The real deal: How much land can you buy in Manila today with USD 100,000?

Reading Time: 5 minutes

The South East Asian real estate market is poised for rapid growth and has boomed in recent years. Thailand, Vietnam, Cambodia are some of the fastest growing countries with high levels of investment and development. The residential market is also facing an upward tick with booming foreign investment in countries such as the Philippines.

Here’s some more interesting facts: the Philippines has the second largest population density – there are 332 people/sq km in a total land area of 300,000 sq km. Residential property living and development is equally dense and robust in the country. As of 2018, residential ownership soared to a record high of 54,000 units in and around Manila.

So, we wondered, how much land can you buy in the Philippines with USD $100,000? Since property prices have ballooned by as much as a whopping 50-70% than the publicly known rates in recent years, we were curious – would it be a giant mansion, a tiny hole in the wall, or something in the middle?

We decided to use our really fancy SAC tool for this mission. With its amazing data crunching capabilities, it analysed figures from several verified property websites on the web and gave us some interesting perspectives. Ready to have your mind blown?

First let’s set some context:

For the purpose of this exercise, we have centered all our findings and results around Manila where economic activity is the highest. We have compared it against similar metro cities in South East Asia (size, population, density).

All set, here we go!

Manilla sits right in the middle

While Hanoi offers more bang for the buck at one end of the scale, Hong Kong takes it another extreme, land purchase there is almost 12 times more expensive than Hanoi! The average price in the Philippines is USD 3,952/sq m, while Hong Kong is at a staggering USD 28,570/sq m. Manila sits right in the middle with a generous 25.30 sq m for USD 100,000 with Kuala Lumpur taking the next spot. In countries such as Indonesia which account for 40% of the ASEAN population, you can purchase 38.54 sq m in Jakarta- a small apartment in the heart of all the action. According to reports, Cambodia and Vietnam are the two largest growing real estate markets and with a cool USD 100,000, you can get up to 43 sq. m of space to yourself.

When visualised on the world map, you can clearly see that Hanoi scores way above the rest.

Oh wow- that’s expensive!

Since the Philippines does not release/publish official data on house pricing, we collected data from various sources, chucked it into the SAC tool and it took care of the rest.

Here’s what we found- when the percentage is above 0%, it means the current house price has increased from the previous year, and vice versa. As a result, we can see the two lines look very similar, which means house prices increased in conjunction with an increase in inflation.

By comparing data YoY in the last decade, the long-term trend line indicates that the change rate is consistently high after two down terms in 2001 and 2010 respectively. Price of a 3BR apartment in Makati CBD went from USD 1,632 in 1998 to USD 3572 per sqm in the last 10 years. That’s almost a 50% increase and it shows no signs of slowing down. While housing prices had dipping periods in the last 5 years in 2014 and 2016, it has course corrected to a 10.26% change in 2018.

Factors affecting the surge in house prices

One of the biggest factors affecting price is the stock market index, the PSE. This graph derives the strong positive correlation- when the PSE index is high, the house price drives up and vice versa. In the last 10 years, housing prices have steadily increased with respect to the closing day numbers on the stock market- the highest being at USD 3649/sqm corresponding a close of 8500 points on the PSE. Reports suggest that 2019 will see further foreign investment into SEA countries, which could lead to higher stock market value, thereby causing a further surge in housing prices.

GDP is also a major contributor in driving up the house pricing in CBD Manila. This chart shows a positive correlation with GDP per capita. As GDP increases, so do the prices.

Looking into the future

Even though pricing is affected by plenty of unpredictable factors, just for fun, we tried using SAC’s automatic forecast to predict for the future. As the dotted line indicates- residential condominium housing prices are expected to be on the rise with consideration for inflation in the future. Prices will increase by 12.77% in 2021 from 11.82% in the previous year.

Will Manila see a real estate boom? With foreign buyers lining up, it has become one of the top spots in the Asian market. With agreeable demographics and an increased spending power of the middle class, Metro Manila has generated big interest in the present and for the future.

 

SAC always keeps it real

If you would like to explore this data set on your own, you can download the dataset and get your free SAP Analytics Cloud trial here.

 

Data source:

House Price: https://www.globalpropertyguide.com/home-price-trends/Philippines

Lending interest rate: https://data.worldbank.org/indicator/FR.INR.LEND?end=2018&locations=PH&start=1997

PSE index: https://finance.yahoo.com/quote/PSEI.PS/history?period1=883584000&period2=1514736000&interval=1mo&filter=history&frequency=1mo

Conversion rate: 1 PHP=0.19 USD as of 29 Aug 2019

Green line = the figures published by most official statistical sources

Red line = house price changes after adjusting for inflation.

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