Philippine developers see boost in home buying tied to overseas workers in Hong Kong, elsewhere
- Families are using more of the money sent back from family members working overseas on home buying, according to the latest consumer survey by the Philippines’ central bank
Philippine developers are getting a boost from Filipinos working in Hong Kong who are taking advantage of the weak peso to buy property back home.
Rowena Arandia is one such worker who bought her first home this year, looking ahead to retiring from her job as a domestic worker in about 10 years.
“I bought the property because I am planning for my retirement,” said the 46-year old who has worked in Hong Kong for 12 years. “Another reason is that I thought it was a good time to buy a property because of the good exchange rate compared to two or three years ago.”
The Philippine peso has weakened about 5.4 per cent this year to the US dollar. The Hong Kong dollar, the currency Arandia is paid in, is linked to the US dollar.
She paid US$24,100 for a two-bedroom home in SM Development Corp. (SMDC) near Clark Air Base, which was a previously a US military facility.
Hong Kong-based buyers account for approximately 8 per cent of total SMDC international sales, which are about half of all of the company’s sales.
“Sales to Hong Kong-based buyers have been growing steadily over the years,” said Jose Mari Banzon, SMDC president, adding that most are Filipinos working in the city.
Sometimes the workers are using their Hong Kong earnings to buy a home for themselves. At other times, they are sending money back to their families for a home purchase.
Families with a member working overseas are using more of the money sent home on property, according to the latest quarterly consumer expectation survey of the Philippines' central bank: 11.8 per cent of households with a member working overseas spent remittances to purchase a house, up from 8.7 per cent in the second quarter.
The increase in home buying comes as Manila and other areas in the Philippines are seeing home prices rise and more properties coming onto the market.
Home prices in the Philippines across all segments rose between 4 per cent and 28 per cent in 2017, according to the Oxford Business Group, citing data from Santos Knight Frank. Eighty-five per cent of available properties in Metro Manila were sold in the period, up from 79 per cent in 2016.
About 10.2 million Filipinos – one out of 10 – live and work overseas, often sending part of their paychecks home. That boosts the earnings of Philippine developers such as SMDC, and has helped the real estate industry post strong growth, transform the capital’s skyline and spur developments even in rural areas.
In Hong Kong alone, there are about 211,000 Filipinos working as domestic helpers, while around 17,000 are either professionals or students in the city.
SMDC is the residential business of the SM Group, owned by Henry Sy, the richest Filipino according to Forbes.
For the January to September period, its operating income grew 34 per cent to 8.29 billion pesos (US$159 million) as revenues jumped 23 per cent to 25.26 billion pesos.
SMDC, which has an office in Hong Kong that helps buyers, mostly offers high-rise condominiums at an average of 4 million pesos to 6 million pesos each in Metro Manila locations.
Some analysts said the Philippines’ economic fundamentals, as well as property market conditions, make it a good investment bet.
Kerry Wong, REA group greater China region chief executive officer, cited the Philippines' 6.1-per cent economic growth in September, one of the fastest in Asia, and stable supply and demand of residential projects as supporting its property market growth.
Wong said 22,500 housing units in Metro Manila and prime tourist destinations were completed from January to September. Another 23,500 units are scheduled to be completed this year.
Overall residential real estate prices in the Philippines have grown 4.8 per cent this year.
“As of February 2018, Manila rental yields stood at 7 per cent, which is in the top 5 in Asia,” Wong said.