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Bagsak ang Piso! Afford mo na’ng mag-condo!

The peso dirham rate has been hovering at the Ph13.95 to Ph14 range in the past weeks. With remittance centers seeing as much as a 10-year record low of Ph14.20 exchange rate, experts suggest that now is the best time to buy a property back home.

Why? Simple, they said: you pay less.  A P3.4 million condo unit five years ago when the peso dirham rate was at Ph11 range would cost around Dh309,000; at the current Ph14 rate, that would be Dh245,000 – a difference of Dh64,000, meaning you will have bought the condo at a 26% discount.

The fifth edition of the Philippine Property and Investment Exhibition (PPIE) is underway and experts are saying this could yet be the best venue to shop around.

The strengthening of the dirham to the peso will certainly make it relatively easier for anyone earning dirhams to buy any Philippine products. If we look at the exchange since 2013, the peso has generally weakened against the dirham,” said Thomas Mirasol, VP and COO at Ortigas & Co. LP.  

A P3.4 million condo unit five years ago when the peso dirham rate was at Ph11 range would cost around Dh309,000; at the current Ph14 rate, that would be Dh245,000 – a difference of Dh64,000, meaning you will have bought the condo at a 26% discount.

Mirasol said overseas Filipino workers  (OFW) should stay the course if they have a current long term mortgage with low interest rates; or diversify their portfolio if they have excess investible funds and already have a property.

 

“But, if they haven’t taken a position on real estate yet, I would highly recommend that they do.  It’s a very good time for that now,” he told The Filipino Times in an email interview from Manila. 

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Added Martin Joaquin De Leon, AVP-Condominium Division at Greenfield Development Corp. (GDC), “The implication of a strengthening dirham is that peso-based assets can be bought at a discounted price compared to how it was before the increase (in the exchange rate).”

 

“Based on historical performance,” he said, “sales do increase in countries that experience this due to the perceived discount.”

 

 

Factors at work

Mirasol, who has years of experience in the Philippine property sector, said the buying power of the dirham against the peso has been appreciating from about Ph11 to around Ph14 currently – or some 27% over 5 years. But, he noted, there are also many factors at play in investing in property.

 

One, he explained, property values in the Philippines have also been rising during the same period, so depending on the property being considered, the relative buying power may be tempered.  

 

Another, he said, is that “people can have very specific requirements when investing so having the right property at the right price and at the right time is important.”  

 

Lastly, he said, investors will consider their own business or employment circumstances before making a purchase decision.  The more confident they are of their situation the more likely they are to think about making an investment, Mirasol said.

 

“My advice for any investor would be to weigh each of these considerations, look around and compare prices and features and then invest in what feels right for them,” Mirasol said.  

 

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Windfall

De Leon said the strengthening of the dirham is a windfall for OFWs with existing amortization.  

“For example,” he said,  “if someone bought a Ph4 million unit last year at Dh13 to Ph1, he would have had to pay approximately Dh 307.69k over a certain amount of time. Now that the its Dh14 to Ph1, he only has to pay Dh 285.71k or approximately a 7% discount.”

But while OFWs can heave a sigh of relief on their eased amortizations, most of those interviewed said they’ll spend the difference on their daily cost of living and a bit on bank accounts. There were those who said they will add up the amount to their monthly remittance for their loved ones.

Megan Alonso, a Dubai-based OFW who has a current amortization for a condo unit she bought along Shaw Boulevard in Mandaluyong, is among OFWs happy about the peso devaluation.

“My monthly used to be around Dh1,270. Now it’s Dh1,000. I get 30% more value for the money,” Alonso said.

Chris Toperos, who’s based in Abu Dhabi and already has two units back home, for his part said  he saves some Dh245 in monthly amortizations; he has a third unit  where he saves some Dh100 more in downpayment.

Reginald Altera who’s paying monthly amortization for a house and lot, said payments went down from Dh2583 back in 2012, when he acquired the property, to Dh2215 now that the exchange rate is at Ph14 to the dirham.

Vince Ang said he pays Dh1900 a month for his unit; with the new rate, he will save some Dh200.

Asked what he plans to do with savings , Toperos said the devaluation has eased life a bit for himself such that he now has money to go dining out.

The same with Alonso: “I’ll eat out and go shopping,” she said.  Altera? “Dagdag ko sa panggastos (I will add it to my daily allowance).”

Ang said he will include it in his remittance. ““Fixed kasi ang remittance ko. Kapag ganyang may menos sa bayaran, idadagdag ko sa padala para mas maraming mabusog.  (I’ll use up the saved money for more remittance so I can feed more),” he said

Investment

Condos are the best among other investment tools, said De Leon, explaining that while cash, stocks and bonds yield interest and/or dividends, “real estate, especially condominiums, on the other hand, are one of my favorite asset classes because unit owners can earn both on rent and price appreciation.”

“It’s always a good thing to use what you earn to increase your assets since they are a good source of income,” De Leon said, adding that a condo is oftentimes a good asset choice especially one that is still in its development stage at an ideal location.  

 

“There is a potential upside in appreciation as the condo becomes more desirable to the market,” he explained.

 

Sudhesh Giriyan, COO at Xpress Money remittance company, concurred: “The currency devaluation has obviously made assets such as land and homes more affordable for expatriates, so it is certainly worth considering investing in a nest egg back home,” he said.

 

“We’ve always suggested that expatriates take advantage of favorable exchange rates when they occur,” Giriyan said. “At present, each dirham transferred home is worth more pesos, which makes it a good time for OFWs to remit money back home, set up investments, and look at saving plans,” said.

 

Strong demand

Global real estate think tank, Jones Lang LaSalle has said in a recent report, JLL said that the continued weakening of the peso could lead to stronger demand for residential properties from OFWs because of their higher spending power.

“The recent PHP depreciation against the US dollar may strengthen the purchasing power of overseas Filipino families, potentially increasing overseas Filipino demand for residential units,” JLL said.

The dirham is tied to the dollar, ergo a strengthened greenback would mean likewise for the dirham against the peso.

As of presstime, the dollar-peso exchange rate is at P51.07 to $1. Financial pundits in the Philippines said the peso could further weaken to Ph52.80 by year end and further down in the range of Ph53 to Ph54 by next year. As of writing, the peso-dirham rate was at Ph13.96.

The fifth edition of the Philippine Property and Investment Exhibition (PPIE) will be held on Sept. 22 and 23 at J.W. Marriott Hotel in Deira, Dubai. Major stakeholders of the Philippine real estate industry – from Ortigas & Co. to Greenfield Development Corp., Ayala Land Inc., SMDC, Megaworld and DMCI Homes – will be at the event.

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