Friday, October 26, 2012

Property firms bullish after BSP rate cut - InterAksyon.com

Ayala Land's Treveia project in Nuvali

InterAksyon.com
The online news portal of TV5

MANILA ? Property firms maintained their bullish outlook, downplaying concerns of an asset bubble, as the Bangko Sentral ng Pilipinas cut interest rates to fresh record lows.

In a recent investors? briefing, Ayala Land Inc said the property market, including the retail, office and hotel segments, remains ?healthy.?

?Average price increases have been moderate, underlying end-user demand remains very strong and frictional costs serve as disincentive for speculative purchases," the property developer said.

Citing data from Colliers International, Ayala Land said first-half launches even dropped 7 percent against the 10 percent growth in take-up during the period.

George Ty-led GT Capital Holdings Inc., which owns Federal Land Inc, said there?s no cause for concern because ?supply is still far behind the demand.?

"So long as interest rates remain low and affordability is there, I think the property market will continue to be a growth sector," Carmelo Maria Bautista, GT Capital president, said.

On Thursday, the BSP cut policy rates by 25 basis points, bringing its overnight borrowing and lending rates to fresh lows of 3.5 percent and 5.5 percent, respectively.

Days before the BSP move, Governor Amando M. Tetangco Jr. said Philippine asset prices are far from inflated.

"I know there's a lot of talk about asset bubble and overbuilding. If you really think about it, you say there's overbuilding in the last three years but in the last 10 to 15 years, there was zero building,? Bautista said.

"Building started a few years ago... In terms of actual building, we're still three years behind the curve where supply and demand will intersect," he said.

Fears of a property bubble were fueled by the BSP's move to tighten banks' real estate exposure. The central bank?s latest data show residential real estate loans in the second quarter hit a four-year high.

Ayala Land described the central bank?s action as "pre-emptive, not reactive" and provided a more comprehensive measure of a bank's 20 percent cap on real estate exposure that previously excluded mortgage loans, socialized and low cost housing loans, loans guaranteed by Home Guaranty Corp, and investment in debt and equity securities issued by real estate companies.

While funding to developers may tighten, Ayala Land said market players with ?strong brand equity and excellent track record? will have the advantage. It added that thrift banks were not covered by the new policy.

"Think of all the people, where were they living? They were living with extended families and probably renting. All of a sudden they had purchasing power. All of a sudden they could do a 10-year mortgage. All of a sudden there are these condos. Wouldn't you move out of your mother's house? All of a sudden there's an option," Bautista said.?

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Source: http://www.interaksyon.com/article/46582/property-firms-bullish-after-bsp-rate-cut

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