Posted May 26, 2013 by Martin Armstrong
QUESTION: Interested in your comments regarding real estate and capital flows.
I live in manila Philippines and the price of property in the financial district makati is quite mind boggling. For a third world country prices for a 2 bedroom condo can be close to 300k usd and for a 3 bedroom edging on close to 500k usd plus.
Is this because of capital flows trying to find a safe haven. With the peso very strong and construction at a rapid pace and lots of condos.coming onto the market in 2014 it doesn’t seem to.bode well for the real estate market but it could also be part of the cycle as you discuss.
Interested in your thoughts
ANSWER: The Philippines has been the recipient of capital inflows as also many companies have moved back-offices there. The Philippines is also one of the few countries to have its sovereign debt rating raised.
But yes, in the case of Philippines, the economy will turn down with 2015.75. Then there will be the excess supply of real estate in the financial sector. But what will happen is you will begin to notice that the price rise will spread to the outer-lying areas. This pattern has been true in Europe, America, Australia, China, and Japan. It is human nature.
The property in the suburbs will start to rise and as that takes place the financial sector will have peaked first. When you see that, it will be the setup for the turn in 2015.75.