PH real estate industry welcomes investment grade

Aya Lowe

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Philippine's first investment grade rating to signal a boost in the Philippine Real Estate industry

REAL ESTATE BOOM. The Philippines real estate industry is expected to benefit from its new investment grade status. Photo by Rappler/John Javellana

MANILA, Philippines – Real estate players are rejoicing at the news that the Philippines has achieved its first investment grade rating from Fitch.

“We are very pleased with the credit rating upgrade which affirms the strength of the Philippine economy developed through years of structural reforms. It should further enhance the competitiveness of the country and the business community as thet prepare for the integration of the ASEAN markets” Jaime Ysmael, CFO, Ayala Land told Rappler.

Announced on Wednesday, March 27, the new BBB- investment grade is expected to boost an already robust local real estate industry, particularly in regards to foreing investment which has already been increasing along with the country’s strong GDP growth of 6.6% in 2012.

“This is great news particularly for the property market and especially since there have been a lot of foreign investors looking into the market. This tells foreign investors it’s about time to invest in the Philippines,” Karlo Pobre, research analyst at Colliers International, told Rappler.

According to Pobre, the sectors that stand to benefit from the announcement include the commercial and industrial sector.

“There is more opportunity in the commercial or industrial sector since the residential sector is already slightly competitive. There should be increased expansion from BPO’s (business process outsourcing) and there may be more financial insitutions coming in to set up office,” he said. 

Lylah Fronda, associate director market of property consultant Jones Lang Lasalle, echoed this sentiment saying, “The upgrade will encourage more businesses to expand and relocate to the Philippines. If last year’s total office space take up was around 400,000sqm, we are expecting a better performance this year — probably 20% more.”

This will have a domino effect in the industry. As more international businesses open new offices in the Philippines, it will bring in more foreign workers who in turn will be looking for mid to high end accomodation.

“With a lot of job opportunities that will come available and possibly significant growth in expat community we see more demand in luxury destinations and leisure properties. Manila will continue to be a favorite among real estate investors and developers as a good alternative market in Asia,” Lylah added.

Speaking at a press briefing in January 2013, Rick Santos, chair of real estate consulting firm CBRE Philippines, said investor confidence in the Philippines was already high due to 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.

Santos predicted that the investment upgrade at a time when most countries are getting investment downgrades, this would further this boom. Now that this has become reality, analysts, developers and realty agents can prepare for a busy year ahead. –


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