Housing in the Philippines the Solution
To solve a problem it must first be clearly assessed and identified, afterward it must be cast aside and all of the focus should be put on the solution, which is the most important and useful thing to do. The solution is only effective if the solution is without the factors that created the problem in the first place.
Therefore it is more than evident there is an existing housing shortage and it has grown steadily since 1996, so it can be concluded that no feasible solution has been applied, otherwise there would have been a decline in the requirement as well.
Economics and development go hand-in-hand, simplified development creates jobs and the employed usually spend for everyday needs and products of desire. Housing development and economics have a multi-faceted affect on the economy if all of the factors are in sync with each other. The factors include the employees of the development project re-introducing their salaries back into the economy through purchases and utility payments, the buyer of a home that is truly affordable, which allows them to buy new furnishings and accessories from the local vendors, another form of currency being re-introduced and circulated into the economy.
If property is overvalued and priced beyond the buying means of the population and in the close proximity of the basic salary for 75% of the population, this only compounds the problem. Another compounding factor is the sell price of a home is equal to or exceeds the appraised value, so there is no equity for the owner to use for upgrades, send their children to school or qualify for a low interest loan because the Loan to Value (LTV) is not in favor of the bank. In this situation, the banks are losers as well as their credit rating are affected because of the debt ratio, and if the quality of the home is substandard and the buyer has financial difficulties, there is a high risk of loan default.
We have the solution, quality homes sold well below the appraisal value, a cooperative relationship between the developer, bankers and end buyers, educating all in the benefits of our methodology so that all parties benefit.
There are several ways to approach this for a quick implementation, this summary will address a scenario involving banks or other types of lenders.
If the financial entity is in possession of defaulted and stagnated properties, they are already a negative factor not being productive for the entity or a credit enhancement for the entity portfolio. The longer the stagnations persist the worse the situation becomes also it has to be considered how the properties ended up in the situation in the first place. More than likely they were overpriced from the start and they owners/buyers for economic reasons could not or were not willing to keep up with the payments.
In the case where there are raw land or empty lots, these properties need to be enhanced with a quality residential or commercial structure to bring the valuation up so that the financial entities can have their portfolio in the black.
As the properties were already considered a loss and a liability, the financial entities should make the best of the situation and not get overzealous with the newfound assets and consider sales and rental of the properties at or below a realistic market value.
A way of looking at this is if the property had a negative value and basically a write-off, putting a quality structure on it gives it new life which can benefit the note holder and future occupants if a cooperative nature is exercised.
By selling or renting, the there can be a positive cash flow and increased asset value, the financial entity can benefit from this increased value and cash flow for the duration of the loan, therefore the extension of favorable pricing should be extended to the tenants. If the tenants are able to get the structures at favorable pricing, there will be a chance for them to use their surplus funds to spend into the economy or deposit into the bank.
The financial entities will contribute to the buyer market, work force, local economy and themselves, a win-win for all.
We at K.I.S.S. Management Ltd. can assist the clients with implementation, methodology and provision, the best building materials and lastly the best possible cost, which must be forwarded in order for everything to work progressively.
We look forward to doing business with you.
K.I.S.S. Management Ltd./EDI Housing
