The real estate sector traces the growth pattern of the economy. When the economy is growing, demand for real estate also increases and vice versa. The impact of the global financial crisis has started to manifest in the economy and the real estate sector of the country. In the first quarter of 2009, gross domestic product slowed down to 0.4% from 3.9% in the same period last year. Likewise, gross value-added in real estate contracted by 0.5% from 21.6%.
Across subsectors, however, the effect of the crisis varies. The retail market, low to middle income housing, and office space for business process outsourcing companies are holding on. On the other hand, the regular office market, luxury residential condominium and industrial market have shown signs of slowing down. Meanwhile, the two biggest real estate development companies in the country have set aside huge funds for expansion for both residential and commercial units.
As analysts do not seem to have a consensus on the depth and length of the crisis, stakeholders, including the government, should not be complacent. Safeguard measures to sustain confidence in the real estate market should be instituted. And during these times of credit tightening, measures to provide an alternative source of financing for real estate development should be promoted to ensure that financing is available for the sector when the world economy starts to recover. Revisiting the proposed national land use policy should also be considered to advance optimal utilization of land resources in the country which will augur well with real estate development. >>read complete document