Friday, July 18, 2008

Credit crunch unlikely to affect Philippine real property market

The Philippines although hit by rising fuel and food costs is unlikely to see economic growth disrupted by the global credit crunch due to reforms and strict banking policies adopted after the 1997 Asian Crisis making it one of the best places for property investment funds to consider

Beth Collingz, overseas sales director of PLC International and lead marketing partners for Pacific Concord Properties Lancaster Brand of Condo Hotels in the Philippines said a lot of criticism has been leveled at Philippine banks conservative lending policies. It is a tightly controlled industry dominated by only a few banks and their lending habits have been severe, particularly since the 1997 Asian crisis, and that has hindered the country’s economic growth at times. However, these policies are why the Philippines will not face the same state of affairs that are occurring in the United States and Europe today.

Failures in the Philippine banking system that were seen as a result of the Asian crisis are almost impossible now given the size of the remaining banks that have grown and consolidated over the past 10 years. The Philippine bank’s ratio of non performing loans is minimal due to tight lending rules and very high collateral requirements is a really a blessing is disguise said Collingz.

Philippine banks can weather the current global financial storm. The US and UK property sector financial problems are caused in the main by overfed and unrealistic real-estate markets. Property developers simply borrowed easy funds from numerous financial institutions and built too many units that went unsold, dragging down prices. Moreover, mortgages for property purchases were easy, creating mock buyers unlike the Philippines where property developers, since the Asian crisis, rarely break ground for a project until at least 60% of units are pre-sold eliminating oversupply and empty buildings of unsold units. Collingz said “you cannot buy property in the Philippines with a smile, a whistle and empty pockets. Philippine real-estate lenders require something uncommon to US buyers and that is a substantial cash up-front down payment”

A recent Statement issued by the International Monetary Fund on the Philippines said the Philippine economy is likely to grow 5.2 percent in 2008, down from 5.8 percent projected earlier. Meanwhile inflation is expected to remain close to double digit levels in the coming months as the recent increases in food and fuel prices filter through to the consumer price index. To its credit, the Philippines, maintains a largely deregulated oil sector which has allowed it to avoid the fiscal problems being faced by some other countries from fuel subsidies.

The collapse of real-estate markets in the US and Europe triggered much of the financial disaster we are seeing now. This picture will not happen in the Philippines.

Indices show crude-oil prices are turning downward due to reduced demand. It is only the current price of oil that is causing higher inflation. The Philippine economy is otherwise strong and stable. Overseas remittances from Filipinos abroad reach new records every month because no one wants to spend money in Europe or the US. Philippine call center outsourcing continues to grow as global markets look for more cost-efficient locations to service their companies. Interest in the Philippines is growing in particular from big investment groups from the UK and the Middle East whom look to Asia as a profitable market.

With the credit crunch now hitting Europe, Property Investors are looking away from concentrated property areas like Paris and London's West End to other markets all over the world, and Philippine Apart-Hotel, Condotel or Buy-to-Let rental properties fit the bill said Collingz. Institutional investors are trying to diversify their property portfolios through areas like Southeast Asia - with the Philippines heading the list, then Thailand, Japan and China property investments featuring in some portfolios.

The best investment returns are actually going to come out of Asia and emerging markets - the US's day in the sun is certainly over. Investors are moving to new areas to find value said Collingz "More and more of clients for buy-to-let Condo Hotel Investments are coming from the UK and the Middle East. There has been a distinct market shift from US based clients over the past few months and we see that trend continuing throughout 2008 well into 2009 as Sterling maintains its increase in value over the US Dollar.

“A lot of this interest is being driven by the relatively cheap market prices in the Philippines compared to Europe and the easy payment options available for our Condo Hotel Developments, but there are other factors, too. Offshore Property Investors, Foreign baby boomers as well as overseas Filipinos, are looking for ways to maximize their return on investments as they approach retirement, and so are purchasing second homes, particularly Condo Hotel Investments where they can use the Condo for vacations and rent it out through our In-House Condo Hotel Management when they are not using the unit thereby gaining rental incomes that on today’s purchase prices, give a projected ROI on their investments of some 8-14 percent depending upon the mode of payment for the unit”

Lancaster Manila Atrium Tower A, Shaw Boulevard, Metro Manila, Philippines is a "Full Service" Condominium Hotel offering Studio, One, Two and Three Bedroom Suites for sale with the option of enrolling their units in the Lancaster Condo Hotel Rental Pool and earn Rental Incomes as Owner Non-Residents when not using their units through Condo Hotel Management and reciprocal arrangement with Lancaster Cebu Resort Residences. This makes Lancaster Suites Manila, one of the Hottest Investment Opportunities in the Philippines said Collingz.

For further info regarding Lancaster Philippines Condo Hotel Investments please do not hesitate to contact us....

Beth Collingz
PLC International Marketing Networks
Pacific Concord Properties Inc.,
Manila Head Office
Shaw Boulevard, Mandaluyong City.
Metro Manila. Philippines
Phone: Manila [632] 717 1958
Fax: Manila [632] 718 1828

Pacific Concord Properties Inc.,
Cebu Branch Office
Lapu-Lapu City, Mactan.
Cebu. Philippines
Phone: Cebu [6332] 340 0721
Fax: [6332] 495 4938
Web: [Lancaster Condotels]
Web: [Lancaster Suites]
Web: [Lancaster Atrium]

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