BY MORGAN LEGEL
Demand is continuing to ramp up in Guam’s residential real estate sector, even throughout the pandemic.
“It’s basic economics; despite COVID the demand has remained very strong, and the lack of new inventory has been pushing prices for the existing properties higher,” Christopher Murphy, president of the The Real Estate Professionals told the Journal.
According to Cornerstone Valuation Guam Inc., the median price for residential real estate holdings is continuing to rise “fueled by low-interest rates, limited additional supply and the old adage of real estate as a hedge against inflation,” according to a Nov. 11 newsletter from Siska S. Hutapea, president and founder of Cornerstone.
Murphy said that a lot of recent offers are above appraised value and asking price, especially with “historically low” interest rates.
“We’ve all seen in the real estate industry older homes’ value skyrocketing because the demand is there and people want to buy a house and that’s encouraging,” he said. “But I don’t want there to be a buying frenzy — people buying at over the appraised value.” Purchasers should reflect on such a large investment and the commitment, he said. “Real estate goes in cycles — things eventually stabilize and you don’t want to be into something that will be a problem down the road.”
Paradise Court, a 17-unit development in Mangilao with construction underway should be finished by mid-2022. In addition, Murphy cites Paradise Estates, Paradise Meadows, Paradise Country, and Sienna residential subdivisions as popular.
According to Conchita Bathan, CEO of Core Tech International, there are many residential real estate projects it is working on
These include Summer Towers Villa next to Guam Memorial Hospital, which will offer eight villas for sale in 2022; a 10-story, 42-unit Tumon condo project behind DFS; Bayview Townhouses, with 12 to 16, two-story units; the Two Lover’s Point single house subdivision, with 200 units or more housing close to Tanguisson beach; and phase one of the Summer Breeze project, which includes 64 affordable housing units.
Additionally, CoreTech has recently finished or assisted in the development of Summer Town Estate I, II, III and IV in Dededo — also known as Lada Estates, which has 463 units; Summer Towers 1, 2, 3 and 4 in Tamuning next to GMH, with 195 units; Oceanview Residences in Upper Tumon, with 76 units; Rancho Villa in Yigo, with eight units; Bel Air apartments in Mangilao, with 26 units; Pacifica apartments in Tamuning, with 18 units; Sunset apartments in Tamuning, with five units; and Premier apartments in Yigo, with 10 units.
With the exception of Summer Towers, all of the properties are rentals. “At least that’s the plan for now,” Bathan told the Journal.
She said, “Real estate development is our expertise, we will always focus on the residential market.”
Pacific Rim Constructors Inc. recently worked on another affordable housing development — Ironwood Villa Del Mar. This project consists of two phases: the first with 50 units in Toto, which opened in October 2019, and the second with 88 units, which opened earlier this year, according to Keith J. Stewart, president of the Pacific Rim Group of Companies.
This is the only residential project Pacific Rim plans to work on for a while.
“Right now, our company is focusing less on home building, mainly due to construction costs,” Stewart said. “Our focus will be on military and commercial work on Guam — if we do housing, it will be focusing more on commercial or military clients.”
Murphy said there’s even less affordable housing available, especially when you consider the definition of it.
“The concept of affordable housing is a moving target to begin with. What truly is affordable to the people?” he said. “My concern with any kind of project that targets affordable housing are the challenges in labor and material costs, availability, infrastructure costs — which have all sky-rocketed in the marketplace. [Infrastructure costs] may or may not offset the cost, so that you can actually get something to a price-point that makes it truly affordable to a resident of the island.”
While Murphy said there’s clearly not enough supply to meet the demand, the struggle is continuing to grow the island’s supply of residential homes, affordable or otherwise.
“If there’s developers out there with the capability to put units on the ground now, I think there will be a sufficient demand to fill those units,” he said. “At this point in time though, it’s very challenging to build a home, whether it’s a developer or individual.
“We’re already starting to see in some areas a shortage of general construction materials like pipes and things like that,” Murphy said. “Once we can stabilize the supply chain and ensure we can get things here in a timely and affordable basis, then hopefully things will stabilize.”
Stewart said the cost of building on the island is the main problem for Pacific Rim and other contractors.
“There’s definitely a need for more housing, but the problem comes down to manpower and cost. It’s very hard to build housing here, that isn’t subsidized in some way, and make it affordable. That’s why you find very few private developments actually being built,” he said.
While COVID-19 did not cause constriction in the residential development sector, it did exacerbate it, he said.
“I think this situation was here before the pandemic, but now demand is even higher for housing. The issues now are inflation — which is working against developers — along with material escalation and the lack of labor. It’s just making things much more difficult,” he said.
For the future, Bathan said, “Due to the military buildup, [Core Tech] sees the need for military and affordable housing projects.” mbj