TODAY'S BUSINESS HEADLINES

Ceasars Palace operator interested in putting up Philippine casino 22-Oct-14, 5:44 PM | Rain Castro, InterAksyon.com

PH stock index climbs back above 7,100-mark 22-Oct-14, 4:28 PM | Krista Angela M. Montealegre, InterAksyon.com

Ayala-Aboitiz tandem, San Miguel press PNoy to resolve Cavite-Laguna Expressway impasse 22-Oct-14, 3:27 PM | Darwin G. Amojelar, InterAksyon.com

More fun for foreigners to invest in PH real estate, property consultant says

Photo by Bernard Testa

InterAksyon.com means BUSINESS

MANILA - The Philippine property sector will ride on the economy's growth as more foreigners discover it's more fun to invest in real estate here, according to property consultancy firm Jones Lang LaSalle.

In a briefing, Chris Fossick, managing director for Jones Lang LaSalle in Singapore and Southeast Asia, said Asia, in particular Asean, will continue to experience growth over the next two years, driving the global economy, and along with it the expansion of the real estate sector.

This year, Manila is increasing its supply of residential units by 47.2 percent, the highest rate in Southeast Asia, Fossick said, adding that the Philippines is also growing its office stock by 18.7 percent.

“Rarely do we have a situation where we have strong economic growth and real estate is on a decline. It's a rare occurrence. When values across any sector in real estate fall due to strong economic growth, you see a result of overbuilding or overprovision,” he said.

The Philippines grew 6.6 percent last year, outpacing the expansion of its Southeast Asian neighbors.

Low interest rates and a young workforce have supported the robust real estate sector in some Southeast Asian nations like the Philippines, benefitting the housing market and boosting retail consumption.

"Southeast Asia is also seeing urbanization, except Singapore which is already urban, and that creates demand in the cities. Traditional families stay together, but when you have a developing economy, you see children move out earlier. That creates more demand for the housing market," said Fossick.

Apart from overseas remittances and the business process outsourcing industry, more foreign businesses -- ranging from financial institutions to insurance companies, distribution and logistics firms -- are fueling demand for real estate and bringing new wealth into the economy, said David Leechiu, Philippine country head of Jones Lang LaSalle Leechiu (JLLL).

“We are seeing companies looking to investigate the Philippines with the hope that in 6-12 months time, they'll gonna come here and commit to a reasonable level of capital -- about $100-$500 million -- to set up businesses in Philippines because of the same reason they are doing so in Indonesia, Vietnam, China and India: large population, growing middle class, rising incomes and untapped markets,” Leechiu said.

In the last 12 months, JLLL has entertained foreign clients who are mostly here for business, “but as soon as they come here they kind of like what they see and they start to become property owners,” Leechiu said.

“Hong Kong and Singapore are two big markets and the US and these are not Americans married to a Filipina. These are homegrown American people who say the yield of 5-8 percent is four times higher than what they can get in the US, Singapore and Hong Kong,” he said.

All residential segments will continue to experience growth because “the economy is growing, debt levels are not changing, savings rate is building up and deposits in idle funds are climbing,” Leechiu said

“Everyone is so concerned whether we have a bubble or not. Probably, the most important factor to consider is debt levels across all spectrums. Government, private and household debt is considered very low,” he said.

 

OTHER BUSINESS STORIES
BREAKING NEWS