Philippine Real Estate Industry Analysis
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8990 HOLDINGS, INC. – Student Equity Research
Marc Alvaro Manzano, Vladimir Regala, Sangrok Im – 4FM1
College of Commerce and Business Administration – University of Santo Tomas
Industry Analysis
Recurring Economy
The growth of Philippine real estate sector remains positive through 2016, playing a big role in maintaining economic stability despite impending leadership change in government. Also, for the past few years, its GDP growth rate remained to be seasonal resulting to an increase in its progress towards continued growth. The strong growth was investment-driven on the demand side, with significant contribution from investments in durable equipment. (See Figure 1)
Housing Divisions
Socialized, Economic, and Low Cost Housing are the products offered by HOUSE and Table 2 demonstrates the housing divisions in the Philippines based on the standard price range per housing unit.
Robust Economic Growth
The Philippines´ residential property market has performed spectacularly, due to robust economic growth. During the year to Q1 2016, the nationwide residential real estate price index rose by 9.2%. With the GDP rebounding from 5.6% in the first quarter to 6.4% in the second quarter, the outlook for investment flow into the country continues to be on an uptrend. Hinging on this optimism, real estate players are forging ahead with aggressive developments in all sectors—office, retail, residential, and industrial—across, within and outside the main city centers of the country.
Industry Drivers
Working class Filipino that can afford socialized to mid-rise residential buildings has increased because of the the BPO and IT booms which created jobs in the country.
Industry Outlook
The Philippines has a huge housing need at the low end. There are much as 300,000 households in Metro Manila residing in informal and uninhabitable housing units which composes 8.7% of the total Metro Manila population. These people live in appalling conditions. Many others live in very poor conditions. Despite so much price appreciation, the Philippine housing market has still not recovered from the crash after the 1997 Asian Financial Crisis.
Industry players
Considering the recent expansion in the real estate market, developers now face now face the challenge of strategically positioning themselves to secure and maintain industry leadership. There are some real estate companies whose making their mark in the present property boom. Ayala Land, Inc. is considered to be the