09/08/2008 [ tribune.net.ph ]
The local property market remained robust enough to weather the impact of the United States sub-prime woes, on the back of surging demand from overseas Filipino workers (OFWs) and business process outsourcing (BPO) firms.
“Sales will grow over 10 percent (this year) but net income might not grow as much because of escalating costs. As long as the OFWs market is there, there is no problem. Then there is still a huge housing backlog, so the market will continue (growing),” Danilo Antonio, managing director of Credit Rating and Investors Services Philippines Inc., said.
In a forum on “The US sub-prime meltdown: Will the fallout hit RP,” Antonio said residential and commercial markets are now considered “hot” segments in the business.
The OFWs mainly propel sales of the horizontal subdivisions and mid-priced condominiums which are priced up to P2.5 million.
On the other hand, demand for “built-to-suit” buildings from the BPO companies is also rising because of very big cost advantage for locators, he added.
But Antonio stressed that the industry’s “second home” market mostly vacation homes and residential resorts is weakening due to the US economic crisis.
“Second home and luxury home market will weaken a bit, particularly those projects counting on the Fil-Am market. They prefer investing in ‘cheap’ products in mainland US,” he noted.
Antonio said that except for the Fil-Am market, the property market is not affected by the US sub-prime crash as developers are already very reliable.
There is strong equity base traditional support, sufficient lender support, plenty of project level funding support and strong banking interest of contracts-to-sell financing, he said.
“(Also,) we are not affected by what is happening there because our mortgage system is still very ‘primitive,’ we don’t have mortgage-backed securities yet,” he said.
Antonio stressed there are also no signs of the so-called “ninja” loans in the business where even those with no income, no job and no asset can borrow.
Gamaliel Pascual Jr., senior advisor of Regina Capital Development Corp., said the main funding for the housing sector in the US is not coming from the banks, but from the capital market.
“And when your capital market freezes up, then your housing (sector) starts to suffer. The housing sector is a multiplier of GNP (gross national product) in good times,” he stressed.
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