High-end developer sees no property bubble
Century exec says demand still outstrips supplyBy Daxim L. Lucas |Philippine Daily Inquirer
The Philippine real estate market is nowhere near the bubble of the late 1990s as evidenced by the continued strong demand from end-users, including buyers of high-end condominium units, according to officials of Century Properties Group Inc.
In a briefing, chief operating officer Jose Marco Antonio said the growth in demand for premium high-rise developments—defined as condominium units worth P7 million upward—continued to outstrip the growth in supply in the sector.
“Supply has increased by about 50 percent, but demand has increased by 130 percent,” he said, quoting the results of a recent industry study.
In recent years, Century Properties has become one of the high-profile developers of high-end condominium buildings, due in part to an aggressive marketing campaign that brought in celebrities and designers as marketing partners for their developments. These include ongoing projects like the Trump Tower, a residential development marketed as having been designed by celebrity socialite Paris Hilton, and other buildings made according to the specifications of the Versace, Missoni and Philippe Starck design houses.
Despite periodic reminders by the Bangko Sentral ng Pilipinas to banks to be mindful of their lending activities to property concerns, Antonio downplayed rumors of an imminent real estate bubble, pointing to the prevailing low interest rate regime in the country and around the world.
He predicted that low interest rates, which make it cheaper for condominium buyers to obtain financing from banks, would continue as the developed nations in the West try to revive their stagnant economies.
Antonio pointed out that the high-end real estate market in the Philippines was dominated by only one other firm, apart from Century Properties—Ayala Land Inc.’s Ayala Land Premier. This fact, he said, helped limit supply in the market.
In addition, the Century Properties official noted that the appreciation in prices of both land and condominiums in recent years was nowhere near the rates seen during the late 1990s, just before the collapse of the property market.
“The annual [price] increases of 5 to 8 percent [in the sector] is sustainable and is a long way off the peaks in 1997 for both land and condos,” he said.
On Sunday, Century Properties launched its latest high-end development, the fifth tower of its Acqua Private Residences complex in Mandaluyong City. Antonio said the company would spend P1.7 billion to build the condominium, dubbed “Iguazu” which, at 50 stories, will be the tallest structure on the 2.4-hectare property directly across the river from the Rockwell complex.
He said the company was expected to book some P3.5 billion in revenues from the new building, which was being designed by world-renowned architect Philippe Starck.
All told, the Acqua complex is expected to bring in P15 billion in sales for Century Properties.