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Listed property firms boost real estate

Published on 20 October 2012 [ ]

The country’s biggest real estate companies remained to be the main factor why the real estate industry is experiencing growth where listed property companies represent approximately 15 percent of the market capitalization.
According to the market report of CBRE Philippines, the listed property companies continue to provide an investment window to local and foreign investors.

“The Property Sector Index [PSI] as of March 2012 registered the highest record since 2008 at 1,881.71 and is equivalent to a P/E [price to earnings] ratio of 23.15 times, still within tolerable levels,” said the report.

CBRE Philippines also mentioned the companies that contributed largely in the industry: Ayala Land Inc.; SM Prime Holdings; and Robinsons Land Corp.

“The aggressive development thrust of Ayala Land provides large and sustainable income generating projects that supports a share price upside to investors,” said CBRE Philippines.

“In the property sector, SM Development Corp. [SMDC], the mid-income residential development arm of SM Land, is aggressively developing condominiums across Metro Manila including Tagaytay City. This, coupled with determined land banking strategy, shows promise of unprecedented growth for SMDC,” it added.

The profitability of Robinsons Land, on the other hand, continues to rise on the back of improved revenues across all its business segments and led by its commercial and residential divisions. This runs contrary to its undervalued share price of a low P/E ratio of 10.3x as of end 2011 and rising to 15.3x by the first quarter of 2012.

CBRE Philippines, moreover, specified that the second quarter turned out to be another encouraging period as the local real estate sector remained among the best performing markets in the region.

“Developers are actively pursuing projects and more big ticket developments are being lined up in the sectors of residential, office, hospitality and retail. Consistent with their expansion plans, developers are aggressively working on the acquisition of land which would be included in the ranks of active projects,” said the report.

Also, developers are keen on utilizing their existing land banks as the timing is very suitable for developments from the favorable market conditions, CBRE noted.

Investments are still concentrated in the business districts of Makati City and Bonifacio Global City in Taguig City, though developments are becoming more active in the fringe areas. Bonifacio Global City, on the other hand, still has vacant developable lands and still interests developers because of its location, the market report said.

CBRE is the world’s largest real estate services provider and the leading player in the local market that has a network of offices in Asia Pacific and the United States.

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