While we were switching up our office tables and splurging on nicer headphones, the rich this pandemic were snapping up luxury homes.
David Leechiu, a property analyst who is the CEO of Leechiu Property Consultants, said in a Property Report PH that the wealthy, who weren’t able to travel, went panic-buying for homes as the pandemic stretched on.
In the report, Leechiu says the property prices in Batangas beach destinations like Punta Fuego, Tali Beach, and Kawayan Cove all shot up in February to up to 20 to 50 percent higher than they were before the beginning of the pandemic. He says in Property Report, “The transaction volumes are the highest I’ve seen in 20 years.” Property Report also says that a four-bedroom house in Terrazas de Punta Fuego is now priced at ₱60 million.
The same report also says that Club Punta Fuego’s Marina, which can accommodate only 250 for land and board parking for vessels, has written a letter to its club members saying they were down to their last 10 slots—and this was in October of last year.
It’s not even just beach houses. In an article by KMC, a luxury real estate company based in Bonifacio Global City, on their website in January this year, the trend is said to extend to luxury real estate properties.
Bangko Sentral ng Pilipinas’ latest Residential Real Estate Price Index (RREPI) recorded the highest year-on-year growth on nationwide property prices with a 27 percent jump, the highest since 2016. According to BSP, the stronger demand for high-end projects serves as a key driver in the increasing average prices of upscale properties.
This isn’t just a local phenomenon. All over the world, the demand for luxury homes has escalated. According to Bloomberg, the increase is 42 percent during the third quarter of 2020, the largest climb since 2013. This trend, of course, is only seen among the luxury market, as demand for mid-priced homes has increased only by three percent, and the demand for low-cost homes, curiously, has declined by as much as four percent.
KMC senior manager for Research Gerfer Mindoro, in the article, says. “Now that the need of having a safe home is amplified, more people have realized the importance of investing in a high-quality home for their families.” Aron Pritchard, the senior business development consultant for residential services, also said in the same report that the need for home offices, as well as spaces for children to study, in a location where they will spend their entire day in, has made the rich realize they need to get even nicer homes.
‘For the truly rich, real estate purchases would be opportunistic rather than whimsical.’
Those who’ve been living in smaller condos are vacating them for bigger homes, and Filipinos are looking for lots in beach areas, or for the NCR-based, bigger properties in nearby provinces like Batangas and Laguna.
A McKinsey survey, from data collected in April 2020, and comparatively again in October 2020, showed that as the pandemic wore on, the optimism felt by those in the middle class dwindled, while those in the highest income group increased.
What about the truly wealthy—not just the rich but the true one-percenters—but those whose massive wealth means they’ve owned these luxury beachside homes for generations? How did they spend their money?
Joe Ferreria, a leading money guru who helps the uber wealthy manage their income streams, says the very, very rich are using the pandemic to snap up good deals. “My criteria for really wealthy people is 100 million pesos cash assets, minimum. Those who make 20 million a year just in investment income without working,” he says. “Most of the wealthy already have houses all over the world, even in London or US, because they have children there. For the truly rich, real estate purchases would be opportunistic rather than whimsical. They look at real estate as a generator of rental income or capital gains. What they’re looking out for are investment opportunities, buying what you call ‘distressed’ properties. We will see large businesses changing hands as the hawks among the rich swoop in to take advantage of businesses that are good but in financial trouble because their owners are running out of money.”
So nothing fun and frivolous for the crème de la crème?
“They also have deliveries from online purchases, of course, but it’s going to come from Amazon,” Ferreria jests. “And yes, they’re spending on premium food items. When you are incarcerated at home, they eat and eat and drink like the rest of us. Or fix and renovate their houses. Just like us—only at a grander scale.”