Discovering Opportunities in 2009

1/16/2009

2008 was a good year for property developers. It was probably the best of the last ten years.  Sales were brisk and everyone was happy.  It did not matter whether the development was for the lower-, mid-, or high-end market; they all sold very well.

However, doomsday analysts are painting a rather bleak picture for this new year, which only goes to show just what they are: doomsday analysts living up to their name. These purported oracles are so “good” at what they do that they can find a sad scenario even for the very positive things that have happened in the last year. To them, a drop in oil prices forebodes horrendous traffic jams or a reduction in prices of construction materials translates as ill news for the manufacturers. Nothing escapes their glum prognosis.

I believe there are endless opportunities for everyone in 2009.  Although the US is sunk in a recession, we may not be as severely affected as predicted. Why is that?

For one, we are not as dependent on the American economy like we used to be. There was a time when most of our exports, like decorative handicraft, accessories, and furniture, were geared solely to the US market. Although we suffered when they tightened their import quotas with us, we were encouraged to cultivate other partnerships, particularly China. The breakdown taught us to be independent and not reliant on a single market. In addition, the negative publicity China has been getting due to the quality of their products gives us somewhat of an edge; it offers our products as viable alternatives. For the property sector, this could mean the establishment of more factories and industrial zones.

Second, we Filipinos are very resilient.  We have been immersed in crises countless times over the past three decades-- from dictatorships, to natural calamities, to flailing economies, to varying levels of coup de tat-- so that we are now considered crisis-ready, if not crisis-worn.  In fact, we are the experts in crisis situations and are sought out by other nations as consultants in dealing with seemingly impossible situations. Similarly, our other skills as planners, designers, and builders are ever in demand on foreign shores.

There is an influx of Korean nationals now residing in our country. They also contribute to our economic growth in the areas of real estate, education, etc. Apparently, the cost of living and education in Korea is steeper, so our country is a good substitute. If we can make our facilities friendlier for the Japanese and other Asians as well, we may be able to attract even more visitors. If we can enact laws that would protect and prioritize our own citizens, we can enjoy a symbiotic situation as welcoming host and comfortable partner. Meanwhile, the expansion of housing, commercial, and school facilities will provide us opportunities for growth.

Our cost of living here is cheaper and attracts retirees. Our overseas contract workers cannot work offshore forever; they likewise grow old, get financially settled, and desire to retire. We have to be ready for them. This can translate to a continuing demand for housing from this sector.

Travelers are ever on the lookout for more affordable alternatives for rest and recreation. A $3000 vacation for one in Europe is enough for a family of eight to have luxurious fun in Bohol.  This points us towards more opportunities to develop properties for this purpose.

These days, there is a decline in prices of construction materials, making the situation ideal for building. When the construction industry revs up, the economy improves as well since more jobs are created all around.

Our developers have already learned their lesson during the 1997 crisis and are now smart enough not to make the same mistakes twice. They are more careful. They know that as long as they deliver on what they promise, they will be patronized. One of the failures during the 1996 crisis was that some developers spread themselves too thinly, launching many projects left and right, but were not able to complete these. This made buyers wary of putting in any more of their money, thus slowing down investments.

Lately, I seem to find myself in the company of positive thinkers.  A client, who just sold his home in Quezon City, recently wanted to build more houses. He claims to have been surprised by the number of respondents in search of homes, trooping to the house when he put it on the market.

A friend in the advertising industry likewise seems to be surprised with the volume of his work prospects for the coming year. He believes this is because the fear generated by the US recession prompted businesses to advertise more.

A supplier of construction materials claims to not have experienced a decline in sales. He is confident of the bottom line enough to bring his family on holiday abroad.

Another good indicator is that SM Malls continues building new and expanding their old malls like these were merely sari-sari stores, with one sprouting and sprawling in every corner.

Even call centers, which many feared were on the downtrend, have bounced back since businesses decided to fight back and bring more of their transactions straight to the consumer by initiating more direct marketing calls.

These days of investor wariness opens a door of opportunity for real estate bargain hunters to find good deals for properties owned by Filipino-Americans selling their properties for below market value to support their lifestyle abroad. Now many locals can snatch up US properties at great prices.

We still have other aces up our sleeves that have not been fully explored, such as the self-liquidating agri-based development. These are farm development projects which, with proper management, can eventually pay for itself. Property management, refurbishing, and conversion of existing buildings are also good ways to further grease our economy.

There is nothing to fear but fear itself. Money does not really disappear.  It just moves from one hand to another. So it's just a matter of finding out who has it this time and working out how to cultivate that sector. 

When I asked a client developer why they continue to build despite the current situation, he simply replied, "This is what we do and this is what we do best." Yes, we must continue to do our best and discover the prospect and opportunity in even the most challenging situation.  As a motorcycle enthusiast, I have learned that there's nothing wrong with riding in the rain. You just have to ride more carefully and do everything a little more slowly than usual. On the threshold of 2009, I can only quote the song: “The future’s so bright, I gotta wear shades!”