REM 13 Chapter 1 Part 2 Summary

[Audio] Chapter 1 Summary: The Property and Capital Market REAL ESTATE AND THE NATIONAL ECONOMY.

[Audio]  1. Economic Growth & Real Estate Demand (Pre-Pandemic: 2010–2019)  Key Drivers:  GDP Growth (~6% annually): Boosted incomes and business expansion.  BPO Sector Boom: Increased demand for office spaces (Metro Manila, Cebu, Davao).  OFW Remittances & Middle-Class Growth: Drove demand for mid-to-high-end condos.  Infrastructure (Build, Build, Build): Improved connectivity, raising land values in emerging areas (Cavite, Laguna, Bulacan).  Market Response:  Price Surge: Office rents (₱1,100/sq.m/month in Makati CBD), condo prices (+8% annually).  Supply Expansion: Office stock (1.4M sq.m, <5% vacancy), residential completions (~60k units in 2019).  Elasticity: Office supply responded quickly (elastic), while prime residential areas were inelastic (land scarcity)..

[Audio]  2. Economic Contraction & Real Estate Impact (Pandemic & Post-Pandemic: 2020–2023)  Key Shocks:  COVID-19: GDP contracted (-9.5% in 2020), WFH reduced office demand (vacancies rose to ~12%).  Interest Rate Hikes (2022–2023): BSP raised rates to 6.5%, increasing mortgage costs (~8%) and slowing homebuying.  Market Response:  Declining Rents/Prices: Office rents (-15%), condo prices stagnated (0–3% growth).  Construction Slowdown: Office completions (-30%), fewer residential launches.  Market Adjustments: Shift to logistics (e-commerce) and affordable housing..

[Audio]  3. Interest Rates & Real Estate Demand  Low Rates (2012–2018, 2020–2021):  BSP rates at 3–4% (pre-pandemic), 2% (2020) → fueled condo boom (~10% annual price growth).  High Rates (2022–2024):  BSP hikes to 6.5% → mortgage rates hit 7–8%, slowing demand (residential sales -20% in 2023)..

[Audio]  4. Credit, Construction Costs & Supply  Financing Challenges (2022–2024):  High borrowing costs → project launches dropped ~20%.  Rising Construction Costs (2021–2024):  Steel, cement, labor costs up 20–30% → developers shifted to prefab/modular construction.  Regulatory Delays:  Metro Manila zoning/permit issues → pushed developers to provinces (Cebu, Clark, Davao)..

[Audio]  5. Public Policy & Housing Programs  Affordable Housing:  Pag-IBIG loans (5–7%) supported mass housing (e.g., Bulacan, Cavite).  Socialized Housing Law (RA 7279): Requires 20% of projects for low-cost housing.  Tax Policies:  REIT reforms (2021): Lowered public float to 33%, encouraging listings.  VAT exemptions for socialized housing (units below ₱2M)..

[Audio]  6. Financial Institutions & Regulations  Residential Financing:  Pag-IBIG, bank loans fueled pre-pandemic condo boom.  Commercial Real Estate:  BSP Basel III rules tightened lending for risky projects.  60-40 foreign ownership rule limited large-scale investments..

[Audio]  Key Takeaways:  Cyclical Market: Real estate responds strongly to GDP growth, interest rates, and sectoral demand (BPO, OFWs, infrastructure).  Supply Constraints: Construction costs, zoning delays, and credit tightening limit supply elasticity.  Policy Impact: Government housing programs and tax incentives shape affordability and developer activity.  Future Outlook: Recovery depends on interest rate cuts (2025+), infrastructure completion, and REIT expansion.  The Philippine real estate market remains volatile but resilient, with longterm growth tied to economic policies and global trends. .