Developers in the Philippines are cashing in as much as a third of remittances sent home by their compatriots living in the Arabian Gulf, a newspaper reported on Monday.
The properties ─ which are marketed to Filipino expats living in Dubai, Doha and Riyadh ─ are named after the world’s most desirable addresses, according to The National.
Advertisements in Filipino newspapers of “Forbes Town Center,” “Manhattan Garden City” and “Milano Residences,” resemble the flashy developments during Dubai’s boom years.
The sizable number of Filipino expats living in the Gulf countries has pushed some developers to hire freelance sales agents to market the luxurious real estate being built.
An estimated 280,000 to 450,000 Filipinos live in the UAE, while in Qatar the figure hovers between 150,000 and 200,000. Saudi Arabia had 300,000 job orders for Filipinos in 2008.
Iconic names used
The property tycoon Donald Trump has nothing to do with the under-construction “Trump Tower Manila.” He merely sold his brand to the developer, Century Properties, so that it would be able to lure more buyers for the apartments.
“It’s a way of attracting expatriate investors,” Alex Pomento, the head of research at Macquarie in Manila, told the newspaper. “They are more familiar with ‘Hollywood’ names.”
Big developers such as Ayala Land, Megaworld and Century Properties are also stepping up their marketing in the Arabian Gulf, where many Filipinos have already invested in condominium projects.
Anna Liza Sanjuan-Gonzales, who works in publishing in Abu Dhabi, has lived in the Emirates for eight years. She bought an Ayala Land-built apartment in the commercial city of Makati as an investment.
“The Philippines real estate market was not affected by the downturn as much as other places,” she said. “The value of our property has increased.”
Christopher Tongco, another Filipino expat in Dubai, has already signed up for a two-bedroom off-plan apartment in Manila that cost the equivalent of about $108,908.
Togco, a newlywed, will have about 35 percent of the purchase price paid over five years in monthly installments of $694 with the balance due on handover.
Memories of Dubai’s bubble?
Despite Philippine’s robust property market activity, and Manila last week approving a 10 percent increase in government spending next year to about $48 billion, economists fear a Dubai-style boom and bust in the property sector.
Real estate services firm in Manila, Jones Lang LaSalle, estimates that 154,000 new units will be built in the country between this year and 2016: 30 percent more than the 118,000 units completed between 1999 and last year. However, as was seen in Dubai, the question remains whether these new units can all be absorbed by end users.
Property prices in the Philippines have risen by about 4 percent annually in the past four years, according to S&P, thereby pushing off the likeliness of an asset bubble at least in the short-term.
S&P also says that the risk of a credit-fuelled bubble in the country is low because of a funding model that relies largely on expat remittances rather than bank lending.
And unlike the UAE, the high population in the Philippines and the influx of expatriate cash into the property industry is helping the country to shake off its reputation as an Asian underperformer while consumer confidence grows and government anti-corruption reforms begin to bite.