Philippines Real Estate Over the Last Several Essay

Download this Essay in word format (.doc)

Note: Sample below may appear distorted but all corresponding word document files contain proper formatting

Excerpt from Essay:

Philippines Real Estate

Over the last several years, the Philippine Islands has been going through a major transformation. Part of the reason for this, is because the country has become an area of focus for many firms that are looking to outsource jobs from other regions of the world. As, the nation known is known for: having an educated workforce and low labor costs. This has helped to increase the total number of businesses that are relocating to region. A good example of this can be seen with the total number of IT jobs that were outsourced to the Philippines. As, they increased by: 26% in 2011, which is following a rise of 24% in 2010. These factors are important, because they are highlighting how the Philippines are quickly becoming a popular location for variety businesses. (Philippines Real Estate Report 2011)

While at the same time, the government has been aggressively focusing on promoting the nation as place for tourists and retires. This is based upon the tropical lifestyle they offer and their close proximity to other countries in the region (i.e. Japan and China). Over the course of time, this has helped to increase tourism. Evidence of this can be seen with the high number of arrivals that were reported in the first half of 2011. As the country, reported a total of 1.9 million visitors, which is up 12% from the previous year. This is significant, because the increases in tourists and potential retirees are helping to fuel the demand for housing and other kinds of properties. (Real Estate Sector Banks 2011)

For the real estate market, this means that prices have been consistently rising. The reason why, is because there is a shortage in available housing and a large number of employers are relocating to the region (which is improving the standard of living). These two factors have helped to shelter the Philippines against the financial crisis. As the overall amounts of demand, are pushing prices higher. The below chart illustrates the underlying strength of the markets from 2008 to 2011. (Clancy 2010)

Strength the Philippines Real Estate Market










100% (Estimate)

(Clancy 2010)

These different figures are significant, because they are highlighting how the real estate market in the Philippines has tremendous amounts of demand.

However, there are worries that the region could be slowing down. The reason why, is because of fears surrounding a double dip recession and the Euro Zone crisis. These two factors have been raising concerns that the Philippines could be overheating (based upon its strong performance in the past). To determine this, we will be looking at the impact of these events on the real estate market. Once this occurs, is when we will be able to offer specific insights about how they are impacting the Philippines over the last quarter.

The Current Situation in the Philippines

The Philippine Islands has always been at the crossroads of the West and Asia. This goes back to the days when the country was controlled by the Spanish and later the Americans. Once they gained their independence in 1946, is when there was even more focus on the country. The reason why, is because it is within close proximity to the various ports in Asia and it has a good relationship with Western nations. These two factors mean that business and tourists will visit the country on a regular basis. This has helped to fuel tremendous amounts of economic growth that the nation has been experiencing. Evidence of this can be seen by looking no further than, the 7.3% GDP rate that the Philippines experienced in 2010. This is despite the fact that the world economy was going through a jobless recovery, in an attempt to overcome the issues from the last recession. (Philippines 2011)

However, unemployment continues to remain at 7.5% and the number of people who are living in poverty has not improved (with this accounting for 32.9%). This is significant, because it is showing how the overall amounts of economic growth are uneven. As this is helping, particular segments of the economy while ignoring others. Over the course of time, this can cause the economy to go through a period of stops and starts (based on these inequalities). At the same time, the government has taken massive steps to reduce their national debt levels from 3.9% of the current GDP to 2% by 2013. (Philippines 2011)

These different facts and figures are troubling because they are highlighting how there are a number of localized challenges that are effecting the real estate market. When you combine this with the issues from the U.S. And Europe, all of these elements together have the ability to slowdown the housing market dramatically. The real key going forward will be: if the economy can maintain its high levels of economic growth and what the demand for housing will look like. This will depend upon if the world economy is able to avoid another downturn and begin to go through another phase of slow growth. If this can take place, it will help to give buyers confidence about the country's real estate markets. This is the point that sales will continue to remain strong. (Philippines 2011)

The Impact of Events in the U.S. On the Philippines Real Estate Market

In 2007, the real estate market in the United States began to implode. This is because of low interest rates and a robust economy fueled the overall amounts of speculation. As, a variety of consumers were purchasing the largest homes available on credit and a new kind of financing vehicle was introduced (called an adjustable rate mortgage or subprime loan). This is when the bank is offering borrowers, who have bad credit, with a home loan that has number of features. A few of the most notable include: low introductory rates, payments and little to no money down to purchase the property. However, once the Federal Reserve begins raising interest rates, is when this had an impact on these mortgages with the monthly payment adjusted upward to reflect these changes. The combination of these different elements is important, because they all helped to create a large asset bubble in the real estate market. While, increasing the possibility, that there could be some kind of sudden shock to the financial system from these types of mortgages. (Sub Prime Mortgage 2011)

Once the economy slowed, is when borrowers would be unable to afford their mortgage payments. As interest rates, were continuing to be reset higher on subprime homeowners. This is when these amounts began to increase and they were unable to keep up. At which point, the total number of foreclosures began to rise exponentially. (Sub Prime Mortgage 2011)

A good example of this can be seen by looking at: the total amount of foreclosures in 2009. As these numbers, rose to a 3 million homes (an all time high). Since that the time the markets have went through a mild recovery. (Record 3 Million Households 2010) This is because there were various programs designed to help homeowners, who were in subprime mortgages, to refinance to one that has a fixed interest rate. The basic idea is that this would help to stem the overall rate of foreclosures. During the recession, this protected the market against a much more severe downturn. However, the program and other stimulus measures to help homeowners only made the underlying situation worse. The reason why, is because a number of these measures have expired and they were not renewed by Congress.

As a result, the housing market has been continuing to experience the same kind of problems as it was in 2007 to 2009. The only difference is there are a large number of foreclosures on the market and prices have fallen to all-time lows. This is problematic, because if the current rate of foreclosure continues the economy could slip into a secondary recession (called a double dip).

Evidence of this can be seen by looking no further, the total number of foreclosures since the end of the recession. As, 2010 did not see a decrease in these rates with: economy improving and the stimulus measures helping to stabilize the housing markets to a certain extent. However, the total number of foreclosures has remained within the same range of 2.9 million for that year. When this is added to previous figures, the total amounts of unsold homes are increasing exponentially. This is problematic, because it means that the housing market is continuing to remain stagnant. (Record 2.9 Million Properties 2011)

At the same time, the U.S. government and the states have been wrestling with fiscal problems surrounding their large deficits and the how to balance their budgets. This has led to loss of confidence among homeowners, investors and financial institutions. They are fearful that any kind of potential default or government shutdown could lead to an economic meltdown. If this were to occur at key points on…[continue]

Cite This Essay:

"Philippines Real Estate Over The Last Several" (2011, October 12) Retrieved October 22, 2016, from

"Philippines Real Estate Over The Last Several" 12 October 2011. Web.22 October. 2016. <>

"Philippines Real Estate Over The Last Several", 12 October 2011, Accessed.22 October. 2016,

Other Documents Pertaining To This Topic

  • Territorial Expansion How Did the U S Acquire

    Territorial Expansion How did the U.S. acquire the territory in question? On the auspicious date of April 30, 1803, the United States of America bought eight hundred and twenty eight thousand square miles worth of land from the French government of Napoleon Bonaparte. Thomas Jefferson, the President of America, wanted to secure this deal. Wars were rampaging overseas in the continent of Europe and Napoleon had intentions to safeguard what he had acquired

  • Gap Inc In 2010

    2010 Description of Industry Gap, Inc. is one of the most leading American forte apparel retailers who foundation is centered in San Francisco, California. It trades things like the casual apparels, decorations, and other products that are personal for men, women and children. The merchandises of Gap, Inc. comprise of khakis, T-shirts, boxers, denim, casual wear, and others. The trade is done in the New York Stock Exchange which goes up

  • Business General Please List Sections According to

    Business (general) Please list sections according to instructions Exercise 1.1: Review of Research Study and Consideration of Ethical Guidelines Option 1: Stanford Prison Experiment Go to:, the official site for the Stanford Prison Experiment. What do you think the research questions were in this study? List 2 or 3 possible research questions (in question format) that may have been the focus of this experiment. What happens when you put good people in an evil place?

  • Impacts of Brain Drain in Both Developed and Developing Economies

    Brain Drain in both Developed and Developing Economies: Brain drain defines as the personnel migration in the search of better standards of living and an expected quality of life, which includes accessible advanced technologies, better paid jobs and sometimes a more stable political condition in different places around the world. The professionals who migrate for better work opportunities, both locally and internationally are victims of the growing concerns of unstable

  • Asian Economic Currency Crisis

    Asian Economic Crisis In the summer of 1997, an economic and currency crisis rocked the Asian markets. One by one, southeast Asian countries such as Thailand, Indonesia, Korea and Japan saw their economies crash in the wake of heavy foreign investment. An economic boom had made the region an attractive investment opportunity for much of the 1990s. By 1997, however, domestic production and development had stalled, and foreign investors grew

  • Economic History Japan &

    The government made several key policy changes to provide selected firms a strong start. Two crucial policies during this period are the import-substitution industrialization (ISI) and export promotion (EP). ISI allowed government selected firms in government target industries to borrow foreign currency, and borrow domestic funds at rates beneficial to those firms. This was the beginning of importing advanced technologies only to improve, adapt, and reproduce them for export.

  • Eleven 7 11 or 7 Eleven Is Part of

    Eleven (7-11, or 7-Eleven) is part of an international chain of convenience stores owned and operated by Seven & I Holdings of Japan. The company operates largely as a franchise, and is the global leader in franchising and licensing convenience stores, with almost 40,000 outlets -- surpassing McDonalds. The U.S. subsidiary is headquartered in Dallas, Texas. 7-Eleven operates stores in 16 countries, the largest markets being Japan, the United

Read Full Essay
Copyright 2016 . All Rights Reserved