MANILA, Philippines—The prospects of the real-estate sector in the Asia-Pacific region remain bright despite the steady stream of demand from investors—for both physical assets and shares of property developers—that have kept prices high in recent months.
This rosy outlook includes the Philippines, where the backlog in the housing sector and the possible introduction of real estate investment trusts (REITs) make the market attractive to foreign investors, said a fund manager who specializes in real-estate investments.
In particular, Panna Capital founder Brett Gordon singled out the affordable housing market as being attractive to investors, along with “pre-IPO opportunities” for growing private developers who have yet to list their shares on the Philippine Stock Exchange.
“The implementation of the REIT law in the Philippines is also going to be very interesting,” said Gordon during a recent conference for Asia-Pacific journalists sponsored by Swiss investment bank UBS.
REITs are publicly listed entities formed for the purpose of investing in income-generating real-estate assets like residential and commercial developments. This is particularly attractive as an investment vehicle for foreign funds, which are prevented by the Constitution from directly owning real-estate assets in the country.
“(The REIT law has) been stalled a number of times now, but if that comes into effect, I expect to see a growing institutional market for real estate in the Philippines,” he said.
“Asean [the Association of Southeast Asian Nations] is massively overlooked as a growth story, especially on the residential side,” added Gordon who, previous to his founding of Panna Capital, was in charge of real-estate investments at Dutch pension fund giant APG Investments.
Earlier this year, he was named the top-ranked real-estate investment manager in Asia by the Reuters Extel Survey.
Gordon singled out Indonesia and the Philippines as being attractive real-estate investment markets because “the demographics are ‘to die for,’” referring to the young population with growing disposable incomes and attractive prevailing mortgage rates offered by banks, as well as the high margins earned by developers.
According to data from Panna Capital, the Philippines has 35 real-estate companies on its investment radar screen with a combined market capitalization of $16 billion, compared with the total of 409 real-estate firms with a $202-billion market capitalization for the entire “emerging Asia” zone.
In the Philippines, Gordon cited the performance of Ayala Land Inc. due to the earnings prospects provided by its housing projects and its Bonifacio Global City project.
source: Philippine Daily Inquirer, April 10 2011