Upbeat BPO, tourism spur real estate growth

CEBU, Philippines - For as long as the critical economic factors are present, a real estate official says the property sector in the country will continue to expand.

Ramero Espina, vice president for sales and marketing of Primary Homes, Incorporated, said the growing business process outsourcing and tourism industries continued to support the business environment of Cebu.

The growth of these sectors spurred residential sales, Espina noted, adding that the high migration rate in Cebu also made the city a favored location for residential condominiums. Renting out a property has also become one of the thriving activities in the realty market.

At least 85 percent of the total BPO offices and financial centers are situated in the central district of Cebu particularly in the IT Park and Cebu Business Park.

Both young professionals and senior businessmen perceived this as a great development, he said in an interview with reporters.

The supply of condominiums in Cebu continues to grow, and so too the demand and the take-up process of these properties.

Demand

The House and Land Use Regulatory Board said the demand would continue to increase especially that investors saw a great potential in property rental business, Espina further explained. 

Based on official data, according to Espina, majority of condo investors are BPO professionals and some are overseas Filipino workers who realize the high returns of leasing out a property.

He said, “This is all because of the fast growing economy of Cebu. On the demand side, we are confident that it will be sustained kay ang growth sa BPO ug tourism every year gyod bisan naa tay problema sa infrastructures and transportation.”

“You know, these industries are growing every year (from 10 to 12 percent),” he said, adding that the building of the new Mactan Cebu International Airport should also further boost the property sector.

The Global Property Guide has revealed the Philippines has the highest rental yield in Asia with a gross rental yield of 7.53 percent. In real estate, rental yield is the percentage of rental income return that a property owner gets from an asset being rented.

According to Espina, PHI has an average rental yield of eight percent to 10 percent for its delivered units. During the interview, he also announced the company’s Mabolo Garden Flats project recently had its topping off and its units would be soon delivered in the third quarter of next year.

According to the company, the increase in the country’s investment grade rating from BBB- to BBB in 2013 and the new rating of Standard & Poor’s from A-3 to A-2 this year have boosted the sector’s performance.

In fact, South Korea-based National Information and Credit Evaluation Ratings, Incorporate recently increased the nation’s rating by a notch from junk to the minimum investment grade of BBB.

In its latest report on the Philippines, NICE Ratings said: "The real estate market overheating is still under manageable level because housing prices started rising in full swing as recently as the 2Q 2013 and the central bank has strengthened monitoring already.”

It has also expressed a positive outlook for the Philippines and that the nation may possibly get another rating upgrade within the shortterm. (FREEMAN)