PROPERTY KMC MAG GROUP: Ease foreign ownership rules
By Catherine Talavera of the Manila Times, 07-01-2016
A relaxed foreign ownership rule needs to be implemented for the
Philippine property sector to benefit from the Brexit victor, a
real estate analyst said.
In a text message, KMC Mag Group head of research Anton Nordberg
noted a possible capital spillover to emerging markets, including
the Philippine, as Britain leaves European Union (EU).
". . . After the investors have reassessed the current
situation, I believe there will be more capital spillover moving to
emerging markets such as Philippines," Nordberg said.
In a research note, Colliers International Asia said the Brexit
victory would probably make Asia Pacific (APAC) investment
properties more attractive.
"Brexit will probably lead to further downward pressure on
already very low global bond yields, increasing the relative
attraction of the 3 percent to 6 percent yields on core APAC
investment property," Colliers said.
Headline yields on major office property markets range from 2.9
percent in Hong Kong to 5.7 percent in Melbourne and 6.0 percent in
Sydney, compared to the dropping bond yield rates in most developed
"At the time of writing, the US 10-year bond yield has dropped
to 1.47 percent - close to the 1.38 percent level of July 2012,
which was the low point for the last 10 years, while the
corresponding yields in Germany and Japan are -0.11 percent and
-0.19 percent, respectively," Colliers noted.
Despite the allure of APAC investment properties, Norberg noted
the Philippines needs to loosen its foreign ownership rules to
attract foreign direct investment (FDI).
Foreign investors can only own up to 40 percent of a property in
"This would be the perfect time to relax the foreign ownership
rules so that this capital can go to FDIs rather than portfolio
investments," Norberg said.
The shock of the Brexit vote reminds investors of the potential
negative political and economic surprises in developed western
economies, making APAC markets such as China and Japan more
attractive to investors despite the cautious economic
"In the wake of the UK's vote, Japan may well appear more stable
than many western countries. Opinion towards China may well also
improve, although Southeast Asia will probably continue to be seen
as a "risky" region, at least for the time being."
Jones Lang Lasalle Philippines head of Research, Consultancy and
Valuation Claro Cordero Jr. noted the Brexit controversy has no
immediate effect on the local property market.
"If at all, the probable impact will be on the flow of
investment funds to the Asia-Pacific regional property markets, as
global interest rates and bond yields are forecasted to remain low,
in light of the Brexit event; while the spread between global
interest rates and bond yields in core property markets remain at
respectable levels," Cordero said.
However, Cordero noted that the country is not likely to benefit
". . . The Philippine property market is not included in those
core property markets in the Asia-Pacific region, so we are also
less likely to be a beneficiary of these funds," Cordero said.