By Ray Eñano | Posted on Jun. 27, 2013 at 12:01am
[ manilastandardtoday.com ]
A property bubble in the Philippines is not happening yet, despite fears raised by some conservative analysts. The real estate boom will persist as long as migrant Filipino workers continue to fuel it, so says a top executive of a leading property company in the Philippines.
Remittances from Filipinos working overseas and the current property boom have become intertwined, prompting real estate companies to build more condominium towers and offer other types of affordable housing units. Ambassador Jose “Joey” E.B. Antonio, chairman of Century Properties Group Inc., told this writer recently over a round of golf at the Manila Golf and Country Club in Makati City that demand for housing and condominium units from migrant Filipino workers had not abated.
Workers overseas remit billions of dollars annually to provide financial support to the family and close relatives they left in the Philippines. Relatives normally deposit part of the remittance in time deposits. A part may serve as a start-up fund for a small business venture, like the acquisition of a jeepney unit, to augment the income of relatives. For some, the stock market may be a lucrative investment outlet.
Bank deposits, however, are not a sound investment proposition because of low interest rates. Small business ventures, meanwhile, may go awry to the disappointment of the main fund provider.
Joey says workers overseas are discouraged by the low or risky return of their current investments. They, instead, turn to real estate as one of their investment options. Real estate companies like Joey’s Century Properties, thus, have taken advantage of the appetite of migrant workers for condominium and housing units.
Personal remittances from migrant Filipino workers increased 7 percent in April to $2.003 billion from $1.871 billion year-on-year, bringing the total in the first four months to $7.7 billion, up 6.4 percent from $7.2 billion on year.
Century Properties, SM Development Corp., Megaworld Corp. and other property companies are racing against each other to build more condominium towers and raise funds in the face of increasing demand.
Century Properties started turning over 1,432 units of its 72-story Gramercy Residences in Makati City, one of the tallest buildings in the Philippines with a gross floor area of 121,595 square meters. It is raising more funds amid a double-digit growth in reservation sales and its bullish outlook on the property sector.
Joey told reporters earlier that reservation sales were expected to rise between 10 percent and 15 percent this year from P21.4 billion in 2012.
“We have consistently been very active in the property sector. We take the opportunities as they come. Right now I feel the big story is actually the rising middle-class in the Philippines. Century Properties is addressing the needs of the middle-class,” he said. Century Properties has tapped the capital market for funds, tasking Standard Chartered Bank to raise $100 million from a bond offering.
SM Development Corp., the property unit of retail tycoon Henry Sy, meanwhile, has raised P6.2 billion from the issuance of 7- and 10-year notes to finance real estate projects.
SM Development by far is one of the most aggressive companies in the condominium sector, along with Megaworld. It is launching three to four new projects this year. These are Trees Residences and Grass Residences Phase 2 in Quezon City; Shore Residences at the Mall of Asia Complex; and possibly Rich Residences in Mandaluyong.
Megaworld is equally bullish. It is confident of generating P12 billion in sales from four new high-end residential towers that will soon rise in the Makati Central Business District.
Megaworld said the demand for residential units in Makati remained strong as reflected in the robust sales performance of the company’s four residential buildings under construction.
Megaworld’s two “super high-end” projects, called Two Central and Three Central along Valero Street, are 100 percent and 85 percent sold out, respectively.
Paseo Heights, a newly-launched residential tower located in Salcedo Village, meanwhile, is 65 percent sold out while another tower that will rise along Legaspi Village called Greenbelt Hamilton is already 75 percent sold out.
Megaworld expects to complete the new buildings, which will add 2,000 condominium units of inventory in Makati, over the next three to five years. The company currently has 18 residential and office buildings in Makati.