The funds sent home by overseas Filipino workers (OFW) and the booming business process outsourcing (BPO) industry remain the drivers of the Philippine real estate sector in 2013.
This positive outlook was complemented by healthy investment environment and low interest rates, a key factor in buying homes, especially by OFWs, shared Rick Santos, chairman and CEO of real estate advisory firm CBRE Philippines.
“It took 20 years to get the stars aligned but now we’re looking at sustained growth. We are now experiencing the best real estate market in the Philippines in the last 20 years,” said Santos during a yearend briefing on Tuesday, November 20.
BPO industry revenues are expected to reach P25 billion in 2016, more than double the 2012 projected revenues of P12 billion, CBRE numbers showed. To accommodate the booming BPO business, demand for both residential and commercial properties has been steadily grown.
“There has been a surge in pre-leasing. The take up is still dominated by demand from BPOs. We really see that the demand is strong not only for the need today but in terms of forecast as well,” said Joey Radovan, CBRE head of Global Corporate Services.
Below are the property consultants' assessment of the different market segments:
OFWs continue to drive demand. According to CBRE, foreign buying of property increased by 61% this year.
Vice President Jejomar Binay said in a recent Asian focused realty conference that the main reason OFWs go abroad is to buy a house here.
Santos cited the prevailing low interest rates as also key to robust demand for homes. The central bank has slashed interest rates to record lows to entice local consumer spending and investments to help shield the economy from the crisis crippling the rich countries.
The Philippines has the lowest interest rates and best financing schemes for home ownership today, noted Santos. Interest rates range from 5% to 11% for short- or long-term payment schemes.
“This has opened the opportunity for more Filipinos to become owners rather than renters,” stressed Santos.
This is reflected in the rising prices of property not just in Manila but in growing markets across the country.
According to Victor Asuncion, executive director of global research and consultancy at CBRE Philippines, Cebu residential condominium prices range between P80,000 to P110,000, reaching Makati and Ortigas prices. Other growing markets include Davao and Iloilo.
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/sqm range, reflecting the demand created from the growing population of families and young professionals, Santos said.