While the US housing market, especially the sub-prime housing sector, has been spiraling downwards, growth in the Philippine real estate industry has picked up speed with property firms registering record sales this year.

This is thanks to a growing market of urban professionals and overseas Filipinos buying homes for their own use.

Big names like Ayala Land Inc., the country’s largest real-estate firm, reported that for the first nine months of the year its profits grew by 15 percent to P3.1 billion due to high demand across all segments.

This is shown by Ayala’s growths in residential unit bookings for its high-end and middle market projects. These grew by 18 percent and 42 percent, respectively, while bookings in its low cost housing segment more than doubled.

Megaworld Corp. expects to book, by the end-December, P19-billion worth of residential sales, P4 billion higher than its initial target at the beginning of this year.

At end-September, it posted record profits that jumped by 52 percent to P2.29 billion over a year ago as real-estate sales continue to drive revenues up, which grew 53 percent to P10.07 billion year on year.

Besides the influx of dollars coming from overseas Filipino workers, the growing middle class, the low interest rate regime, and flexible financing terms from developers and lenders alike also fueled the demand for homes by end-user buyers instead of speculators.

In addition, the rise of the business process outsourcing sector has pushed office space rentals skywards at prices never seen after the 1997 Asian Crisis.

Analysts told The Times that the slowdown of the US economy may only make a blip in local real-estate companies’ sales since these firms’ exposure to the US market is relatively small compared with their domestic sales. Some companies opted to keep a diverse clientèle to escape the meltdown in the US housing market

Meanwhile, some developers are following the US situation closely since a chunk of their overseas clients come from that country while others have brushed away the negative impact the credit squeeze could have brought the local real-estate industry.

“I believe the US sub-prime meltdown has almost fully run its course. Even if more write-offs ensue, the Asian economy, particularly the real-estate sector, will continue to roar, as evidenced by the sector’s overall health in the latter half of 2007. Real estate is very location specific and the cool-down in US housing has not affected real estate in Asia,” Jose E. B. Antonio, Century Properties Inc. chairman, said.

Industry insiders and analysts agree that one of the compelling reasons the industry was somewhat insulated from any ill effects of the credit market mess in the US is the value Filipinos attach to home ownership. Filipinos would not stop paying for their property acquisitions in the Philippines since these are meant for their future retirement or for their loved ones’ use. They would always strive to find a way to pay for these loans so that their families do not lose their homes.

Most likely the 2007 boom will go on in 2008.

Source: Manila Times 

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