Vol. XXII, No. 64 [ BusinessWorld Online ]
Thursday, October 23, 2008 | MANILA, PHILIPPINES
THE PROPERTY industry will remain healthy and stable despite a possible slowdown in residential and the business process outsourcing (BPO) demand, a real estate consultancy firm yesterday claimed.
"There are bright spots in the tourism and retail sectors and the country can take advantage of this," CB Richard Ellis Philippines, Inc. (CBRE) director Victor J. Asuncion told a briefing.
Mr. Asuncion hinged the assessment on what he said was high demand for more hotels to be built, with tourist arrivals expecting to reach P3.4 million this year. He also believes that growth in the tourism and retail sectors will offset the slowdown in the residential and BPO sectors.
Other property analysts, however, stressed that the industry would be hit significantly by the global financial crisis.
"Demand from overseas Filipino workers (OFWs), which contributed strongly to the rise in residential real estate prices, is now weakening due to exchange rate movements and the global financial turmoil. A slight slow-down in economic growth and higher interest rates are also pulling housing demand down," Prince R. Cruz, senior economist of Global Property Guide, said.
In an interview with BusinessWorld, Mr. Cruz said the property sector’s dependence on the OFW market had made it more vulnerable compared to the other sectors.
"If you are a property buyer, you will postpone your purchase and wait for everything to settle down," he said.
Mr. Asuncion agreed that there would be a change in spending patterns but said this could be offset by "tailor-fit payment schemes for buyers" and shifting from the traditional US market to other areas that have a high OFW presence.
"It will be unfair to generalize the growth of the whole property industry to the growth of the residential and the BPOs. They are just one segment of the industry and they do not represent the whole industry," Mr. Asuncion said.
He added that the slowdown in demand for housing and office units would only be temporary and would likely pick up again by the second quarter of next year.
CBRE Chairman Rick M. Santos said that for this year, the firm was tracking roughly about half a million square meters of leasable office space for the BPO industry alone. This is significantly higher compared with last year’s 330,000 square meters.
"Multinational companies will continue to outsource or offshore for both survival and preservation of profitability. They need to service their customers," Mr. Santos said.
Of the six subindices in the Philippine Stock Exchange index, the property sector has been hit hard by the ongoing US-led financial crisis, losing as much as 55% year to date.
Among the property companies that have seen their share prices fall are:
* Ayala Land, Inc., which opened the year at P14.25 but was at P6.40 per share yesterday;
* Andrew Tan-led Megaworld Corp., down to P0.89 from P3.75 at the start of the year; and
* Villar-led Vista Land & Lifescapes, Inc., which closed at P1.16 yesterday after starting the year at P6.
Property company owners have said they were taking a cautious stance, but added that the crisis had yet to be felt.
"As of the moment, everything is going as usual. We do not see any change," Mr. Tan yesterday said. — KJRL
