost and economic housing. Studies done by housing economist Dr. Stan Padojinog estimate that about 5.7M of these households still do not own their own housing units. This is the existing unfilled demand for socialized (4.8M households for housing price range between Php 480,000 to P750,000), economic (.304M households for price range of Php 750,001 to P1.75Million) and low-cost (.602M households for price range of Php 1.75M to P3.0M) housing. Many of these households depend to a great extent on the foreign exchange remittances that they receive from their relatives who are OFWs. Even with the 600,000 displaced OFWs who have returned because of the pandemic, there continue to be close to 10 million abroad who are expected to send some US $30 billion of remittances (down from US $34 in 2019) in 2020. That is why there continues to be a strong demand for low-cost and economic housing during the pandemic. OFW remittances are expected to bounce back quickly (V-shape recovery) after the pandemic is put under control world wide. Thus there will be sufficient incomes for many households in this category to satisfy their demand for low-cost and economic housing for some time to come. What is more, the Philippine population continues to grow at 1.4 percent annually, adding to housing demand.