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Property market to grow by at least 10%


[ ] February 19, 2010

Real Estate services firm CB Richard Ellis Philippines sees an uptake in the property market growing by at least 10 percent this year pushed by liquidity, election spending, bank lending and the enactment of the REIT (Real Estate Investment Trust) law.

In a press conference, CBRE Philippines chairman Rick M. Santos, said the growth would be across the board but it would be led by office followed by residential and retail.

Santos said this year’s performance particularly quarter on quarter is an acceleration from 2009. Numbers for the full year are yet to be available.

Santos said the first quarter of 2009 saw a slowdown in property activity following the global financial crisis but he sees this recovering this year.

Santos said prices in some sectors may go up in the third or fourth quarters of the year as supplies begin to be taken up.

For now, he said, there is more supply that landlords are more flexible in their transactions especially for the office and residential segments.

Santos sees this is good for the property market as this would push demand even more.

For 2009, Santos said, prices in the office segment slid but they had been flat for residential and retail segments.

Santos sees lots of supply for high-end residential leasing.0

He said he has seen resurgence in activity in the property industry in the first two months of the year which would be sustained for the rest of 2010.

Santos said demand office and commercial space will be supported by the growth of the business process outsourcing industry especially outside Metro Manila although modestly as the global economy recovers.

Santos said the implementation of Republic Act 9856 or the REIT Act would be a big boost to the property sector. Its implementing rules and regulations are still being finalized.

"It will be great for developers, foreign investors. It would create liquidity, strengthen the capital market. It will be good for the man on street as it would allow him to invest along with the big guys and the landed families," Santos said.

He said REIT, which would allow property developers to unload some of their assets into REIT companies, would help translate to the growth of the commercial and office segment, retail tourism and even industrial and logistics centers.

An REIT is a corporation that uses the pooled capital of investors to buy and manage income property and mortgage loans. REITs are traded on major exchanges just like stocks.

"It would be a good shot in the arm for these sectors especially as we see more and more outsourcing, foreign investors coming," Santos said.

Retail space, on the other hand, would benefit from good cash flow and sizeable demand from consumer spending and higher remittances from overseas Filipino workers.

The tourism sector would see the development of more hotels and resorts and the emergence of entertainment complexes, medical facilities etc.

"We are seeing continued interest in the office, retail and residential segments. We see transactions taking place, expats coming in, BPOs expanding," Santos said.

He added that the election would create a lot of liquidity and as history has proven, positive things happen three quarters after the election.

There have been 28 entities inquiring with the Philippine Stock Exchange about enlisting their REIT vehicles.

SM Prime Holdings Inc. has made public its plans to raise $300 million from the public offering of the SM-REIT while Rockwell Land Corp. of the Lopez family is joining other real estate firms in exploring the REIT as an alternative source of funding their real estate portfolio expansion.


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