Credit rating upgrade to boost PH real estate

Aya Lowe

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An investment grade will further reduce the cost of borrowing for major investments, including real estate

MANILA, Philippines – An expected credit rating upgrade this 2013 will boost the Philippines’ real estate industry, consultants from CBRE Philippines said.

Speaking at a press briefing  on Wednesday, January 23, Rick Santos, chair of real estate consulting firm CBRE Philippines, said investor confidence in the Philippines is currently high due to the following: strong macro-economic fundamentals, renewed confidence in the country’s leadership, record low interest rates, a booming Business Process Outsourcing (BPO) sector, record tourist arrivals, a strengthening currency, and all time record level of the Philippine stock market.

“This is the best market I’ve seen in the Philippines in the last 20 years. It reminds me a lot of the excitement and activity we saw in Hong Kong, Singapore and China during their real estate booms,” said Santos.

“We anticipate that there will be an investment upgrade for the Philippines this year. This will be a real boon for investors. In an area where most countries are getting investment downgrades, the Philippines continues to upgrade and we’re one notch away from being investment grade,” he added.

In 2012, all 3 credit rating firms — Fitch Ratings, Standard & Poor’s and Moody’s Investors Service — raised the credit rating of the Philippines from two notches to just one notch below investment grade on the back of improved corporate governance and steady economic growth. An investment grade will further reduce the cost of borrowing for major investments, including real estate.  

In early January, Malacañang said it was hopeful that the Philippines would reach investment grade from credit rating agencies this 2013 following the enactment of sin tax reform law which improved revenue collection and debt restructuring.

Santos said all sectors of the real estate industry stand to benefit namely commercial, residential, retail, hotel, leisure and industrial.

“Investment upgrade like that doesn’t just up the property sector, it helps almost every sectors. Being investment grade will give it a lot more access to capital overseas as well,” said Santos.  

“Probably the most attractive is the office sector. We do have strong interest from blue chip international companies,” he added. –

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