The question is simple: In a consumption-driven economy, how much of the buying is supported by ordinary Filipinos and how much comes from ill-gotten means?
We’re already seeing signs of the latter’s outsized influence on segments of the upscale to ultra-luxury market.
Top high-end retailer sees less customers
InsiderPH learned that a chain of stores specializing in designer goods has noticed significantly less foot traffic, amid the government’s ongoing crackdown on luxury living by public executives, lawmakers, and their private sector collaborators.
“This is very similar to the Xi Jinping crackdown in China in 2012. Remember the hit in luxury items and cars in China, as netizens scrutinized the expensive watches, cars, and clothing of government officials. And that paved the way for the prosecution of government officials in China,” an industry observer said.
“It’s eerily too similar to what is happening right now in the Philippines,” he added.
Some of these excesses are carelessly—or should we say shamelessly—exposed by the individuals themselves during TV appearances or by their own family members on their online accounts with hundreds of thousands of followers.
‘Too much money’ from politics
Luxury properties are next on the list as government investigators move to identify and freeze real estate owned by government officials that allegedly benefited from multibillion-peso kickbacks.
Rep. Elizaldy “Zaldy” Co’s penthouse in Shangri-La the Fort (probably referring to a luxury apartment in Horizon Homes where the penthouses are located) was already tagged as the location of cash drop-offs.
“They would most likely lie low in purchasing high-end residential now that the issue is too hot,” a real estate insider said.
“This is why those P100 million condos were still selling. Too much money sloshing around from politics,” the insider added.
High-end condos, Forbes Park mansions
High-end condos could take a hit as well as homes in prime locations like Forbes Park and Dasmariñas Village, where values have surged in recent years and remain elevated.
One top developer recently lauded strong sales at its new luxury tower in Makati City, but the insider said some of those units were sold at discounts of up to 25 percent for cash buyers.
“They have never discounted that much. Again, who pays cash for pre-selling?” the insider said.
“Prices went up because of POGOs mainly,” the insider continued. “This money coming from government deals [raised prices] to a certain extent. This doesn’t help to prop up prices.”
Silver lining for real estate
It’s not all bad news for developers, especially those diversifying to growth hubs outside Manila’s well-known neighborhoods.
One example is luxury lots.
“Lots are less flashy. You don’t build a house but it’s a store of wealth. Less risky,” the insider noted. “If in retail, diversify your brands and not just in one segment.”
The bottom-line
How this ultimately impacts key segments of the economy remains to be seen, especially with ongoing probes and more misdeeds being unearthed.
A respected fund manager shared an intriguing perspective.
“It just clicked that everything is supported by flood control,” he told InsiderPH.
The nation’s domestic economy is, after all, propped up by consumption (C), investment (I), and government spending (G).
“We say 70 percent of our economy is C but because of flood control, a lot of the C is funded by G,” he added.
Now, that’s a disturbing thought indeed.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
