MANILA, Philippines - Top property developers continued to be bullish about the Philippine real estate market, saying there's no sign of buyers' fatigue.
At the same time, the Bangko Sentral ng Pilipinas said it does not see any evidence of an asset price bubble.
"In the Philippines, there is yet no definite evidence of asset price bubbles in the property market as increases in prices and demand are fundamentally supported by economic and market conditions. Stability in real estate prices has been supported by the continued growth in the BPO industry, which should drive demand for office spaces," Bangko Sentral deputy governor Diwa Guinigundo said at BDO-The Asset real estate forum in Makati City.
A real estate bubble is characterized by rapid increases in valuation of real property until it reaches unsustainable levels.
Guinigundo said nominal and inflation-adjusted real estate values and prices "remained less than 50% of their pre-Asian financial crisis levels, and only increased by a modest 15% since 2003." He also noted growth of real estate loans are also lower than pre-Asian crisis levels.
The BSP official said the country's strong economic fundamentals and improved economic conditions have been supporting the growth in the real estate sector. In the first half, the GDP grew by 7.6%, driven by strong household and government spending.
"Should we be worried in terms of this 7.6% growth in the first half? Based on estimates of the BSP, our potential capacity has increased from what we used to have 4-5%, right now it is estimated at 6-7%. In other words, we can expect to grow in a very robust way without the risk of overheating. This is supported by the very good convergence of a very high economic growth of 7.6%... with low and stable inflation," Guinigundo said.
No buyers' fatigue
CBRE Philippines chairman Rick Santos said the Philippine real estate market is "re-emerging," as growth is seen in the residential, office, retail and industrial sectors.
Officials of some of the country's biggest property firms said they are seeing continued growth in the industry, as seen with strong pre-sales.
They also shrugged off fears that the industry could suffer another meltdown like it did during the Asian financial crisis.
"I think the industry now is more mature than '95, '96. At that time we didn't have the benefit of hindsight. Now we know what happened. The banks, financial systems and real estate companies are much stronger... It's completely different, not to mention the economic statistics," Vista Land chairman Manuel B. Villar said during the forum.
Villar, whose company was badly hit during the financial crisis, admitted he is now more cautious. "This is the big difference now. Most developers are now far more cautious... As you recall in '98, scary lang... But we see the potential. We have serious expansion plans. Still controlled growth. We're happy with our profitability," he said.
Jose Carlo R. Antonio, Century Properties chief financial officer, said the company has seen continued growth in pre-sales of their projects.
Asked if he sees any buyers' fatigue, Antonio said, "Right now, we are not. What we have been focusing on is turnover collection, given than a majority of cash payment is at turnover 70%."
However, DMCI Holdings president Isidro Consunji said he sees a "shakeout" in the industry in the next few years.
"I think there will be a shakeout. Masyadong maraming players, maraming one-off (developers). They think it's easy to be a developer... In the next five years, there will be a separation of professional developers and mom-and-pop developers. I think the demand will still be there," Consunji said.
Consunji said there are no plans for DMCI to increase prices of its residential condo units. "We want to maintain stable prices... We want to emphasis quality," he said.
source: www.abs-cbnnews.com
