Will the residential properly boom in Makati continue?

The residential property boom in Makati has been booming, high rise residential property has been looking extremely attractive. Two questions remain; will the strong market conditions remain and how long will such conditions persist?

Favourable economic conditions in the Philippines; strong remittances by Filipinos working abroad and low interest rates have been driving the residential property market in recent years. Every trip I take to Manila in the last seven years has seen the growth accelerating; I see a number of developments nearing completion around the city and new developments immediately starting.

Walking around the major shopping complexes; sales centres have been set up, some complete with mocked up apartment units in various developments. I am targeted by sales vendors as I stroll around and I am more than happy to view their developments; as a foreigner, I would certainly consider such an investment, but these developments need to meet long term investment quality indicators of rental yields and capital growth.

The financing schemes remain a concern; the apartments are pre-sold with vendors providing the financing until the project is completed. A 10% deposit is received followed by monthly installments, a loan then has to be arranged in presumably a Filipino bank with a scheme of finance extending over the next 20 – 30 years.

The high rise apartments fueled by Megaworld, SM Prime Holdings and Ayala Land are targeting foreign retirees; overseas foreign workers and young Manila professionals that includes doctors, lawyers and prominent business identities.

I often look at the huge complexes with in excess of fifty floors and wonder if sales are meeting projections; the sales agents I spoke to are normally unable to answer such questions.

When I ask specific questions about the demographics of the buyers, I am normally met with vague answers so it would appear sales agents haven't been fully briefed, surely I am not the only one with such questions.

Increased government spending, a high rate of consumerism in the Philippines, a low interest rate environment and a building boom in Manila appear to be driving the current high rise residential property boom. 

Property booms can come to an abrupt end, sometimes taking a decade to recover, parting with retirement savings in current economic conditions causes much anxiety. As such, I was in two minds as to what to do. 

The sub-prime boom and bust in the United States is still clear in people's minds, loose lending standards and a low interest rate environment fueled speculation in that market that led to the property market bubble bust.

A number of questions remain regarding the quality of workmanship are concerning; loose building codes and a recent explosion at the Two Serenda complex that was similar in nature to the explosion in Glorietta 2 in 2012 needs to be urgently addressed. 

Work practices on the construction sites leave much to be desired, the safety of workers does not appear to be a priority although increasing work stoppage orders issued may change current industry trends of profit over worker safety. Too many lives are lost on these building projects, one hopes no more lives are lost in construction.