Growing interest in Philippine property market among Singapore investors

More Singapore investors are giving the Philippines property market a second look as they search for fresh opportunities.

Market watchers said the uptrend in property prices has spurred growing interest in the Philippines property sector.

Prices of condominiums in the Philippines have gone up by as much as 20 per cent this year, outperforming the annual average of about five to eight per cent growth, according to real estate consultancy firm OrangeTee.

Philippines developer Ayala Land has broken tradition by giving buyers in Singapore the first pick of its new 394-unit Solstice Tower Two development.

The development is located in Makati City, which is in the central business district of Manila.

Although Ayala Land had initially set up a sales office in Singapore catering to the Philippine diaspora, it soon found out that there is also growing interest from non-Filipino investors.

Thomas F Mirasol, president of Ayala Land International Sales, said: “When we open up the Singapore market, we are quite surprised by the level of interest from Singaporean nationals.

“We always thought that it would be about 20 to 30 per cent of our total business. But it is actually 60 per cent of our business.”

Besides loan curbs and property cooling measures in Singapore, the lure of the Philippines is its fast economic growth.

In the first three quarters of this year, Philippines posted one of Asia’s highest GDP growth rates at about 7 per cent.

Experts noted that more MNCs have also located their business process outsourcing operations in the Philippines, giving rise to rental opportunities for properties in the central business district.

Currently, occupancy rates stand at about 97 per cent and rental yields at around 8 to 9 percent.

But experts said town planning in the Philippines is very different from Singapore, and not all condominiums there are located in safe or pleasant surroundings.

They added that investors could play safe by buying from more established developers, who are usually town planners.

Johnny Chng, head of international projects at OrangeTee, said: “Small-time developer or first-time developer — if you were to buy from them, you would have to do extra homework to make sure you are buying into an area where the developer may have a plot of land there, but it is in a township development by a bigger developer.”

Borrowing costs to finance a property in the Philippines are also higher with interest rates of 7 per cent, compared to about 1.3 per cent when buying a property in Singapore.

Currency risks should also be considered.

With the Singapore dollar more likely to appreciate, this may impact the total investment returns from property rentals or capital gains in the Philippines.

Source : Channel NewsAsia – 13 Dec 2013

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