Published on Thursday, 29 November 2012
00:00
Written by ALBERT CASTRO
Written by ALBERT CASTRO
Malaya Business News
Online - Philippine Business News | Online News Philippines
The Philippines is
ripe for an institutionalized secondary market of securitized real estate
receivables as the real estate industry is experiencing one of its boom periods
in history.
For Jesus B.
Atencio, president of 8990 Housing Development Corp., a big opportunity is
offered by securitizing developers’ collectibles in what the financial industry
calls as “asset-backed securities” to
enable developers to tap additional source of funding.
State agency
National Home Mortgage Finance Corp., (NHMFC) has delved into this type of
securitization in two instances
through Bahay Bonds, which is a
mortgage-backed security using collectibles acquired by the agency.
Bahay Bonds aims to
raise for the NHMFC P300 million to P604 million in fund it intends to use for
housing loan services to beneficiaries.
The Bahay Bonds are
now listed at the Philippine Dealing and Exchange Corp.
Atencio said it
could be a good source of funding for developers.
“If we could do this
four times a year, we will be able to generate more funds for use on projects
in a year,” said Atencio.
“In the US, they are
able to do this eight times a year,” he added.
The asset-backed
securities or commonly called ABS have, however, been one of the causes of the US financial implosion
in 2007 and 2008.
A construction
industry expert meanwhile said developers ought to look into the opportunities
of addressing demand in the lower-end segment of the property industry.
Anthony Dean Borg,
country manager for construction consultancy firm BCI Asia, said the biggest
opportunity in the residential market lies in the lower-income segment where
demand has been limitedly addressed.
“I don’t worry about
the supply in the high-end segment since many developments you can find address
this particular market. But there is a greater demand in the lower-end segment
of the market, which bodes well for the property and the construction sector as
well,” said Borg in a Malaya interview.
A recent
CB Richard Ellis
report said the property market “is expected to experience increased real
estate demand across all segments, spurred in large part by the BPO sector.”
“Multiple credit
rating upgrades, the support of the government and positive outlook are
encouraging more businesses to expand and relocate in the country creating
demand in luxury destinations and leisure properties,” CBRE.
CBRE, however, said
while demand for the high-end market will be sustained in 2013, developers will
focus more on mid-income residential market segment, within the P45,000 to
P80,000 per square meter range, reflecting the demand created from the growing
population of families and young professionals and supported by the record-low
interest rates.
“The Philippine has
the lowest interest rates and best financing schemes for home ownership today.
Interest rates ranges from P5 percent to 11 percent for short- or long-term
payment schemes. This has opened the opportunity for more Filipinos to become
owners rather than renters,” said Rick B. Santos, CBRE chairman.
Market observers
have pegged the residential backlog at 3.8 million. State estimates meanwhile
that the housing need is estimated to reach 7.55 million between 2007 and 2016,
based on government estimates where there is an estimated 3.91 million new
household needing new houses within this period, on top of the existing demand.
A big portion of the
demand, at about 70 percent or so, is estimated to be coming from the lower-end
of the segment.
The Organization of Socialized
Housing Developers of the Philippines (OSHDP) meanwhile is asking for subsidies
for developers that will venture in mid-rise residential buildings as a means
to provide supply to the market.
The OSHDP is
suggesting that medium-rise buildings are the most cost-effective way of
addressing the 4 million housing backlog in the country, with MRBs being ideal
for low-income individuals, particularly renters, who need to be in their place
of work.
Jefferson S. Bongat,
OSHDP national president, said one MRB can be built within a 2,000-square meter
area, at five storeys high with a density of 125 units, with a minimum area of
20 sq.m.
The development cost
is seen to go as low as P38,000 to P40,000 per square meter, about the same
price for a house and lot package in Cavite, and the monthly amortization also
the same at about P5,900.
These developments
can be made in areas of in Pasig, Cainta and certain parts of Quezon City,
according to Bongat.
Bongat said that
with subsidies in place, a developer can roll out one MRB in 8 months. The
proposal has been presented to the Housing and Urban Development Coordinating
Counci, chaired by housing czar Vice President Jejomar Binay, already.
OSHDP’s recent
studies reveal that MRB residential units can be built by private developers at
the estimated cost of P840,000 per unit
in National Capital Region; Metro Cebu and Metro Davao, give the high cost of
city lands.
In other
highly-urbanized cities, MRB units can be put up at an estimated P750,000 per
unit.
Their study also
showed that the housing loan package for socialized housing of P400,000 last
set in December 2008, may need to be adjusted to P450,000 to reflect the
movements in price of land and construction.
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