MANILA, 26 February 2007 — Southeast Asians are on a home-buying spree thanks to easier access to mortgages and an inflow of cash from overseas workers, feeding profits at small developers often overlooked by investors.
The likes of 56-year-old Fe Lapisura, a waitress in Hong Kong, are spurring the housing market in the Philippines to the joy of firms such as Ayala Land, Filinvest Land and SM Development.
Lapisura, who left the Philippines in 1993, recently got a mortgage to buy a two-bedroom house just outside Manila for 980,000 pesos ($20,310), which she rents out. She is also dabbling in land speculation, with two plots in Samar province.
“Before I was a bit interested in foreign exchange but I changed my mind and bought a house,” Lapisura said. “Maybe I’ll move back there when I retire and set up a bakery or a grocery... It’s a big space, so you can build two more houses there.”
A record $12.8 billion was sent home last year by overseas Filipinos — who account for 37 percent of Ayala Land’s residential sales.
The purchasing power of that money has been swollen by easier access to long-term mortgages — a trend also playing out in Indonesia and Thailand, delighting firms such as Jakarta-listed Ciputra Development and Kawasan Industri Jababeka, and Bangkok-listed Preuksa Real Estate and LPN Development.
In Indonesia, over a year of soaring interest rates — imposed to cap inflation and shore up the rupiah currency after fuel subsidies were removed — caused housing demand to well up.
Now that interest rates have fallen sharply and banks are competing to give longer and cheaper loans, the country needs around 8 million new homes as the population grows by 1.5 percent a year, according to BNP Paribas.
Young Thai graduates are also breaking with tradition by moving out of family compounds to buy homes. A home in the $30,000-$60,000 range is affordable for a new software programmer, who would earn about $6,700 a year.
Jorry Noeddekaer, who manages $1.4 billion in Asia for British-based New Star Asset Management, said he was “overweight” Southeast Asia with a tilt toward property. “Southeast Asia has tons of young people who are getting jobs and enjoying rising incomes,” Noeddekaer said. “More and more people are moving to the cities. When they move out of their parents’ homes, they look to get their own.”
Outstanding mortgages grew 10.6 percent in Thailand last year to 649 billion baht ($18.18 billion). In Indonesia, mortgages are growing at an annual rate of about 29 percent, but the potential is high as homebuying loans still equal only 2 percent of gross domestic production, compared with 9 percent in Malaysia and 32 percent in Singapore.
