Property investments seen rising
Business World by Bettina Faye V. Roc, 11-13-2013
At the 4th Annual Asia Pacific Real Estate Investment Summit
yesterday, industry stakeholders and government officials
alike touted the various opportunities in the country's growing
real estate sector. "Economic growth bodes well for real
estate here in the Philippines. The local market will continue to
grow amid the prevalence of low interest rates, the high
liquidity ... and with the housing backlog still to be addressed,
as well as tourism goals, there is a lot of room for private
sector investment," Jaime E. Ysmael, Ayala Land, Inc. chief
financial officer, said. "And there is renewed interest in the
country given our favorable economic performance, as well as
our investment-grade status. This will continue to contribute to
the industry's development," Mr. Ysmael said.
The Philippine economy expanded by 7.6% in the first semester,
faster than most Asian countries and exceeding the
government's 6-7% goal for the year. The country is also now
considered investment grade by the three major credit rating
agencies after Moody's Investors Service, on Oct. 3, raised its
credit rating one notch to Baa3 with a "positive" outlook from
Ba1. Fitch Ratings and Standard & Poor's had earlier raised
their ratings for the country to investment grade -- BBB- from
BB+ with "stable" outlooks -- in March and May, respectively.
Finance Secretary Cesar V. Purisima said in his keynote speech
that, aside from the country's own economic fundamentals,
regional developments should likewise contribute to the real
"For example, by 2015, ASEAN (Association of Southeast Asian
Nations) will become a more integrated community. Competition
will be wider, which will be good for consumers, as this will spur
growth in the market," Mr. Purisima said. "We are also about
to hit our demographic sweet spot, with a young population just
about to enter the labor force. Purchasing power will shift, not
only for us but also for a lot of countries in the region.
That will widen investors' markets," he said. Financing is
likewise available and accessible for developers and endusers,
members of the banking industry said. Bank of the Philippine
Islands (BPI) Capital Corp. President Cecilia L. Tan said
several financing instruments may be tapped in the capital markets.
"On an overall basis, the financing support for real estate is
there. Developers have to start looking at the capital markets,
which is awash with liquidity. For end-users, we've lengthened
tenors so they can enjoy lower interest rates," Ms. Tan said.
BDO Capital & Investment Corp. President Eduardo V. Francisco
said that the investment-grade status will continue to help
developers and end-users lock in lower interest rates and borrow at
lower costs for financing. Mr. Francisco noted, however, that
there are still areas that need more financial accessibility.
"For example, for those sectors with the highest need -- in
particular, socialized housing -- these are the
unbankable. So, there's a need for a government effort to help
these sectors," he said. "The move to do developments outside
Metro Manila sort of addresses this segment, but other segments are
in a better position. There must be a comprehensive program,"
BPI's Ms. Tan added. Mr. Purisima said another challenge is the
continued increase in external risks that could affect real
estate, such as vulnerabilities to climate change. "There is
a need to share risks, and also plan communities better," said
the Finance chief. Industry players and stakeholders said that
while investors -- particularly firms from neighboring countries --
are starting to look at the Philippine real estate market, the
business environment here could also still be improved.
"Business compliance still takes long, although it has
substantially improved," said Jose Carmelo J. Porciuncula, head
of business operations and capital markets at KMC MAG Group,
Inc. "Foreign ownership limits also need to be revisited,
maybe, and the capital markets developed further to provide more
space for real estate investments here," Mr. Porciuncula said.
BNP Paribas Director Khim Siew Han noted that investor sentiment in
the Philippines has increased given its strong fundamentals.
"Demand is still good; rental values here compared to the
whole region are still pretty competitive.... Business should keep
driving the real estate market's growth here, especially in
middle and lower markets," he said. Growth in the real estate
sector will in turn drive economic expansion, Mr. Purisima
stressed. "Long-term investments and commitment of capital will
help the government remain on this growth trajectory and make
it more sustainable," he said.